Economic headwinds put adhesive sector in sticky situation
FEICA , the Association of European Adhesive & Sealant Manufacturers, said the sector has been forced to “correct” its prices after being buffeted by strong economic headwinds. The body said it hoped tariffs would stabilise by the autumn but cautioned it could make no guarantees as conditions through its supply chain were likely to remain volatile.
“The adhesives sector is really suffering from a shortage of raw materials, which in some cases are critical,” FEICA secretary general Bernard Ghyoot told FoodProductionDaily.com. “These conditions are not specific to adhesives but are affecting the inks and coatings sectors as well.”
But the group was not forecasting “an imminent shortfall in adhesives” as the industry was using reformulating and alternative sourcing strategies to tackle the problem and ensure long-term supply of its products.
Supply and transport setbacks
The body said today that macroeconomic recovery in the first quarter of 2010 had seen a surge in demand for specialty chemicals, leading to supply shortfalls and which has led to supply shortfalls and rising prices for some key raw materials used in producing adhesives. Petrochemical commodities for the production of widely-used hot-melt adhesives, some dispersion adhesives and contact adhesives have all been hit.
“We are trying as much as possible to compress price increases to a few per cent. Market conditions are difficult at present,” said Ghyoot. “In reality these are price corrections as we are reacting to price increases of our raw materials. We are seeing this across all sectors we supply and adhesives for food packaging is following this trend.”
Other economic problems contributing to the problem include the poor harvest of natural raw materials, insufficient freight capacity and a weak Euro. The crop failure in natural resin (gum resin) has led to a shortage and a price increase for this raw material, said the body.
The limited freight capacity across Europe caused by the deregistration of 230 000 transport vehicles so they can be equipped for truck toll data collection in the region and restricted availability of ship freight is likely to persist until the third quarter of 2010.
Ghyoot added: “We have felt criticism from customers but stress these price corrections reflect what is happening in our supply chain and will not increase our own profitability. We hope the prices will stabilise by the autumn but cannot guarantee this as the economic environment is still volatile.”
