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Announcement of Force Majeure in Europe for Phenolic Resins Has No Immediate Effect on Flint Group Print Media Ink Delivery in Europe

Published December 17, 2010
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Over the last few weeks, a number of ink manufacturers have had inbound supply issues related to phenolic resins. While 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 at the end of 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,” said 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 the 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 four times as high as the long-term historic prices. While 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 Mr. van der Velde.

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