Information related to latest development in manufacturing cost for industrial fibers and fabrics
After the unprecedented impact of the COVID-19 pandemic in 2020, the global economy has gradually recovered in 2021, but is still experiencing very volatile market conditions. The pandemic is unfortunately not yet fully controlled, global freight remains unreliable and expensive, cost for energy and global commodities is increasing, and the increasing focus on sustainability and environmental impact is driving compliance cost upward in most part of the world.
Like many companies, the Indorama Mobility Group, manufacturing industrial fibers, cords and fabrics, is confronted with such significant inflation since the beginning of the year. In particular, the inflation has been notable for the following cost items:
- Utilities: gas price has tripled in the past few months in Europe (from a level of 15 EUR/MWh in Q4’20 to 45 EUR/MWh recently), while increasing by 50% in USA
- CO2 emissions and compliance cost: prices for CO2 certificates in Europe have almost doubled, approaching 60 EUR/ton from 30 EUR/ton at the end of last year, while regulations continue to expand the need for CO2 compensation
- Chemicals and additives (spinfinish, dip chemicals, coating & laminating chemicals): cost have increased by 5%
- Packaging: prices for standard packaging materials have increased by more than 30%
- Logistic: despite our local manufacturing footprint which is not fully affected by global freight issues, the regional logistic costs are also increasing up to 20% (road transport)
Despite continuous efforts to optimize our cost structure, through extensive operational excellence initiatives, such cost inflations have now reached a level we can no longer offset and must pass on to the market, with a general price increase effective October 1st 2021. It is a necessary step to continue supplying high quality products and services for our broad range of product portfolio.
Our global commercial team will be approaching our customers shortly to discuss the details and implementation across our various product lines.