Dear customers & partners,
This week’s communication will be slightly different from what you are used to, as there are no significant changes in terms of ocean freight this week. The huge level of disruption to global ocean freight persists with continued shipping delays and extremely high costs. Vessel capacity out of the Philippines remains restricted and shipping from China is interrupted by Chinese New Year in February (Feb. 12). North America, Australia and the UK continue to be the destinations in most difficulty.
Please check for current best advice, as it relates to to the potential impact on any open orders with critical timing, and anticipate delays and longer transit times when placing future orders. Our global supply chain team will work in a close team effort with the sales regions to make sure that all available vessel space is prioritized to the most time-critical orders. Jacobi Group policy is to continue shipping to the greatest extent possible, using all available vessel space, despite these high costs, in order to secure supply.
This week, we would like to highlight the raw material cost developments we see in the market. Not just for Coconut shell-based Activated Carbon (AC), but also for Coal and Wood-based AC, and the developments we see in the key raw materials used to produce Ion Exchange Resins.
As communicated earlier, charcoal costs continue to increase. We see increasing prices in all regions, except for Vietnam. Our average cost is back at the same level as it was in the summer of 2018 (and we expect it go up to the level of April-May 2018). During the period from January 2020 till January 2021, our charcoal costs went up by 40%. That is why we anticipate a sales price increase being implemented on April 1,2021.
As you know, we sell a wide range of coal and wood-based AC, and ion exchange resins next to coconut shell-based AC. For those products, we largely depend on the economic development in China relative to the rest of the world. A growing concern is the exchange rate development between the USD and the CNY since early November. The USD is continuously getting weaker which currently impacts the costs of all products sourced from China.
Despite the fact that material cost prices for coal and wood-based AC are relatively stable in RMB/mt, we do see increased costs in USD/mt.
Important raw materials for Ion Exchange Resins are styrene, divinyl benzene (DVB) and acrylonitrile (ACN), for which we carefully monitor price developments. Prices (in RMB/mt) for these raw materials went up significantly in November 2020. Fortunately, they bounced back to some extent (in RMB/mt). However, due the strengthening of the Chinese currency against the USD, prices in USD are currently increasing again. For your reference, please see below the graphs for styrene and ACN price development during the past year:
Preparations for Chinese new year have started, and transportations within China will become increasingly difficult within the next week. Our Jacobi China team in Tianjin have all current shipments under control though. New orders will be shipped in March at the earliest.
As we continue to deal with the consequences of the pandemic, our focus remains to become the most sustainable supplier in the Industry. We prioritize the safety of our people. That is why we have decided to extend our travel policy (no travel unless absolutely necessary) during Q1 of 2021.
Thanks you for your support and cooperation.
Stay safe, stay strong.
Remko Goudappel CEO