ASSOCIATIONINSIGHT
Portable Sanitation Association International News
BIWEEKLY EDITION APRIL 14, 2021
Page 11
Supply Issues Create Challenges and Opportunities…continued from page 10
Q: Are you passing increased costs along to your customers?
A. All of the companies we polled said the market
fluctuations and other factors affecting production costs
make it impossible for the manufacturers to absorb the cost
escalations they are seeing. They have no choice but to pass
along the increases to customers in the form of higher prices
for product.
"Yes, we are needing to pass a portion of the
increases along to the customer. In a normal year, the
fluctuations of the raw material costs are absorbed
by us and generally balance themselves out over the
course of the year. This year has seen unprecedented
cost increases in the raw materials." —John Babcock,
Satellite Industries
"We at PolyJohn are going to have to pass some of these costs onto our customers. Usually we ride
out the variation in material costs, but we can't cover this huge increase alone this time." —Sam
Cooper, PolyJohn
"This 'perfect storm' …has forced suppliers to begin to pass price increases along …" —Karl
McMichael, Armal
"We are experiencing an absolute explosion in pricing and freight costs. We are doing our best to
hold pricing as close to [what we quoted] as possible [and] we are instituting a surcharge only when
necessary to cover expenses." —Keegan Campbell, Ameri-Can Engineering
Looking Ahead
While the present situation is unprecedented, sources inside and outside the industry project that supply chain
challenges should work themselves out later in 2021. That does not mean, however, that prices will ultimately
return to their prior levels. In a March 16 Intelligence Report for Bloomberg, a market analyst wrote:
"Longer-term, petrochemicals are set to be the
biggest source of oil demand growth due to
economic expansion and increased use of plastic
in consumer goods globally, according to the
International Energy Agency's Oil 2021 report.
Liquefied petroleum gas and naphtha, used as
chemical feedstock in Asia and Europe, will account
for nearly 70% of higher demand through 2026,
compare with 2019 levels."
Oil and Gas 360's analysts agree, stating:
"The coronavirus pandemic has ushered in a new age, and as the world begins to adjust to the new
normal, demand for commodities like oil and natural gas will also begin to change. […] the need for
plastics, fertilizers and other petrochemical products will continue to grow on an aggregate as well
as a per capita basis regardless of implications from the pandemic. […] As the global population
increases, aggregate demand for these petrochemicals will continue to grow.
Continued on page 12
