Update on the Raw Materials Market – July 2022

Summer 2022 continues to see pricing and supply issues within the Composites sector and further afield into most other markets. Stretched supply chains, high market demand and increased production costs continue to keep material prices at rates never previously seen across Europe and Globally. Indications are that availability and pricing issues may well continue, and forecasting is extremely difficult.

Key factors in keeping material price high:

  • High demand for manufacturing, combined with reduced supply continues.
  • Oil price is heavily affected by the crisis in Ukraine and remains high though is stabilising – Brent Crude Oil latest price chart
  • July Styrene contract price was at an all-time high level. There is growing concern amongst raw material manufacturers around the profitability of the Benzene chain of chemicals, from which Styrene is produced – this could lead to increased pressure on pricing into Q3/4, particularly if demand remains high against a backdrop of limited supply.
  • The Euro has fallen in value against the dollar which in turn could negatively impact the sterling value – transactions from Europe are done in Euro.
  • Concerns over the potential effect of a permanent closure of the Nord Stream gas pipeline from Russia to Germany.
  • Gazprom have declared force majeure on shipments of natural gas which will potentially affect all tiers of the supply chain
  • Shortages of Titanium Dioxide continue with loss of a key production site in Ukraine.
  • Re-opening of Chinese manufacturing following Covid lockdowns will affect supply of glass and carbon fibre into Europe.
  • Energy prices continue to rise, and are anticipated to increase further post Summer, which will further drive up the pricing of materials, production and logistics
  • There are still global shipping issues around delays and costs remain high.
  • Shortage of logistics staff and HGV drivers, especially for the transport of hazardous goods
  • Other industries are competing for the same limited supply of material.

The impact is across all resin systems and speciality chemicals, reinforcements, including glass and carbon fibre, organic peroxides, and many others.

In addition to the above, the UK inflation rate is now over 9% with forecasts above 12%. OECD continues to forecast the likelihood of a global recession; however, most banks are predicting that this will be short-lived and shallow due to underlying levels of demand.

The message to Composites UK members is:

  • Things are likely to remain difficult for some time
  • Plan ahead
  • Make sure your supply chain is robust to ensure you have what you need to maintain production

For more information on raw material prices for the composites sector: