Update from IKO Insulations: Scarcity and sharp price increases for PIR insulation
For a while now, IKO has been confronted with supply problems of MDI (“isocyanate”), the main raw material for the production of PIR insulation boards. Not just IKO, but all producers of PIR insulation material are severely impacted in this regard. The situation has worsened significantly in recent days. We estimate that there is currently a shortfall of at least 30% MDI to meet demand. We do not expect this to change much in the coming months. It is an unprecedented situation!
The major petrochemical companies, our MDI suppliers, have been blighted by a succession of unplanned shutdowns (incidents) at their production facilities, and in combination with long-planned maintenance work, the increase in demand for MDI (due to the success of PIR high yield insulation, among other things), and the delay in the construction of several large MDI plants, this has resulted in a vast, acute shortage of MDI. IKO is therefore presented by its suppliers with a fait accompli: a large shortage of MDI and MDI raw material prices that increase exponentially, almost on a daily basis.
The combination of all these factors has created a very exceptional situation, which was completely unforeseeable and which we could never have reasonably expected or anticipated in advance. The impact of the price increases and the scarcity of raw materials have a particularly heavy impact on our production costs and production volumes. Due to this situation of force majeure, we are unfortunately unable to meet the demand for IKO enertherm, and we are obliged to pass on the exorbitant raw material price increases in our sales prices in the very short term.
We are well aware that this puts the entire construction process under significant pressure.
IKO is trying to keep the supply of raw materials as smooth as possible by all realistic means. Supply takes priority over pricing. Our aim is to be able to supply our customers as quickly as possible. However, the situation that has arisen has an impact on delivery times, now that the scarcity of raw materials is, of course, also affecting our production capacity, which is completely beyond our control.
Nonetheless, availability remains our main focus. This inevitably means that the current force majeure event with which we are faced, with price rises and scarcity of raw materials, means that we ourselves have to apply continuous price rises to our products. In this regard, we also refer to our general terms and conditions of sale and delivery, based on which price adjustments are possible and the delivery period is always given indicatively.
IKO will in any case keep the familiar quality of IKO enertherm at a high level, and will not try to lower prices by scrimping on quality.
We hope that this situation will soon stabilise but, as far as we can currently estimate, further price rises will be inevitable in the coming months.
We therefore kindly ask you to take these circumstances into account when planning your projects and orders.
IKO’s management and staff sincerely apologise for this situation, which has arisen beyond our control, and we are making realistically feasible efforts to guide our partners through this extremely challenging period.
We advise our direct partners to discuss the situation with your customers as a matter of urgency, to highlight the force majeure nature, to order on time (delivery times are currently up to 8 weeks). Be especially cautious in quoting prices for future projects.
We will keep you informed of developments.