The New Reality of Raw Materials

January 25, 2012

Each quarter, the H.B. Fuller sourcing team publishes a Global Raw Material Report as a courtesy to our adhesive customers. Drawing on the knowledge of our global team, we provide our collective insights regarding recent developments and trends that influence raw material costs for manufacturing adhesives.

In the most recent issue of the Raw Material Report, the H. B. Fuller sourcing team shares how a new reality has emerged for raw material pricing. In the last two years, petrochemical and natural-sourced raw materials used in the adhesive industry have experienced unparalleled inflation in both magnitude and breadth. There is an ongoing disconnect between feedstock pricing and raw material price movements.

In the recent past, much of the disconnect has been explained by the shift to light cracking which limits the supplies of feedstock by-products used in the manufacture of adhesives. However, the old paradigm that allowed adhesive manufacturers and their customers to gauge raw material pricing based on crude oil trends no longer holds true.

The report examines the statistical correlation between raw material cost and feedstock costs over the last five years using a modified R2 analysis (mRSQ). This analysis shows that supply/demand – not crude oil pricing – will remain a key cost driver for several feedstocks and adhesive raw materials. The current easing of feedstock costs will be slow to move down the adhesive raw material supply chains due in part to continued availability and demand pressure, despite the recent easing in demand.

The report also provides a global fundamentals review and supply issues snapshot for Hot Melt, Reactive and Water-based adhesive raw materials.

H.B. Fuller’s recent issue of the Global Raw Material Report is available for download in English (PDF). We translate our Global Raw Material Report into multiple languages around the world.  These will be posted to our Raw Material Report Pages for EIMEA, Latin America andAsia Pacific.

Lisa Rosenberg
Global Brand Manager

Tags: global raw material report, water-based adhesives, feedstock pricing, hot melt adhesives, crude oil, reactive adhesive, raw material costs,