Price Increases Dominate Industry Chatter
March 1, 2011
Heard anything about price increases for raw materials lately? If my experience is like anyone else’s within the adhesive and sealant sector, raw materials pricing is almost the only thing you hear about these days. Raw materials are literally issue number one for every single Adhesive and Sealant Council (ASC) member, and I’m sure it’s an issue that resonates with all companies up and down the supply chain.
Here’s a sampling of the words and phrases that CEOs are using when talking about the fluctuations the industry has been experiencing: “unbelievable,” “unprecedented,” “keeps going up,” “uncertainty is an issue.” These phrases appear in different ways when earnings are announced for the publicly traded members, or when the monthly statements are shared for the privately held companies.
The bottom line is that prices are putting a pinch on profits and performance for many of the formulators. It’s an issue that's deeply important to the entire supply chain. It’s also the reason for a significant change in the programming at future ASC conventions. After discussions during its winter meeting, the council’s Board of Directors asked staff to focus an entire educational track on various raw material feedstocks at the next several conventions. The ASC is inviting experts to share their thoughts on what is occurring within the supply chain, and present ideas on how to plan for the significant issues the industry is facing.
The ASC’s board members were clear in their directions to the council. They all spend time, effort, and money to track feedstocks, and many commit significant resources to fund studies, regular reports, and updates. But they want to have presentations-featuring live, expert voices-that allow them to cross-check the information they collect. An interactive format allows raw material specialists to provide information that is vital to business but that can “get lost” in a 30-page report. A face-to-face session also provides the opportunity for questions, which can generate a dynamic discussion for attendees.
Pricing is not the only reason for the chatter, though that is clearly the top issue. The other factor is availability. Many companies are moving to allocation, yet not discussing when that will change. In addition, there is a great deal of uncertainty in the market. Between the unsettling conditions throughout the Middle East to regularly planned and communicated shut downs for repairs, it is clear that our sector will have a lot to think about, even as general business conditions seem to be improving across the board.
To help make sense out of what is going on in some of the feedstock areas, the ASC convention, which will be held April 17-19 in Tampa, will focus on several feedstocks via two presentations:
- “MDI Worldwide Isocyanate Supply and Demand,” featuring Ron Coifman from ICIS
- “Global Trends with VAM, EVA and VAE,” featuring Dewey Johnson from CMAI