Raw material price spikes hit boating industry

THOROFARE, N.J. – Citing disruption of production capabilities caused by hurricanes Katrina and Rita, major polyethylene resin and film suppliers have declared Force Majeure to legally void their contractual obligations to their customers, reported Marine Equipment & Supply Co. (MESCO) in a statement yesterday.

As a result, certain polyethylene, olefin and polymer resins have incurred an immediate significant increase in price and have gone on allocation, the distribution firm stated. Major suppliers such as Exxon Mobil, Tyco, Chevron Phillips, Westlake Chemical and Lyondell have all sent notices to their customers to this effect.

“The supply of Shrink Film for the winterization season may be temporarily interrupted and subject to ‘price at shipment of order’ conditions going forward,” said a MESCO spokesman. “We’re working hard to secure the most favorable availability and pricing for our customers to handle this unprecedented event. Securing an adequate supply of product will overshadow the 20-30 percent price increases dictated by the resin suppliers.”

Boat builders also impacted by price increases

In addition, suppliers of unsaturated polyester resin and gel coat materials are raising prices due to the effects of the hurricanes.

Cook Composites and Polymers and AOC are two such examples.

CCP reported a $0.09 per pound increase in the price of unsaturated polyester resin and gel coat materials on Wednesday. The new price will take effect for products shipped on or after Oct. 23.

It is “driven by recent Gulf Coast weather events which have created new fluctuations in availability of raw materials, transportation, and energy, affecting the entire composites industry,” the company stated.

AOC also reported a $0.09-per-pound increase on all products sold in the United States and Canada shipped on or after October 20.

“Hurricanes Katrina and Rita have crippled the raw material pipeline and complicated delivery logistics,” stated the company. “Crude oil and natural gas pricing was at record levels before Hurricanes Katrina and Rita. Global demand continues to consume an increasing portion of global oil production capabilities because of high Asian and North American business expansion, and is expected to experience its normal seasonal increase during the fourth quarter. The majority of AOC’s raw material suppliers have declared force majeure.”

As of Tuesday, AOC said it wasn’t experiencing supply disruption issues.

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