Whats new in Label Stock Material deliveries across the United States.

Posted by Roy Harris on

High demand for Pressure Sensitive label stock products continues at record levels causing very high capacity utilization across the industry.

The heavy demand has strained supply chains still trying to recover from the outages caused by the severe weather that impacted the southern US in February. While monomer supply (key building blocks for films, adhesives and process chemicals) remains tight, availability of key ancillary chemicals continues to disrupt production.

Many suppliers have instituted sales controls on adhesives, films, papers and important upstream chemicals. These supply chain disruptions are causing much longer than normal lead-times for most products. It’s expected that we will not see more normal supply until early 2022.

ADHESIVES

Acrylic adhesive suppliers are continuing sales controls or allocations to manage high demand in an environment where they are unable to get adequate supply of key monomers and formulation additives. While acrylic emulsion adhesives have been significantly impacted by a shortage of acrylic acid monomer, critical minor ingredients are driving much of the supply disruptions for these adhesives. The tight supply has led to cost increases over 20% in 2021.

Tackifying agents, anti-oxidants and the Styrene polymer building blocks for hot melt adhesives are in tight supply. Pricing of key components are up over 20% for the year and expected to climb further.

FILMS

Many polypropylene films are sourced overseas. In addition to double digit cost inflation for the film, these offshore produced materials are getting hit with significant freight cost inflation in light of ocean container shortages. While films that come from offshore sources are experiencing longer than normal production lead times, ocean freight delays are a bigger factor in the disruption of supply for imported films. PET, vinyl and Styrene films have similar supply/demand imbalances and price inflation on these films is ramping up.

PAPER

Pulp and paper and coating chemicals are in tight supply. Pulp prices have risen to a 20 year high with price hikes being pushed through to the entire paper supply chain. A greater than 30% surcharge for our liner materials can be attributed to the pulp price escalation. In addition to strong demand, the paper industry’s continuing consolidation, product line rationalization and mill closures are all factors in the supply of certain grades of paper. The shortages, while driving costs up, are a having a significant impact on extending lead times for Pressure Sensitive label stock production.

PACKAGING

Corrugated, box board and roll cores are currently experiencing high demand with continuing inflation and shortages. Lumber for pallets has been difficult to acquire over the last several months due to demand driven by a strong housing market and home repairs. Lumber prices have begun to decline in recent weeks, however the cost of pallets has tripled since late 2020 as a result of the shortages and won’t decline quickly in the current environment.

FREIGHT

Freight constraints are causing disruptions in shipments both internationally and domestically. Shipping containers for ocean freight are currently very difficult to acquire, as well as very expensive. Container loads that may have cost $2,000 in 2020 can approach $10,000/load today in some destinations. US ports have tremendous backlogs due to a shortage of manpower to unload containers and to transport to facilities. This is causing much longer lead times, as well as rising costs in both domestic and international freight.

A shortage of rail cars, trucks and drivers for domestic transportation has led to extended wait times for shipments as well as skyrocketing costs. There has not been any relief in this area since our last update late last year.


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