White Paper on Hot Melt Adhesives
Securing Hot Melt Supply:
Navigating the New Landscape of Adhesives Raw Materials
May 2011
Securing Hot Melt Supply:
Navigating the New Landscape of Adhesives Raw Materials
Securing Hot Melt Supply:
Navigating the New Landscape of Adhesives Raw Materials
A new business reality has emerged from the economic crisis. New trends are now challenging the pre-recession status quo. The adhesives industry is not immune to this shifting landscape. Hot melt adhesives, in particular, are being hard hit. Supply threats, both novel and resurgent, are altering the framework of hot melt adhesives’ raw materials supply. The supply of waxes, rubbers, tackifiers and ethylene vinyl acetate (EVA) is affected. Broad trends—rising oil prices related to upheaval in the Middle East and unexpected supply chain disruption caused by the recent earthquake, tsunami, and nuclear crisis in Japan—are changing the way business is being done around the world. Many industries are struggling to navigate this new reality. Forecasting oil prices is difficult at the best of times. Inject regional rebellions against entrenched leaders and rampant market speculation, and volatility becomes the norm. Meanwhile, the Japanese crisis is forcing businesses to reevaluate a treasured and, until now, highly efficient supply chain practice: Just-in-time may no longer be good enough. Other trends, like the unforeseen boom in shale gas exploration in the United States, offer lucrative growth opportunities to some sectors but are having serious repercussions for others. In particular, the abundance of low-cost shale gas feeds available to North American olefins crackers is changing the mix of products coming out of crackers. By choosing low-cost natural gas feeds instead of higher-cost feeds from crude oil, cracker operators effectively reduce the production of feedstocks used to make hot melt raw materials. Because there are no immediate alternatives to petroleum refining to produce these feedstocks,
Navigating the New Landscape of Adhesives Raw Materials
May 2011
Securing Hot Melt Supply:
Navigating the New Landscape of Adhesives Raw Materials
Securing Hot Melt Supply:
Navigating the New Landscape of Adhesives Raw Materials
A new business reality has emerged from the economic crisis. New trends are now challenging the pre-recession status quo. The adhesives industry is not immune to this shifting landscape. Hot melt adhesives, in particular, are being hard hit. Supply threats, both novel and resurgent, are altering the framework of hot melt adhesives’ raw materials supply. The supply of waxes, rubbers, tackifiers and ethylene vinyl acetate (EVA) is affected. Broad trends—rising oil prices related to upheaval in the Middle East and unexpected supply chain disruption caused by the recent earthquake, tsunami, and nuclear crisis in Japan—are changing the way business is being done around the world. Many industries are struggling to navigate this new reality. Forecasting oil prices is difficult at the best of times. Inject regional rebellions against entrenched leaders and rampant market speculation, and volatility becomes the norm. Meanwhile, the Japanese crisis is forcing businesses to reevaluate a treasured and, until now, highly efficient supply chain practice: Just-in-time may no longer be good enough. Other trends, like the unforeseen boom in shale gas exploration in the United States, offer lucrative growth opportunities to some sectors but are having serious repercussions for others. In particular, the abundance of low-cost shale gas feeds available to North American olefins crackers is changing the mix of products coming out of crackers. By choosing low-cost natural gas feeds instead of higher-cost feeds from crude oil, cracker operators effectively reduce the production of feedstocks used to make hot melt raw materials. Because there are no immediate alternatives to petroleum refining to produce these feedstocks,