With overall demand and sales margins on the increase for many of the suppliers of chemicals and performance additives, the price hikes may seem counterintuitive.
Evonik, Kraton and Lanxess all updated their 2021 forecasts in August with improved outlooks after strong first halves. And acquisitions remain prominent.
"We have emerged out of the crisis stronger than before and have made substantial gains in the first half," said Christian Kullmann, chairman of the board of management for the 33,000-employee Evonik. "This positive dynamic will continue in the second half. Therefore, we are confident about raising our outlook."
But the costs of ocean shipping, rail and last mile, and short haul and long haul trucking have to be born out somewhere, and they are realized across the entire supply chain.
"Across the board, it is not an issue of availability for primary chain raw materials, it is an issue of cost," Shiels said. "Supply chains are working three times as hard to get stuff where it needs to go. The imbalance now is that ships get here, but they do not wait if you are not ready (with return freight) at the port itself. They turn around and head back to Asia.
"They are making more money going back and picking up more than on the back haul."
And with specific raw materials, Kraton and others have seen "extreme pressure on butadiene this year."
"Of late there has been the freeze event, the disruption with some unplanned outages, and butadiene has been very, very tight," Shiels said. "We have seen through August the increase in butadiene prices, though finally some cargo is coming this way from China and Asia.
"But overall it has been pretty brutal with butadiene."
Styrene and isoprene, other key materials for petrochemical segments, have been tight, though not nearly as constrained as butadiene.
Shiels noted that butadiene is showing signs of rebounding, and Kraton has been buoyed somewhat by the chemical segment's polyol fatty acid production.
"Just look at soybean oil ... there has been an uplift in the vegetable oil world, and our ability to provide this has been strong," he said.
He added that rosin ester tackifiers for the adhesive market, such as low-end gum rosin, continue to be constrained, as the tapping of pine and spruce trees in China continues to decrease.
"It may be up a little relative to last year, but it is down from 2018-19," Shiels said.
For Moran of HB Chemicals—a Ravago Holdings Inc. distributor with 33 employees, $150 million in annual sales and warehouses throughout the U.S., Mexico and Canada—the outlook is similar, if a bit more uncertain.
"For us, it is hard to tell what the inflationary pressures are, what is driving a lot of the transportation costs," he said. "But everyone is seeking inventory, and there is a lot of raw material pressure—and that availability is getting tighter."
HB Chemicals distributes for Evonik, and Moran said that when container rates coming from China increase from $4,000 per container to $30,000 per container, it affects everyone.
"If that is not inflation, I don't know what is," he said.
The trends toward high demand, high cost and lower availability may not be going anywhere soon, Moran said, as any opposite currents arising to push back against these challenges are a ways off.
"I don't see anything immediate," he said. "We are going to continue with lower supply than demand. Demand will remain strong. There is possible infrastructure spending coming down the pike, and I suspect this year will continue the way it started.
"Sales for everyone could be better. We would sell more if we could get it—but when that other shoe drops is anybody's guess. I think the sad part is people are getting used to it at this point—and it makes a difference for everybody up and down the supply chain. It is a real challenge."
Shiels said logistical problems will continue well into next year, especially as rail rates begin to mirror the increases in ocean freight costs.
"My sense is that people are not sitting on huge inventories right now," Shiels said.
"There is just really strong demand. We have been chasing that with price increases. Inflation is real."
As for possible capacity increases, Shiels said Kraton "is not particularly capacity-constrained."
"We are looking at some debottlenecking in the next year or two," he said. "We are looking at some things, but we are in a fortunate position right now."