On the other hand, rising prices for petrochemicals and base chemicals further upstream, and an escalation of gas and energy prices in Asia and Europe have led to producer price inflation and force majeure situations mostly from 2Q 2021 onwards. In China, raw materials such as phosphorus and many intermediates multiplied in prices and had availability issues.
A short squeeze in thermal coal resulted in unprecedented electricity rationing and outages during 3Q across the country, only as long until the central planner announced rigid price stabilisation measures that started to show effect lately.
Schmidinger says that as we head into the first half of 2022, the industry is likely to still be affected by higher prices, limited availability and delayed deliveries for many raw materials and therefore a continuation of the dynamic supply chain issues prevalent in 2021.
“Many market participants in procurement and sales, quality and management are hoping for easier travel, collaboration and business conditions later in 2022,” he says. “We expect some challenges to fade in the first half of the year, but restrictions for travelling to China or other countries might prevail for longer.
“From our conversations with procurement and trading departments, we are hearing of significantly higher IT investments in Enterprise Resource Planning, supply chain intelligence and digitalisation more generally.”
With China an extremely important component of the global ingredients and materials market, how are environmental legislation, the energy crunch, rising labour costs etc. impacting on materials supply?
Schmidinger says China is shifting up a gear up regarding the de-carbonization of its economy and in the short-term this will certainly lead to dynamic markets and supply situations where factories or chemical parks could be affected on short notice.
