Production capacity improves but input costs and market trends remain a challenge
▪ In-theater reports from 511 Foodservice Sourcing and Manufacturing teams 511 Foodservice across Asia: ▪ Production Capacity : Production volumes are recovering as many Asian factories remained open during Chinese New Year, clearing backlogs and catching up with demand ▪ Environmental Bans : China’s ban on single-use plastics is diminishing availability of bagasse and other molded-fiber materials. Raw cost of Chinese bagasse has increased 20% since January. ▪ Currency : Chinese government moves lowered currency rates nearly 10% in the second half of 2020, weakening purchasing power of North American importers. ( South China Morning Post )
Outlook for Key Supply Categories
Declining Stable Increasing
Manufacturing Cost Drivers
Cost spikes in pulp and paper board are being driven by plant outages (planned and unplanned), supply chain disruptions, and demand increases due to pandemic consumption, and finally, behavioral changes (world-wide increased consumption of tissue-grade products for personal hygiene). A counter-intuitive example of supply / demand imbalance, finished goods prices for some lines of gloves such as vinyl, have stabilized due to strong production capacity, despite steadily increasing raw material and supply chain costs. Nitrile demand and high costs will continue through at least Q3 when manufacturing capacity is expected to begin restoring balance with market demand. Manufacturing capacity for Vinyl–Nitrile blends has increased with many vinyl factories producing these formats as nitrile substitute. It is reasonable to expect that this demand will fade if or when Nitrile availability returns and price decreases.
Cutlery & Takeout Packaging
Preference & demand for individual wrapped cutlery versions continues to rise. Supply remains stable.
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