Important raw materials development - market info

Dear customer, Dear business partner,

as all of us in the course of the last months carefully will have observed that global markets have re-entered into motion.

As your long-lasting and reliable supplier, we feel it being important to inform you about ongoing changes, and which do have a sustainable impact on Chemogas NV, as well, since our company is not a producer of the gases, which we are serving to you, as our esteemed customer.

We address this letter to you in order to allow you to inform your own markets accordingly.

Following our previous communication by our e-newsletter of September 2016, we are confronted not only with re-increasing raw material conditions, but especially with higher land- and sea freights, as well as with general costs which are affecting our business.

To enable you to better understand the impact, we are forced to deal with, please allow us to update you as follows:

  • Road tax (toll) in Belgium has entered into force already by April 2016 – while Belgium is one of the last European countries to implement these road fares. We kept your purchase prices so far stable, although other land transport costs moved forward month by month
     
  • Sea freight costs do continue to rise – mainly to Far and Middle East, but also other regions are affected – as a result of the bankruptcy of Hanjin Shipping Line, and less competition, as a consequence. We informed you accordingly a few weeks ago.
     
  • Multinational chemicals producers have announced to increase their margins, as a result of general cost increases. No ways and means for our organization, to successfully deny this motion. Chemogas so far absorbed this approach, which has come into effect by early this year.
     
  • In line with new agreements made between employers and unions, salaries and wages in Belgium – after more than two years of moderate increase only, – have started gaining in weight again.
    Also here, we managed to maintain our sales price level flat to you, since lower raw material prices of the prior period allowed us to do so. Win-win.
     
  • Important to notice, that our general Belgian competitiveness has improved - compared to other European countries - as the State of Belgium ruled the negotiation process between employers and unions “with safe hand.”
    Good news for all of us.
     
  • We positively appreciate to may remark to our customers outside the European Union : the weak Euro, already for a while allows those of our customers to pay less for our gases, compared to the US-Dollar, which is contributing to balance our price increase, at least partly, and which we will be offering to you, once we have the full picture on our desk.
     

We realize, that at no point in time, none of us is happy when products and services will have to cost more.
As a globally active filling and blending company, nonetheless, we remain a pricetaker, for most of the products we buy from multinationals, and which we fill for your company – while we have proven to assure not only commercial, but also technical and legal sustainability to you – for many years.

Supported by our purchasing department, we sincerely will do our utmost to keep the price level as favorite as possible for you, as we have done so in the past. You may count on us.

We ask for your kind understanding, that we no longer can absorb the already booked higher price levels, as we at the same time are heading for to assure you the same perfect product and supply quality, as you may expect from us, and as you deserve – no doubt about this.

Depending on the further developments, “step by step”, we will update you about possible changes.
As next step, in the course of the coming days and weeks, we will be reverting to you with our revised offer.

Yours faithfully,

Dirk Battig
CEO
Chemogas Holding NV
Eric Matthijs
Director Sales & Marketing
Chemogas Holding NV