The company that made the cladding panels used on Grenfell Tower knew in 2011 they were “not suitable for use on building facades” and performed worse in fire tests than declared on safety certificates, a public inquiry into the disaster has heard.

On the opening day of the second phase of the inquiry into the blaze that killed 72 people, bereaved relatives and survivors heard claims that Arconic knew the fire performance of its Reynobond polyethylene-filled panels was below the minimum required for facades in Europe, but the panels went on to be used on Grenfell with the knowledge of the multibillion-dollar US conglomerate.

At the start of 18 months of evidence about decisions taken before the fire, its immediate aftermath and the role of government, the main contractor, Rydon, revealed that Claude Wehrle, an Arconic official, had explained in internal emails in 2011 that the fire rating of the panels had dropped to class E from class B and so were “unsuitable for use on building facades” in Europe. But, he said, “we can still work with regulators who are not as restrictive”.

In another email in 2015, Wehrle admitted that Reynobond PE was “dangerous on facades and everything should be transferred to (FR) fire-resistant as a matter of urgency”. He added: “This opinion is technical and anti-commercial, it seems.”

The Arconic emails were introduced by Marcus Taverner QC, the counsel for Rydon, the main contractor, who said: “Arconic continued to use the [class B] certificate to promote sales of Reynobond and did so specifically in the case of Grenfell Tower.”

The panels were fitted on Grenfell during its refurbishment between 2014 and 2016, and the first phase of the inquiry last year concluded that they were the primary cause of the spread of the 14 June 2017 fire.

Listening to the evidence at the inquiry venue in Paddington, west London, were bereaved and survivors including Nabil Choucair, who lost six members of his family, Karim Mussilhy, who lost his uncle, and Marcio Gomes, who led his pregnant wife and their two daughters to safety from their 21st-floor home. The area reserved for victims was packed. Some walked with sticks and others carried babies.

Taverner also read out an internal email from Celotex, which made the combustible insulation, from 2013. It showed that officials knew using its insulation alongside aluminium composite material (ACM) cladding, as happened at Grenfell, could be dangerous.

“We cannot seem to find or design a suitable barrier in which we have enough confidence that it can be used behind a standard ACM panel which we know will melt and allow fire into the cavity … Or do we take the view that our product realistically shouldn’t be used behind most cladding panels because in the event of a fire it would burn?”

In the same year, the company decided to enter the “lucrative” high-rise market, Taverner said, and it was sold for use on Grenfell nevertheless.

Timeline Key events since the Grenfell Tower fire Show The fire breaks out in the early hours of the morning, prompting a huge response from emergency services, who are unable to bring the fire under control or prevent a severe loss of life. The then Conservative prime minister, Theresa May, visits the scene and orders a full inquiry into the disaster, and the government promises that every family will be rehoused locally. The communities secretary, Sajid Javid, orders an emergency fire safety review of 4,000 tower blocks across Britain, and it will emerge that 120 tower blocks have combustible cladding. Scotland Yard launches a criminal investigation into the Grenfell fire. The chancellor, Philip Hammond, says the cladding used on Grenfell Tower was banned in the UK. The retired judge Sir Martin Moore-Bick is appointed to lead the public inquiry. Kensington and Chelsea council’s first meeting since the disaster is abandoned after the council fails in a bid to ban the media from attending. Survivors have their first official meeting with the police and coroner. The inquiry formally opens. As the final death toll is confirmed to be 71 people, it is revealed that hundreds of households are still living in hotels. In defensive testimony at the inquiry, London fire brigade commissioner Dany Cotton said she would not change anything about the way the brigade responded to the Grenfell disaster, provoking anger from both survivors and the bereaved. Grenfell survivors and the bereaved expressed frustration at Scotland Yard after they admitted no charges were likely until 2021. The public inquiry report concludes that fewer people would have died had the fire brigade been better prepared. Leader of the House of Commons Jacob Rees-Mogg is forced to apologise after stating that victims of Grenfell did not use "common sense" and leave the burning building. Grenfell cladding firm Arconic reveals it has spent £30 million on lawyers and advisors defending their role in the disaster. The second phase of the Grenfell Tower inquiry begins. Stacee Smith and Grace Mainwaring

An expert report commissioned by the inquiry on the architecture of the refurbishment has also concluded: “It is probable that Celotex was marketing a product for use on the exterior walls of buildings 18 metres in height that they knew to be non-compliant.”

Responding after the hearings, Mussilhy said: “They knew it was dangerous and shouldn’t have been used on buildings above 11 metres and they knew Grenfell was above 11 metres. It shows they don’t care and wanted to maximise the amount of money they could make. Ultimately, people have died because of their actions.”

The inquiry restarted with only one of its two expert panellists after the engineer Benita Mehra was forced to resign on Saturday because of her links to Arconic. The Guardian revealed earlier this month that Mehra ran a charity that received a £71,000 grant from the Arconic Foundation, the company’s philanthropic arm. The inquiry’s chairman, Sir Martin Moore-Bick, gave no indication of when she would be replaced.

Karim Mussilhy, who lost his uncle in the fire, arrives for the inquiry. Photograph: Kirsty O’ Connor/PA

Richard Millett QC, counsel to the inquiry, said almost all of the organisations responsible for the refurbishment were engaged in “a merry-go-round of buck-passing”, taking positions that contain “no trace of any acceptance of any responsibility”. In every case, it seemed to be someone else’s fault, he said.

The counsel for Harley Facades, Jonathan Laidlaw QC, pointed the finger at Arconic. He said that far from prohibiting its use on high-rise buildings, Arconic’s brochure “gave no indication Reynobond was not suitable for high-rise residential blocks” and boasted of “complete versatility in external applications”.

Harley Facades, which erected the cladding, was also in contact with Arconic’s UK sales manager about the Grenfell project and “at no point was it suggested by the manufacturer that the product should not be used at Grenfell”, Laidlaw said.

Given this, he said Arconic’s claim that “it should have been obvious to anybody involved in construction that its product was not of limited combustibility” was “astonishing”.

Studio E, the architect, said it believed the building regulations were not fit for purpose and blamed materials manufacturers for providing safety testing data that “misled designers”. It said the building services engineers Max Fordham proposed the use of combustible insulation and that Rydon had the power to change the materials. It claimed its position was “not an attempt to pass the buck”.

“Studio E will listen carefully,” the firm said. “The company wants to understand and learn, however painful that may be.”

Kensington and Chelsea council has admitted failing as a building regulator. Its building control officers inspected the cladding works seven times and found them to be complete to “a high standard”. Harley Facades has also admitted that its works breached building regulations because it failed to install cavity barriers around window openings, which allowed the fire to spread.

Arconic and Celotex are due to make opening statements on Tuesday.