Image: Heytex GroupUpdate on raw material markets: Supply Chain remains stable
Interview with Heytex-Management on current market situtation. June 2021
Heytex Supply Chain remains stable to continuously provide reliable high quality products.
Fabian Kampsen and Robert Lerch represent the Management Board of the Heytex Group. Fabian is a “home grown” Heytex Manager and since 2020 in the position of Commercial Director. Robert came to Heytex some 4 years ago being the Global Procurement Director with a proven record from various international assignments in different industries. Regarding the current market situation for Technical Textiles, both got together reflecting on the actual developments.
Fabian: Hello Robert, just a few weeks have passed since our last conversation, actually not a long period of time and yet a lot has happened again on the raw materials side since then. How has the global situation developed?
Robert: Hello Fabian, it‘s still exciting! A working supply chain in the manufacturing industry, especially in our branch, is certainly one of the bigger challenges that need to be solved. The availability of various raw materials in the chemical industry is still extremely tense, which has a direct impact on us.
I would describe the supply situation at Heytex as tight but stable. The delivery situation caused by the wrecked container ship in the Suez Canal has unfortunately led to further delays for global sea shipments, which were not foreseeable. Sea freight prices continue to rise to a level of up to 10 times the prices from Q4 2020.
Fabian: I have heard from several sources that the supply of raw materials is endangered by many parallel plant shutdowns in the chemical
industry?
Robert: Yes, unfortunately that‘s true. 13 force majeures, 11 system failures, 22 slowdowns and 24 maintenance shutdowns were active in parallel in the plastics industry, in the month of May alone. A fundamental improvement does not seem in sight, because force majeure cases can last: according to statistics, these last an average of 62 days, the currently longest lasts longer than 200 days already. In addition, producers are faced with lower imports from Asia, the Middle East and the USA. Because even in these classic export countries, demand is higher than supply. The situation is exacerbated by the current bottlenecks in shipping containers.
Fabian: The price development of various raw materials, such as wood, is very present in the media and is extreme. To what extent do you think the commodity markets are likely to recover in
the near future?
Robert: In general, purchasing prices have unfortunately not developed as originally forecasted. Chemical raw materials, fabrics and yarn in particular remain at an extremely high level. The decline in the overheated market, which was expected by all sides, did not occur and will probably not be felt before the end of the year.
One example beyond primary raw materials is the topic of wood. For us, wood has a direct influence on the pallet prices, but also indirectly in other packaging such as cardboard cores and tubes.
But back to the main raw materials. PVC, as well as plasticizers and TPU in particular, have risen by more than 70% in a very short time, and prices are not expected to fall soon. In addition, there is the topic of qualified and approved substitute materials, which were used to compensate for availabilities and ensure delivery stability.
These are quickly twice the price of the original products. These circumstances in combination with multiple, approved sources and our other risk management initiatives, lead to an overall secure supply chain. The limited availability of raw materials has unfortunately still a clear and immediate impact on prices.
Situation at Heytex
Heytex has so far been able to master the challenges of securing the supply chain with a few exceptions. The frightening price increases have stabilized at the highest level, unfortunately a recovery is currently not in sight. The price situation and availability will certainly remain a challenge until the end of the year. In general, Heytex is set up as a stable partner for our customers, who also has a plan B and C in the drawer.
Supply Chain secured
Image: Heytex Group