14. Dec 2021 | Markets & Companies
The European Printing Ink Association (EuPIA) again underlines, following a communication earlier in 2021, an aggregation of factors, mainly triggered by the COVID-19 crisis, which seriously affect the entire chain of supply of raw materials.
Jet fuel costs have increased along with the costs of shipping containers.
Image source: HesselVisser – Pixabay (symbol image).
The global economy is experiencing what most economists and supply chain experts say is the most unprecedented supply chain volatility in recent memory. Demand for products continues to exceed supply and as a result the global availability of raw materials and freight has been severely affected. This situation, sparked by a global pandemic that continues to cause manufacturing shutdowns in many countries, was exacerbated first by a consumer base confined to home buying more items than usual and out of season. peak and, second, by the recovery of the economy in all regions of the world, which has resulted in increased demand. Add to that a crippled supply chain, reduced production in China due to China’s energy reduction program, and a shortage of key raw materials.
Supply and demand imbalances for many critical raw materials used in the production of printing inks – vegetable oils and their derivatives, petrochemicals, pigments, and titanium dioxide (TiO2) – cause significant disruption to EuPIA member companies. Materials in all of these categories, to varying degrees, are experiencing increased demand as supply continues to be limited. Additionally, volatility in demand has resulted in increased complexity in the ability of suppliers to forecast and schedule shipments.
By examining each group of materials, unique contributing drivers can be spotted:
- Pigments, including TiO2, have increased recently due to increased demand and plant closures in China caused by China’s energy reduction program. TiO2 has seen an increase in demand for architectural paintings and wind turbine production.
- The supply of organic vegetable oils has been affected by adverse weather conditions in the United States and Latin America, at a time when Chinese imports and consumption of this category of raw materials have increased.
- Petrochemicals – UV resins, polyurethane and acrylics and solvents – have increased in cost since the start of 2020, with some of these materials having increased demand outside normal levels.
The market has witnessed a multitude of force majeure events which have further restricted supply and exacerbated an already volatile situation. As costs continue to rise and supply continues to tighten, producers of printing inks and coatings are increasingly affected by immense competition for materials and resources.
Packaging, freight and transport
- Packaging materials: The industry continues to face shortages of steel for drums and high density polyethylene raw materials used for buckets and jugs. Growing demand in e-commerce leads to a limited supply of corrugated boxes and inserts. Material allocation, production delays, raw materials, forces majors and labor shortages all contribute to the increase in packaging. Extraordinary demand continues to outweigh supply.
- Air and ocean freight capacity limits: The pandemic has been a catalyst for abnormal consumer purchasing activity (both during and after shutdowns), causing unusual demand in several industries and straining the capacity of air and sea freight. Jet fuel costs have increased along with shipping container costs (on some routes from Asia / Pacific to Europe and / or the United States, container costs have increased 8-10 times the norm) . Unusual ocean freight schedules have emerged and freight carriers are stranded or challenged to find ports to unload containers. Ultimately, increased demand and ill-prepared logistics resulted in a critical shortage of freight capacity.
- Congestion in ports: Due to the coronavirus pandemic, strict health and safety measures remain in place at global ports, affecting port capacity and throughput. The majority of ocean freight liners do not meet their scheduled arrival times and ships that do not arrive on time experience delays while waiting for new slots to open. This has contributed to escalating shipping costs since fall 2020.
- Truck driver shortages: Another contributing factor is due to a critical shortage of truck drivers in many regions, but perhaps more pronounced in Europe.
Resins for water-based coatings
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