Armacell’s Raw Materials Surcharge

Raw Materials Surcharge (RMS)The prices for raw materials are rising steeply.  This especially applies to Butadien, a main component of elastomeric foams.  From the beginning of the year (2017), its prices increased by more than 100% within just a few weeks.  Furthermore, the prices for blowing agents, antioxidants and flame retardants have also risen by double-digit percentages.By using a Raw Materials Surcharge, Armacell has introduced a flexible and transparent system in 2017. The Raw Materials Surcharge is based on those publicly available indices, which influence our production costs the most.  This system is based on the principles of transparency and price-certainty. The surcharge will be amended depending on the evolution of the index. This enables our partners to consider the surcharge in their calculations and pass to their customers.The following Q&A-sections will provides more detailed information.

What is the essential principle of the Raw Materials surcharge?
Why is it necessary?
Which raw material prices are increasing?
Where is it valid?
Which percentage is charged?
On which basic data is the surcharge founded?
How is it calculated?
Which indices are used for the calculation?
Do these indices cover the entire raw materials costs of the products?
Which product groups are concerned?
Will the invoices still cover elastomeric and non-elastomeric products?
I still have a question. Who do I contact?

What is the essential principle of the Raw Materials surcharge?

The Raw Materials Surcharge is an additional charge shown on our invoices. It is related to all elastomeric foam products. We are committed to applying this Raw Materials Surcharge in the most transparent way possible.

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Why is it necessary?

Many raw materials recently faced a major price increase linked to capacity reductions (mostly in China) and growing worldwide demands. This trend applies in a dramatic way to the elastomeric foams industry.  As an example, on average our purchasing prices went up by 15.4% between December 2016 and February 2017 (even more if we compare March 2017 to December 2016).

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Which raw material prices are increasing?

Overall there is a steep increase in many raw materials prices on the commodity markets since the end of 2016. Amongst other examples; namely, aluminum, bromine, PVC and butadiene faced steep price increase in 2017. These materials account for a significant share of the costs for our own manufactured foams.

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Where is the surcharge valid?

The Raw Materials Surcharge applied across European markets, affecting all deliveries of our elastomeric foams as of 1st May 2017.

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Which percentage is charged?

Currently it is fixed at 7.7%.

This is corresponding to an increase of our purchasing prices of 15.4%. We pass on only 50% of these additional costs.

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On which basic data is the surcharge founded?

This Raw Materials Surcharge will be solely depending on unindisputable and publicly available indices, which can be checked anytime on the online.

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How is it calculated?

Each index refers to a specific group of raw materials. These are weighted by their share of costs within the elastomeric foam products of Armacell.  

The weighted average of these 4 indices (composing the “Armacell Price Index”) grew by 15.4%. We take account of other costs (other materials, fixed costs, margins) and apply only half of this percentage, leading to the above aforementioned 7.7%.

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Which indices are used for the calculation?

Official indices are:

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Do these indices cover the entire raw materials costs of the products?

They do not fully cover the raw materials costs of Armacell. However, in order for complete transparency where there is no undisputable index available, we have excluded these costs from the calculation.  For example: The blowing agents used in most of our elastomeric products are not included in the calculation of the Armacell Price Index.  It’s important to note, however, that due to the sharp increase of products such as blowing agents, Armacell is additionally confronted with costs which are not included in the surcharge.

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Which product groups are concerned?

The Raw Materials Surcharge is calculated for all elastomeric foam products. It especially is not calculated for PE products and our range of accessories.

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Will the invoices still cover elastomeric and non-elastomeric products?

Yes. There is no need to adjust any orders since they still can cover elastomeric and non-elastomeric products.

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