Difficult times for raw materials market
In our company we adopt processes of mixing and processing of raw materials: we are an energy-intensive company and therefore susceptible to changes in the cost of raw materials, both minerals and energy.
Products that suffer from increased raw materials costs
Since last year the mineral raw materials market, which plays a key-role in the production of dry extinguishing powder, had undergone a steep increase, which has also invested part of 2022.
Eighteen months of strong concerns that made post-Covid recovery difficult and negatively impacted the entire production process and end products. In some cases, we have resorted to policies of price increase to contain the unbearable raw materials' costs.
It is important to note that, as of today, the cost of mineral raw materials has partly stabilised, but it is still too risky to expect a decrease in the cost of raw materials, especially in the light of new uncertainties.
It is also risky to predict a downward trend in end product prices in view of the constant price increases of another variable, the energy.
The impact of energy costs
In October 2021 Confindustria had already launched a first alarm on energy increases (as Stefano Allegri, President of the Cremona Industrial Association, said in the interview of 16 September on “Mondo Padano” newspaper). Alarm that has not stopped but that has indeed marked the beginning of a vertiginous costs increase of the energy.
These concerns are supported by reliable data provided by Centro Studi Confindustria (CSC), which identifies the chemical industry as one of the most affected by increases in commodities prices. Also, this situation led to a greater impact of energy costs on total production costs for this industry.
The main reason that clarifies such a sharp increase is the strong dependence of our Country on the use of natural gas (Eurostat data) which, with the events that have affected this last period, is the main key to all the problems.
The consequences of the Russian-Ukrainian conflict and the imbalance between supply and demand of natural gas are now even more putting manufacturing companies at serious risk: as discussed in the “Rapporto Regionale PMI 2022”, carried out by Confindustria and Cerved, the possibility of a post-covid recovery phase is totally swept away by the great probability of a strong slowdown for the years 2022-23 due to the high raw materials costs that companies are called to bear.
We find ourselves in the considerations of President Allegri and in the repercussions that the entire industry will have to suffer in the coming months.
With a view to a corporate vision linked to eco-sustainability and clarity towards its customers and suppliers, we will provide continuous and transparent information on market trends and at the same time invest in the improvement of our production processes in order to optimize resources.