Important Update on the Shortage of Key Adhesive Intermediates

AICC through its membership in the AF&PA has received this Adhesive and Sealant Council (ASC) information to share with members.

Important Update on the Shortage of Key Adhesive Intermediates

The Adhesive and Sealant Council (ASC) is providing the following updates to member companies regarding the continuing crisis involving the critical shortage of many key intermediates essential to U.S. adhesive manufacturing.

The disruption was caused by severe weather and subsequent infrastructure failures in mid-February, resulting in petrochemical facility shutdowns and force majeures in the Texas Gulf Coast.

Below are important updates:

• The disruption to raw materials is not limited to one supplier or one product line. Production at major chemical intermediate facilities in the Texas Gulf Coast have been negatively impacted as have intermediates produced by these facilities. Consequently, the downstream impact is not limited to a few adhesive manufacturers but, in fact, most have experienced severe supply shortages. There is supply tightness across the board.
• In North America, reports indicate that all production lines of vinyl acetate monomers (VAM) were down until March 10th. Updated reports indicate that one and maybe two VAM producers resumed production last week. Restarts are moving slowly, however.
• Shipments of VAM could resume be end of this week or early the week of 3/22. Given the surge in demand, transportation bottlenecks will likely lead to longer lead times.
• Other feedstocks including ethylene, acrylic and acrylate production are also down. Additives used to formulate adhesives and sealants are also extremely tight and many are on allocation.
• Restarting these production facilities is a long, careful and methodical process. For example, the inspection of pipes, which were reported to have been heavily damaged by the deep freeze, takes time and thorough testing.
• In some cases, downstream facilities that serve producers of chemical intermediates have also been negatively impacted by the Texas deep freeze, compounding the crisis.

Significant logistical concerns exist. There is expected to be a shortage of trucks and railcars to meet the surge in high demand, which will likely result in bottlenecking. Finding sufficient freight will be a major challenge.

To assist ASC member companies in need of fulfilling their supply commitments, ASC has created a Crisis Recovery Program to facilitate member-to-member assistance. We strongly encourage ASC members in a position to assist those in need of key intermediates to visit www.ascouncil.org/page/crisis-recovery-program and volunteer while strictly abiding by antitrust and trade regulation laws. If you are an ASC member in need, please visit this website to find out which ASC members may be able to provide assistance.

ASC will continue to update member companies on this developing situation.