Diaper Prices Are Still Getting a Bump From Texas Freeze

One product that remains in short supply is acrylic acid, the propylene-based compound that makes diapers absorbent. Executives and industry consultants say that shortfall is still a factor in the fast-rising prices of diapers even as demand declines.

Suppliers of acrylic acid “just got hammered,” said Michael Murray, who with his two brothers runs DeSales Trading Company Inc., a company that buys and sells so-called superabsorbent polymers made with acrylic acid. “Supply is extremely tight right now.”

The global supply chain is in broad upheaval, upended by pandemic- and weather-related production disruptions, demand swings and surging raw materials costs. Diapers are one of many consumer products that are getting more expensive.

U.S. diaper prices are up 9% from a year ago, according to market-research firm IRI, with Kimberly-Clark Corp. and Procter & Gamble Co. , the two biggest diaper manufacturers, warning of further increases.

“I’m not happy that the supply is so tight right now,” said Mike Hsu, chief executive of Huggies maker Kimberly-Clark.

Mr. Hsu said there is no diaper shortage and he doesn’t expect one, though he said the company has been forced to more carefully manage allocations to retailers.

“We’re trying to be as productive as possible and also do everything we can to manage the supply equitably,” he said.

A year ago, acrylic acid was in overabundance and prices were stagnant. Producers in Asia were sending supply to the U.S. due to inadequate demand at home. A falling birthrate amid the pandemic meant diaper sales were set to fall even more.

That equation began to change last year when Covid-19-related supply-chain disruptions from port delays to a shortage in shipping containers slowed delivery times and increased transportation costs.

Then the Texas storm hit, cutting out power to a swath of the state and shutting down the world’s largest petrochemical operations, where most U.S.-made acrylic acid is produced.

Many storm-battered chemical plants resumed production, but the process of getting back online took weeks, and they remain stymied by problems with pipes and equipment damaged by the storm. A number of suppliers enacted force majeure, also known as the “act of God” clause, which is meant to protect businesses when an event outside their control prevents them from meeting their contractual obligations.

Supply of acrylic acid is improving, but it could take months to replenish, several suppliers said.

Acrylic acid is produced from propylene, which is used to create a polymer capable of absorbing 10 times its weight in water. Diapers are the biggest user of the superabsorbents, which are also used in adult underwear, feminine-care products, dog-training pads and industrial cleaners.

Two of the biggest suppliers to P&> and Kimberly-Clark, BASF SE and Evonik Industries AG , are closely tied to Texas. Evonik’s superabsorbent plant is in Louisiana but relies on Texas-based suppliers. Vertically integrated BASF has its superabsorbent operations in Texas.

In a case of unfortunate timing, Mr. Murray, of DeSales Trading Company, pushed to clear inventory before March 31, the end of the company’s fiscal year, only to see prices double in the first weeks of April.

Kimberly-Clark said in March that it would raise prices on several products, including diapers, due to rising materials costs. Procter & Gamble said it is increasing prices in diapers, adult incontinence and feminine care products, all of which rely on acrylic acid.

Baby-care products, which include diapers as well as wipes, toys and other items, are increasingly out of stock at U.S. retailers, though not at shortage levels, according to IRI. Stores ran out of 10% of their baby-care items on average in the week ended April 25, up from 8% of the items a month earlier, also according to IRI.

P&> executives say they believe sales won’t take a significant hit as they increase prices.

Shoppers are still buying diapers and aren’t moving toward cheaper store brands to save money, grocery executives said.

“Our diaper business is relatively consistent,” said Mark Griffin, president of B&R Stores Inc. in Nebraska, adding that the price increase is small enough that consumers aren’t likely to notice.

Karen Clear of Levittown, Pa., has noticed higher prices and increasingly limited availability of the extra-large pull-ons that her 6-year-old son wears. Ms. Clear said that since about last month she started paying around $9 for a 9-count pack, which used to cost $8 and lasts a few days. She said she has been unable to find larger packs, which are cheaper on a per-diaper basis.

“Almost daily I have to check every store just to see if I can find them,” she said, adding that she, like many women, are doubly hit since feminine-care and adult-incontinence products also face increases. Adult incontinence is more prevalent among women than men, according to medical researchers. “It’s sad, and it’s getting very expensive,” she said.

—Jaewon Kang contributed to this article.

Write to Sharon Terlep at [email protected]