I’m going to start with my “traditional” predictions for the coming year (twice makes it a tradition, right??!).   For 2011 I’ll again go with 5 themes

1. Raw material price increases continuing. With the effect of the cumulative increases in additives  I see end of year prices in input costs increases for producers in the 20% range. With oil over $90 and pushing up I see this a safe bet.

2. How much of this will be passed on? Common sense says all of it plus a backlog, but sense has not prevailed in the past. Make your own guesstimate. I see a minimum 10% price rise in the first quarter. How much of this will stick – probably 8% +/- if already incurred costs are to recovered. Its uphill from there. I believe a 20% increase has already been flagged by Kommerling.

3. Again colour demand will grow, both self-coloured, foiled and painted. Suppliers will push it to differentiate their offering and consumers will react to greater choice and increased visibility of the fitted product.

4. The Newbuild market will maintain its low trajectory with little change. However, growth in RMI will be apparent as people look to maintain or improve their existing dwellings rather than move or invest abroad. Conservatism (small C)  in every sense will prevail.

5. The expected consolidation at the producer (extruder) level – all the gossip of 2010 – logically seems inevitable in 2011. However, logic is in short supply and may only come about subsequent to a major failure with burnt suppliers and customers.  I’d give it at 70% chance of happening in the year.

Results for 2010

I would guess 4+ out of 5 isn’t bad even though the negative predictions won out.

Resin prices rose and rose all year long. I predicted falls as well as rises but what we got were more like pauses in the ongoing flow of news. The beginning to end price increase was more like 15% than 10% and the price of compound for producers was further impacted by constant and serious increases in additives such as TiO2, stabilisers, modifiers etc. That was bad enough but shortages in almost every element meant many producers were on allocated supplies and therefore with limited bargaining power.

Prediction 2 was absolutely correct, price increases imposed and then cannibalised by market grabbing exercises. Those same companies then are left without sufficient revenue to re-invest, refurbish tooling or equipment or give proper service. In the meantime their quality products deserving premium prices are sold at prices which imply the label “trash” and pull down the whole market. The added value in the supply chain from quality producer to quality  fitter is thereby proportionately reduced. The consumer is the winner but doesn’t know it.

Prediction 3 – rising demand for colour – was right on the money.

No 4 – market contraction of 5 % – was close enough but for the wrong reasons. The weather played hell at both ends of the year and if it were not for that we might have seen a rise of perhaps 10% year on year as confidence seemed to grow as the year progressed.

No 5 -small increase in independent stockist numbers and a reduction in group-owned outlets – Got the first part right. The second part was mixed with some expansion,  some contraction. The most significant move, certainly as far as their customers were concerned, was the purchase by Epwin group (Swish, Profile 22 etc.)  of  significant outlets and seeming to move further towards the Eurocell model.

Happy New Year everyone!

- Tony