FEIBP General Assembly 2021 – Raw Material Market Reports

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Steel Wire – Holger Kruse, Gustav Wolf GmbH
Vegetable Fibres – Urte Rietdorf, Friedrich Platt
Bristle – Reinhold Hoerz, DKSH
Fine Hair – Mark Samuel, Mark Samuel Trading
Thermoplastic Polymers – Andrew McIlroy, Perlon

Steel Wire – Holger Kruse, Gustav Wolf GmbH

The European Union is the world’s second largest producer of steel after China. China’s market share is increasing every year and its export balance dropped significantly from 2019 to 2020 as a lot of their steel is now being used within domestic markets which, indeed, is the same for nearly every kind of material.

Steel prices have more than doubled in the period from 2015 to 2021 and will likely increase in future with rising transportation costs and when factoring in the increasing costs of CO₂ emissions which were last year at 25€ per tonne, currently stand at 53€ per tonne and look set to increase to 105€ per tonne in 10 years.

Vegetable Fibres – Urte Rietdorf, Friedrich Platt

Urte reiterated what previous speakers have stated in saying that the vegetable fibres industry has been impacted in the same way as in other sectors due to the ongoing pandemic, the shipping cost price explosion and also by climate issues.

Assessing each type of fibre individually showed small differences in the availability, quality and price.

Tampico availability has suffered due to recent droughts leading to unhealthy and insufficient plant availability; a problem that Urte expects to be around for some years to come. Because of this, prices have risen and there have been customer order backlogs. However, the material that is available is of good quality.

Bahia Piassava from Brazil is currently very popular and both availability and quality is very good. The problem with this particular product has been the instability of the Brazilian Real whose fluctuating exchange rate has led sometimes to daily price drops of up to 3%.

For Sherbro from Sierra Leone, Urte said that her company currently has good supply but that they don’t have additional information regarding the bigger picture.

The main factors affecting the supply of Palmyra from Asia have been the disruptions in supply due to COVID, the shortage of trained manpower and climate change. Despite this, availability and quality are quite good but prices are rising.

Cocos has been readily available, of good quality and prices have been stable except where transport costs are concerned.

Arenga from Indonesia has suffered from climate changes in recent years but 2021 has seen good weather conditions for plants so the outlook for the next period is optimistic. Prices are rising here too, as manpower becomes increasingly hard to find and wages rise.

In summary, material is available providing transportation containers are also accessible. At the moment the overall situation for vegetable fibres is quite stable and Urte hopes that this remains the case.

Bristle – Reinhold Hoerz, DKSH

Reinhold explained that whilst pig breeding in China becomes increasingly large to meet demand for meat, the pigs that are being raised are not the right sort for bristle and traders have to rely on traditional sources of supply such as the small mountain farmers with old fashioned breeding methods.

Natural bristle is still available, but the bigger picture shows demand to be shrinking as the utilisation of mixtures and pure synthetic High Imitation Bristle filaments increases.

Chinese power supply shortages, possibly due to China’s research into the best way to reduce CO₂ emissions, has led to the intermittent shut down of many suppliers, thus disrupting supply. Because of these interruptions alongside late shipments due to congested ports and the loss of ocean vessel capacity, the industry has seen a clear revival of warehousing which was previously shunned for reasons of cost.

Regarding the outlook for the short-term future, some bristle factories are expecting better quality raw hair in 2022 as farmers try to delay the slaughter of pigs in anticipation of higher pork prices.

Fine Hair – Mark Samuel, Mark Samuel Trading

The past year has again been dramatic in the world of fine hair with sable prices hitting unprecedented levels. For example, in 2017 Chinese dressed sable cost on average $2,500. In 2020 that rose to $4,500 with a further huge hike to the $10,000 we see today, said Mark. Similarly, European dressed sable prices have trebled from $5,000 to $15,000 with the longer lengths selling for roughly $18,000! Mark surmised that “with every boom a bust will presumably follow, but it’s hard to know when and I am not at all sure we’ll see much of a decline”.

Demand has slowed as prices have risen and brush makers can find substitute synthetic materials for most artist and cosmetic brushes. For certain applications however, sable is irreplaceable, and demand continues to outstrip supply. Supply is limited due to the lack of demand for furs and the various restrictions in the trading of animal-by-products in China. Prices too have been kept high because of the demand in China for calligraphy brushes.

Mark said that in addition other fine hair prices are also rising, notably squirrel hair that has seen increases of 20-30% this year alone. Prices for other hairs such as pony, goat and ox are all rising, even though demand has dropped drastically because dressing factories are closing, and labour is hard to find.

Thermoplastic Polymers – Andrew McIlroy, Perlon

According to Andrew, absolutely nobody could have predicted the current situation 12 months ago. Last year had been a relatively quiet year for oil and plastics with prices low, little demand no problems with availability. At the time, he said he was expecting things post-COVID to return to roughly 2019 pre-pandemic levels. In actuality, prices have witnessed increases of between 25% to 50% compared to the norm.

With such low demand in 2020, the big chemical companies didn’t produce as much which took an awful lot of polymer capacity out of the market from polypropylene all the way through to the higher-end materials. As a result of the jump in demand which occurred from around November 2020 onwards, nobody was prepared and there have since been significant consequences.

There have been, due to the ongoing freight situation, shortages of base raw materials (the salts and chemicals which go into the various plastics) which are mostly produced in China.

From around March to May 2021, planning became impossible: customers were able to place orders with their suppliers and, whilst accepted, no prices or delivery times were confirmed. Prices rose sharply, affecting not just filament production but also for any other application that uses plastics, particularly injection moulding.

The period from July to August saw a slight drop in demand as is usual over the summer and availability improved. Even then, prices didn’t reduce.

Since September, the industry has once again been confronted with major supply issues and further prices increases.

Andrew said that whilst oil is not necessarily a main driver of polymer pricing, for certain polymers it is. Oil prices have increased by 30% in the last 3 months and currently stands at around $85 per barrel as opposed to the previous norm of $60. Andrew suggested that oil could go well over $100 per barrel and, as long as these rises continue, this will not have a positive effect on polymer prices.

Natural gas prices have doubled since May 2021, affecting manufacturing and the domestic consumer alike. Some suppliers quote this increase as the reason for needing to raise their prices.

Overall, all materials have seen massive astronomical price increases and availability has been poor. Individual details for each product can be seen on the slides that will be available shortly.

The outlook, said Andrew, is not entirely clear, with various factors affecting what happens with polymer pricing as outlined below: