Customer information December 2017
Price adjustments for the LOGSTOR pre-insulated pipe systems

After some bleak years in the shadow of the financial crisis, we have noticed growth in the market for pre-insulated pipe systems for District Heating in 2017. It is solely positive that District Heating is growing and contributing to solving the challenges within climate, environment, supply security and macroeconomics.

Globally, the economy is growing rapidly and this has consequences for the price development. This year it has been synonymous with considerable and persistent price increases in the raw materials used in the pre-insulated pipe systems. With a share of approx. 85% of the finished product, the impact on our product is immense.

Transportation costs are another large item with considerable increases and, moreover, the scarcity of lorries and occasional bottlenecks.

The increases have been much higher than announced for the latest price change in February 2017 – and only to a rather small extent, it has been possible for us to compensate for this rise through lower manufacturing costs and higher sales prices.

In other words, the main part of the price increases have been carried by LOGSTOR and other manufacturers which has put us in an unsustainable situation.

In future, we are therefore compelled to ensure that increases in raw material prices will be incorporated in our sales prices so we will continue to be able to deliver a high standard in technical support, documentation, logistic solutions, multiannual guarantees etc., and at the same time develop the system to meet your requirements and those of the future. The sales prices in the market must form part of the financial basis for covering these costs and investments.

All forecasts predict a continued rise in raw material prices in 2018, so we hereby announce rises in our sales prices in the range 8-13% dependent on product category and project.

Please find explanatory material for the above in the following.

Four product groups constitute approximately 70% of the costs for the LOGSTOR pre-insulated pipe systems. Their price developments in 2017 and the expectations for 2018 are as follows.

• Polyol/isocyanate – the two components which each constitute half of the PUR insulation. The insulation makes up more than 20% of the finished system and for pipes the percentage is even higher.

  • Isocyanate has had an explosive and constant rise throughout 2017 and at present the price is 50-60% higher than it was at the same time last year. There is no prospect of this development stopping; on the contrary further increases are to be expected in 2018.

  • Mostly, polyol has followed the price development of isocyanate; however at a lower pace and with a difference of approximately 15% compared to last year. We expect that the price will continue to rise in 2018 and follow suit with isocyanate.  

• Steel – constitutes the largest part of the system with a share of approximately one third. The price rose unexpectedly at the beginning of 2017 with a minor decline during the late summer. The price is now at a level which is 25-30% above the level in Q3 2016 and additional increases are expected in 2018. Especially for steel there are many factors which are decisive for the level.

• Polyethylene – the plastic granulate for the casing constitutes approximately 20% of the costs of the system. The price has been relatively stable with minor fluctuations ± 5% over the year. We expect the price to be reasonably stable when entering 2018.

In 2018 we will inform you on a continuous basis about the development in raw material prices by means of direct mails, information on our website – www.logstor.com – and notices on our LOGSTOR LinkedIn profile.

The new price list will be valid as per 1^st February 2018.