Market conditions are driving up the cost of many raw materials, and manufacturers continue to face cascading supply chain challenges that have plagued the industry throughout the pandemic: shortages, bottlenecks, logistical concerns and escalating oil prices have been pushing up prices of raw materials used in the production of laminating adhesives for flexible packaging.
Laminating adhesives are based on polyester and polyurethane technology and require a range of raw materials from acids, glycols and solvents to make polyesters and isocyanates like TDI and MDI to make polyurethanes. Unfortunately, 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 price is affected by undercurrents in 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.” Talwar cites increased energy and packaging materials costs and 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.”
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Four trends affecting raw material prices
Talwar highlights four significant trends affecting raw material prices. First, global steel prices have hit new records, and this has led to an increase of over 50% in the cost of mild steel drums, the packing material of choice for the laminating adhesives industry. Second, 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. Third, oil prices have risen sharply, pushing prices up. Last, strong global market demand, significantly China’s V shape economic recovery, has led to shortages of many raw materials.
As a result, there has been an overall impact of over 50% on the cost of production of laminating adhesives. Talwar says, “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. Over the last six months, we have seen 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.”
Brilliant’s alternative solutions
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. By definition, these adhesives do not contain any solvent and hence have no volatile organic compounds (VOCs) that escape into the atmosphere, unchecked in many cases. This makes solvent-free lamination the first step towards sustainability.
Brilliant S641 / S400is Brilliant Polymers’ latest innovation and is a two-component solvent-free adhesive that offers faster PAA decay times than standard products. This state-of-the-art product has several unique properties such as exceptionally fast physical cure and bond development, fast chemical cure and migration compliance for food safety. It can be used for high-performance applications including hot filling and can deliver savings of 50% or more in comparison to high-performance solvent-based adhesives
Typically, solvent-based adhesives are run at 35% solids, which means 65% of the mixed adhesive is solvent which is evaporated into the atmosphere. In addition to air pollution, this process of solvent removal also requires heat input which is a further burden on the environment. Further, with the precise dosing and application technology on today’s modern solvent-free laminators, adhesive deposition can be controlled minutely and maintained over time. This leads to savings and reliability over time.
Brilliant S745 and S715 are single component solvent-free adhesives for flexible packaging and carton applications. They can be used to laminate substrates to paper or board or even for film-to-film lamination and deliver savings when used to replace solvent-based adhesives
The primary solvent used in the laminating adhesives industry is ethyl acetate; the cost of this material has more than doubled in the last two quarters. Today, savings of over 50% can be achieved by moving applications from solvent-based to solvent-free technology.
Brilliant Polymers 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. Brilliant Polymers has several innovative solvent-free adhesives, and a majority of its revenue comes from solvent-free adhesives.
Increase in solvent-free adhesives manufacturing capacity in Q3 2021
Looking ahead, 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 along with our 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 of Technology, Quality and Service!”