Recent developments within the adhesive industry
The conflict between Ukraine and Russia has driven unexpected disruption in feedstocks and energy supplies, pushing through into speciality chemical manufacturers, which supply the adhesive market. Natural gas prices have become extremely volatile and at record high levels in Europe. Many manufacturers have introduced surcharges during March in reaction to the sudden rise in costs. Further cost jumps in Brent Crude Oil, Naphtha, C2 and VAM have an impact on our industry.
Volatility in the markets have led to many suppliers adapt their pricing structures with warnings of further changes to come. Constraints, shutdowns, and unforeseen production issues in the first quarter of 2022, and moving through to the second quarter in resin, wax and polymer producers’ facilities have created additional restrictions, which has driven a demand led market increases to secure supply. The continued high demand and tightly supply chain is driving inflation for materials globally, beyond any levels ever seen before and inflation is expected to continue for the rest of 2022. Demand often outstrips supply for many materials, which leads to tightness in the supply chain as well as longer lead times.
Further restrictions on the ability to transport material from Asia to Europe, again mostly driven by the conflict between Ukraine and Russia, have held shipping costs high.
Within the hot melt adhesive industry, there are also noticeable trends within customer markets, largely driven around the dynamics of supply and costs.
Meeting these challenges together
To meet the challenges of today’s evolving market, we continue to work in partnership with our customers and suppliers alike, to make sure we secure material to meet our demand and best utilise what is available. We:
- Maintain strong relationships through our supply chain to secure the materials needed for our products.
- Actively seek alternative supply sources and service providers to secure supply.
- Work with customers to be able to react timely to any developing trends.
- Develop new adhesive products that are more commonly available to meet our customer’s needs.
- Invest in measures to mitigate supply chain disruption.
- Continually optimise our production efficiencies and competitiveness.
To all of Beardow Adams customers and Global Partners around the world, we thank you for your continued support, patience and cooperation.