Letter From A US Supplier Of Industrial Chemicals: “I Have Never Seen Anything Like The Current Supply Problems”

Letter From A US Supplier Of Industrial Chemicals: “I Have Never Seen Anything Like The Current Supply Problems”

In his latest weekly letter to client, One River Asset Management CIO, Eric Peters, attached a letter that a small US supplier of industrial chemicals sent to all its customers earlier this month, in which they apologize for their 70% price hikes. It forecasts additional price hikes.

Dear Customer:

I hope that you and your business are doing well. New price sheets are enclosed. I have been working at xxxxxxxxxx Industries for over 50 years. I have never seen anything like the current supply problems.

Not with COVID-19 in 2020, not during Nixon’s presidency in 1968 and 1969. Raw materials are in short supply, because good workers cannot be found, because of production line breakdowns, because of COVID-19 variant outbreaks, because the automotive industry let themselves run out of everything, because freight rates have increased and now, because of a Hitler doppelganger trying to start a World War.

The cost of metal containers has more than doubled in some cases. We can’t get plastic buckets. The prices of all plastic containers have gone up sharply. The main ingredient in metal adhesive has nearly doubled in cost, and freight on the next container of it is expected to double.

Prices are up from 5% to 70% with even more increases expected.

We hoped to hold our pricing until costs came back down. That was a mistake.

Now we are faced with having to catch-up because prices are out of control and are apparently not coming back down.

We have not offered the usual 30-day notice of the increases because we have already been paying these higher costs. Old prices were below cost in some cases.

What we are offering is 10% off the new prices until May 25. This is for one order only, in quantities similar to your usual orders.

Unfortunately, if you order more than an average amount, we will have to cut back your order so that everyone can get some product. With supply running considerably behind current demand we cannot let a few customers get the lion’s share. I hope you understand.

Thank you for your continued business.

Best regards, xxxxxxxxx.

Coming to your industry and its suppliers soon…

Tyler Durden
Tue, 05/24/2022 – 18:25

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