According to Brilliant Polymers (and other ink, coating, adhesive and solvent manufacturers), market conditions are driving up the cost of many raw materials, and manufacturers continue to face a series of supply chain challenges that have continued throughout the pandemic. Similarly, shortages, logistic bottlenecks, and escalating oil prices have pushed up the prices of raw materials used to produce laminating adhesives for flexible packaging.
Laminating adhesives are based on polyester and polyurethane technology. They require a range of raw materials from acids, glycols, and solvents to make polyesters and isocyanates like TDI and MDI to make polyurethanes. In the last three quarters, the prices of all of these raw materials have risen to unprecedented levels.
While most of these raw materials are from the petrochemical chain, and their prices are affected by volatile global oil prices, the overarching factor remains the demand-supply equation for these materials. Brilliant Polymers managing director Gaurav Talwar says, “The problem isn’t just base material,” citing increased energy and packaging materials costs, as well as sharply rising freight rates because of global logistics constraints. “We are currently in an unprecedented situation where due to several global factors, the prices of all these raw materials are hitting record levels at the same time.”
The new normal – a higher price to customers
Talwar points to four significant trends affecting raw material prices – global steel prices have hit new records, leading to an increase of over 50% in the cost of mild steel drums, the packing material of choice for the laminating adhesives industry. Logistics costs have surged both within India as well as in export markets. The global shortage of shipping containers has led to a sharp rise in transport costs. Oil prices have risen sharply. And lastly, robust global market demand, led by China’s V-shaped economic recovery, has led to shortages of many raw materials.
As a result, Talwar says the overall impact is more than 50% on the cost of production of laminating adhesives. “Despite internal innovations and cost reductions, the magnitude of these rising costs is no longer sustainable. To continue producing world-class products, it is necessary for us to pass along some of these increased costs,” he says. “Over the last six months, we have seen seeing the prices of laminating adhesives rise, but we are nowhere near the levels necessary. We expect these levels to be achieved in the coming quarter as the industry stabilizes to a new normal.”
Innovative solutions – solvent-free laminating adhesives
To mitigate the effect of the upward pressure on prices, Brilliant Polymers is focused on providing alternative solutions to maximize value for customers. The use of solvent-free laminating adhesives has seen tremendous growth in recent years. Since these do not contain any volatile organic compounds (VOCs) that often escape unchecked into the atmosphere, solvent-free lamination is the first step towards sustainability. Typically, solvent-based adhesives are run at 35% solids, which means 65% of the mixed adhesive is solvent which can, if unchecked, evaporate into the atmosphere and add to the air pollution. Solvent removal and recovery also require heat input, a further burden on the environment.
On the other hand, with the precise dosing and application technology on today’s modern solvent-free laminators, adhesive deposition can be controlled minutely and maintained over time. The technology leads to savings and reliability over time.
The primary solvent used by the laminating adhesives industry is ethyl acetate, and the cost of this material has more than doubled in the past two quarters. By moving applications from solvent-based to solvent-free technology, savings of over 50% can be achieved.
Brilliant Polymers says it has been at the forefront of solvent-free adhesive technology and is the market leader in India and several global markets. “We are encouraging our customers to move increasing numbers of their applications to solvent-free technology,” says Talwar. A majority of Brilliant’s revenue comes from solvent-free adhesives. It has several innovative solvent-free adhesives that, along with their hardeners, offer a variety of functionality in each product.
Optimistic increase in solvent-free adhesive manufacturing capacity
Looking ahead, Gaurav Talwar says, “We see increasing demand for laminating adhesives for flexible packaging and are investing to double our manufacturing capacity. We expect our increased capacity to go online by the third quarter of 2021. Our increased capacity and strong relations with suppliers, customers, and partners will ensure market-leading growth in the coming years. As always, all products from Brilliant come with our promise – Technology, Quality, and Service!”