Soaring prices of raw materials THREATEN European carpet and rug industry

Brussels, Belgium (21 April 2011) – The European Carpet and Rug Association (ECRA), has  raised concern regarding the potentially  negative impact of recent commodity price increases and the  scarcity of raw materials on the industry as a whole.  Significant price swings in global commodity markets are impacting the ability of the European Carpet and Rug Industry to guarantee supply of product at fixed prices for longer periods of time. The increased manufacturing capacity in China is particularly presenting the industry with an overall global shortage of raw materials.

Over the last year, the textile industry, including the carpet and rug industry, has been hit by frequent, unprecedented and steep rises in the prices for raw materials. Prices of natural fibres such as linen and wool have increased by 38 to 40% and silk, jute and cotton December 2010 prices versus December 2009 prices  by as much as 100 to 140%. Prices of polypropylene and polyamide have increased at least 35-40% compared to twelve months ago, as have many other raw materials used within the industry such as latex.  Further pressure on the market is being created by the scarcity of raw materials as demand increases in emerging markets.

In light of the situation, the raw material suppliers to the carpet and rug manufacturing industry have had to shift towards monthly price increases.  This impacts most contracts as wholesalers and retailers, as well as public procurement, prefer to have prices fixed for much longer periods of time.

Simon van de Vrande, Director of ECRA, adds “It is becoming increasingly difficult and unsustainable for the industry to guarantee prices over an extended period of time under the current circumstances in the commodity markets. We remain fully committed to providing high-quality, fairly priced products, but must do so at price level that is sustainable for the industry.”

Manufacturers individually work to realise efficiencies in order to prevent any  increased costs being passed on to customers, but they are challenged by the sheer scale and frequency of the commodity price increases.

Gilles Guillaume, Chairman of the ECRA board reiterated that, “Swift action is needed with industry and customers coming together. Short to medium term solutions include the need for creating adaptable pricing within many contracts.  It is our mission to provide the best possible quality of products and services to all customers but at margins that allow us to invest in the future and to safeguard the continuity of our industry.”

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