Explod­ing energy prices and raw mater­i­als sup­ply dif­fi­culties require trans­par­ency across the value chain

In deep empathy with the people in Ukraine and for the sake of the European peace order, CAEF stands behind the sanc­tions against Rus­sia. How­ever, the con­sequences for the European eco­nomy can only be borne, if there is an open dia­logue between sup­pli­ers and customers.

Source: ACO Guss GmbH

The cur­rent devel­op­ment on the energy and raw mater­i­als mar­kets is push­ing the European foundries to the edge of the pos­sible and even bey­ond. While gas is mainly used in melt­ing oper­a­tions for non-fer­rous metals, it is not sub­sti­tut­able by other fuels in pre- and post-treat­ment oper­a­tions in iron foundries either. The energy-intens­ive foundry industry is suf­fer­ing in par­tic­u­lar from the enorm­ous explo­sion in energy prices.

Dir­ect trade between Europe and Rus­sia is more and more com­ing to a stop. European ports have already been par­tially closed to Rus­sian ves­sels. Mean­while, Ukrain­ian ports have already been mined by Rus­sian aggressors, mak­ing exports impossible. Within Europe, in addi­tion, road trans­port of goods has already been notice­ably impaired. Tens of thou­sands of Ukrain­i­ans have exchanged their trucks for guns and returned to their home coun­try. The inter­na­tional sup­ply chains, which are still strug­gling with the con­sequences of the pan­demic on top of everything else, are thus stretched to break­ing point. Due to inter­rup­tion or adapt­a­tion, trans­port routes have been can­celled or sig­ni­fic­antly dis­rup­ted. In the search for inter­na­tional altern­at­ives, every addi­tional freight kilo­metre has doubled in price, also in view of the rap­idly rising pet­rol prices.

Foundries are there­fore also con­fron­ted with con­sid­er­able price jumps on the pro­cure­ment side. For many metal­lic input mater­i­als never seen max­imum prices cur­rently apply. The import­ant iron and alu­minium sup­ply sources from Rus­sia and Ukraine are cur­rently blocked, push­ing the metal prices at sky level. The sup­ply com­mit­ment increas­ingly con­sists of only a few hours or even minutes. Many exist­ing frame­work agree­ments for the sup­ply of mater­i­als are sus­pen­ded. Altern­at­ive sup­plier coun­tries can only be iden­ti­fied to a lim­ited extent on the world market.

Every pur­chas­ing decision by foundries today is char­ac­ter­ised by a much higher degree of spec­u­la­tion than before the price explo­sions. Over­all, the sup­ply of raw mater­i­als is facing sig­ni­fic­ant dif­fi­culties. That is why it is right for cus­tomer-sup­plier rela­tions to take on a new level.

In these extraordin­ary times, cus­tom­ers of cast products should com­mu­nic­ate their needs trans­par­ently and recog­nise their sup­pli­ers more than ever as an ele­ment­ary corner­stone of the value chain.

Down­load the press release here.

CAEF Con­tact:

Fynn-Willem Lohe
phone: +49 211 68 71 — 277
fynn.lohe@caef.eu