Outlooks for the supply chain at the beginning of 2024 are looking bright – in nearly all areas. Overall, prices for chemicals remain stable, and there are no indications of increased freight costs. However, the cost of paper and filmic products is expected to rise.
Global conditions for the supply chain have been better throughout 2023, meaning that orders and deliveries are now stable across Europe and Asia. Therefore, there are no delays or unavailability of raw materials. However, there is a common consensus that raw material costs will increase, affecting prices in the labelling industry.
Unpredictable costs for pulp and oil
The outlook on pricing for pulp and oil is a bit unclear at the moment. If the demand from China increases, we can expect higher raw material prices for both paper and filmic products at the beginning of 2024. Indications point towards this being the case.
Pulp prices are increasing
We anticipate increasing prices for paper products as a continuation of higher pulp costs at the end of 2023. Therefore, it is wise for brand owners and manufacturers to adjust accordingly.
Several factors are affecting oil prices
The main cost driver for filmic products is the price per barrel of Brent Crude oil. Due to the current geopolitical situation, as well as output cuts by OPEC members, there has been considerable volatility in the price of oil, leading to a higher price per barrel currently.
However, if oil prices stabilize around 80-90 dollars per barrel, we don’t expect to see significant fluctuation in pricing.
Read more: A guide for choosing cost-efficient and sustainable label materials
A stable supply chain overall
Although raw material prices could be in limbo, there are no signs that freight costs are at risk of increasing. Hypothetically, shipment delays could be caused if the port of Durban in South Africa is congested. However, this is not an expected scenario.
Also, there are no financial or legislative changes that might affect the supply chain. The devaluation of the Kenyan shilling is likely to continue into 2024 and will have an adverse impact on landed cost for materials.
Chemicals are anticipated to experience a slight rebound in tandem with increasing demands, specifically adhesives. On the other hand, silicon prices will remain high.
Read more: 5 things you should know before designing your new labels
Skanem Africa monitors the supply chain dynamics to meet your brand's requirements efficiently. If you have concerns about how current and future supply chain conditions might affect your label deliveries, don’t hesitate to reach out to us.
