Interview with Dr. Jochen Fabritius on the current raw material situation

Dr. Fabritius, back in April, you highlighted that the shortage of raw materials and the resulting high raw material prices would prevail in the medium term. How do you assess the situation today at the end of 2021?
JF: The situation has become even more acute over recent months. The chemical and construction chemicals industries are facing supply bottlenecks for numerous raw materials and, as a result, sharply rising procurement costs – at a rate we have never seen before. Melamine resin prices, for example, have doubled since last year, and acrylic acid prices have even tripled. The price of crude oil is two times it was 12 months ago, and the price of raw gasoline, the most important raw material for the chemical industry as a whole, has risen by more than 60% per ton compared to last year. What’s more, in addition to drastic increases in the price of raw materials, we are also exposed to significantly rising costs of energy (+400%), packaging and pallets (+300%), transport and personnel. (Source: Deutsche Bauchemie (German Construction Chemicals Association)).

What does this mean for us?
JF: With the situation now worsening and a continuation of these developments expected, the construction chemicals industry must prepare itself for significant price increases across all raw material groups. Our strengths are innovative solutions and products, a high level of technical service, and a high degree of delivery reliability. To ensure our strengths are maintained in the usual quality and to the usual extent, we have got to pass on the costs we incur to our customers and partners. Up to now, we’ve generally done this as part of our regular annual review based on the long-term cost trends for our input factors. Given the challenges and volatility of the raw material and freight markets, we will have to adjust prices more frequently, i.e., on a quarterly or even monthly basis. This is how we’re adapting to the changes we’ve seen on the part of our suppliers and customers in the industry.

What’s your outlook for the coming years?
JF: We don’t expect the situation on the global raw material market to ease in the foreseeable future. The rising raw material cost index actually suggests the situation will deteriorate further in 2022 and high raw material prices are the new normal. So, additional price increases are absolutely essential to carry on being the reliable partner our customers know and appreciate us as. We are continuing to support our customers in the best possible way. We have one of the broadest portfolios in the industry, and our salespeople are closely coordinating with our customers to ensure they know all our alternative products and solutions so they can take the best possible decisions.