H.B. Fuller, a major adhesives company, has signaled that its supply chain is facing a severe, year-long reliability crisis, not just a temporary price hike.
The situation began with geopolitical conflict in the Middle East, which led to attacks near the Strait of Hormuz and disruptions in Qatar. This is the root of a complex causal chain that is now impacting global manufacturing. Let's break down how this unfolded.
First, the conflict directly halted Liquefied Natural Gas (LNG) production in Qatar, a major global supplier. On March 4, 2026, state-owned QatarEnergy declared 'force majeure', a legal notice that unforeseen circumstances prevent it from fulfilling its contracts. This sent immediate shockwaves through energy markets.
Second, the LNG disruption had a critical knock-on effect on petrochemical feedstocks. These are the fundamental raw materials, derived from oil and natural gas, used to make chemicals for countless products, including H.B. Fuller's adhesives. Key ingredients like isocyanates and polyurethanes became scarce. Consequently, major chemical producers like Wanhua Chemical and LG Chem also declared force majeure, confirming a widespread network-level failure. For H.B. Fuller, this materialized as over 40 such notices from its own suppliers.
Third, the conflict crippled maritime logistics. With the Red Sea and Strait of Hormuz becoming high-risk zones, shipping costs and insurance premiums soared. Vessels were forced to take much longer routes, such as around Africa's Cape of Good Hope, leading to significant delays and schedule unreliability. This created a two-front problem: not only were raw materials hard to find, but getting them delivered on time became a challenge in itself.
For H.B. Fuller, this combination of material shortages and logistical chaos has fundamentally changed its business outlook. The company warned investors that these aftershocks could persist through 2026, even if the conflict ends soon. The market reacted swiftly, with FUL's stock price falling over 26% from its peak. This sell-off demonstrates that investors now see a deep, structural risk to the company's ability to produce and deliver its products, a far more serious issue than simply managing higher costs.
- Glossary
- Force Majeure: A clause in contracts that frees parties from liability or obligation when an extraordinary event or circumstance beyond their control, such as a war or natural disaster, occurs.
- Petrochemical Feedstocks: Basic chemical compounds derived from petroleum or natural gas (like LNG) that serve as the raw materials for producing a wide range of chemicals and plastics.
- EBITDA: Stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's overall financial performance and is often used as an alternative to net income.