Changed conditions and Price increase
Dear Distributors,
Now, as the world grapples with ways to deescalate the war in Ukraine and the economic consequences thereof, energy markets have come under even more pressure. The availability of raw materials, Paraffin is an Oil-, which is a key factor in our supply chain, is now being put to the test. Products that are particularly affected by this is Xylene, Histolab Clear, Paraffin and products made of plastic. Over the last two years, we all have experienced a European supply deficit, which will now be even more constrained. Additionally the freight costs have also a huge impact. We recognize that the announced measurements will impact your business, but this is a necessary step to overcome the current crisis. It is regrettable, but this is a collective effort we must bear in the short term to secure feedstock availability in the long-term future. We also expect that this situation will stay for a period.
We reserve the right to change prices and delivery terms if we receive changes from our suppliers.
We hope that the situation stabilizes soon, and hope for continued good cooperation together during this difficult time.
- Energy
All manufacturing industries are large consumers of energy. In Europe, natural gas prices have increased by 460% and the price of electricity has tripled in the last 8 months. Oil prices have risen by 70% since December. - Transport
The increased oil prices have a direct impact on the costs of diesel, and thus also increase the costs of transportation. About 30% of the road freight cost is directly linked to the diesel cost. The transport sector also suffers from a shortage of drivers and increased wage demands. These and other costs affect transport at all levels to varying degrees. - Plastic-based products (Polypropylene / Polypropylene)
The supply of PE raw materials has stabilized and is now at an acceptable level. However, after last year’s relatively stable fourth quarter, costs are now rising. PE raw materials are sensitive to oil prices and especially naphtha gas prices. These costs have increased by 15 to 20% since the beginning of the year. The market is very unstable, most forecasts point to larger increases in the upcoming months.