Consumables
GUM ROSIN SHORTAGES HIT HEXION SPECIALITY CHEMICALS – ANNOUNCEMENT FORCE MAJEURE IN EUROPE FOR PHENOLIC RESINS – NO IMMEDIATE EFFECT ON FLINT GROUP PRINT MEDIA INK DELIVERY IN EUROPE.
Tuesday 21. December 2010 - Over the last few weeks a number of ink manufacturers have had inbound supply issues related to Phenolic Resins. Whilst the rest of the market has been impacted by the supply shortages from Hexion, Flint Group, through its own sourcing capability in China as well as working effectively with its partners, has successfully resolved the immediate supply difficulties.
What happened?
Hexion Speciality Chemicals, now part of Momentive, has announced end last week a force majeure on many of their Chinese Gum Rosin based Phenolic Resins. This step, from one the largest Phenolic resin suppliers globally, marks a new area in the ongoing challenges in sourcing Chinese Gum Rosin.
“The speed and the magnitude of the changes have caused all players in the market very serious challenges. As Flint Group has a sourcing team on the ground in China, we have been able to secure our requirements” says Jan Paul van der Velde, Senior Vice President Procurement of Flint Group. “However it is clear that if a company like Hexion, with their history in Phenolics and their large size are having these type of problems, the market must be really difficult.
Even with our sourcing team in China and therefore being very close to the market, it has been hard to secure our Gum Rosin requirements. The challenges with Gum Rosin are not likely to reduce quickly, so Flint Group is working with all of its internal and external partners to secure the requirements of our customers. We are sure that we will continue to find solutions, but they will not come ‘free of charge’ and will require flexibility from all involved.”
What is market situation now?
Stock-levels for shipment are very low and trading volumes are also very low. Prices are volatile and it is hard to keep trade going. Prices have rocketed up recently reached over $ 3250 / MT Fob Huangpo harbor, which is more than 4 times as high as the long-term historic prices. Whilst recently prices dropped a little, there is no indication that the prices will reduce to historic levels.
“Doing a forecast in this extra ordinary market is like gambling, but it is clear that the fundamentals do not support a quick price reduction. The next crop is due only around June / July and there is no indication that any of the traders need to start selling available volumes” says Jan Paul.
Original Hexion Force majeure announcement:
” We are currently experiencing a situation that qualifies as “force majeur” (as defined in our terms of conditions of sale) around the supply of Chinese Gum Rosin (CGR) which is having its effect on the orders you have given us. Since last summer we have been confronted time and time again with delays of shipments of CGR (against confirmed delivery dates) and although we have ordered extra amounts of CGR to compensate for that, our suppliers have continued to let us down.
We have agreed delivery times of CGR which have been unilaterally postponed from November to December to January and whereas we have been able to work around that with alternative sources of rosin we have come to an end of the alternatives. As a result the following orders will be postponed with at least two weeks and the situation after that is not completely sure due to the fact that our production normally is fully booked. As a result lost time in production can not easily be compensated for. Although cause by circumstances beyond our control, we sincerely regret this situation and will continue to do our utmost to limit the consequences thereof. We will keep you informed of relevant developments.”