04162021Fri
Last updateTue, 20 Apr 2021 11am
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Paint industry under heavy pressure due to developments on the raw material markets

The European paint, printing ink and artists' colour industry is under heavy pressure due to rising raw material prices. A complex mix of demand, capacity issues and scarce transport resources is increasing uncertainty in the supply chain for key raw materials. Despite huge implications for the industry, the paint industry is working to reduce risks for customers.

"After a year marked by the COVID 19 pandemic, our industry is again facing major challenges in 2021 due to the increase in raw material prices," says André Vieira de Castro, president of the European Coatings, Printing Inks and Artists' Colours Industry Association (CEPE). There are several reasons for the increase: an increasing demand for raw materials due to the expected economic recovery, a shortage of available raw materials due to bad weather conditions and the closure of several plants, which makes raw material suppliers invoke "force majeure". In addition, transport costs are increasing due to the sharp rise in oil prices. André Vieira de Castro adds: "The burden on the industry is immense, as raw material prices account for more than half of the costs. Since January, the cost of key components such as epoxy resins has increased by 60 per cent in Europe. The situation is similar for solvents, where the price of acetone and n-butyl acetate alone has risen by 123% and 91% respectively."
The current situation has its origins in Europe and Asia, and in particular from the unexpectedly fast V-shaped recovery in China, which is fuelling demand for key raw materials. Besides epoxy resins, the list of petrochemical raw materials in high demand includes polyester resins, polypropylene glycols, acrylic acids, acrylic resins, UV resins, polyurethane resins and solvents. In parallel with petrochemical raw materials, the global cost of pigments (including titanium dioxide, red and yellow iron oxide) has also risen sharply. The main drivers of the price increases include strong demand in all industrial sectors, greater domestic supply needs in producing countries, general imbalances between supply and demand, and higher costs for pigment components.
The current situation is further exacerbated by capacity problems: disruptions at producers in Asia and Europe - either due to factory closures or operational accidents - have significantly tightened supply. Another cost factor is scarce transport resources. The COVID 19 pandemic has led to a surge in demand in international trade, which is affecting the global movement of shipping containers. The current global shortage of containers in the right places has led to a sharp increase in transport costs: Container prices between China and Europe have increased by more than 400% since the fourth quarter of 2020.
While the paint industry is trying to cope as best it can with the current uncertainties, the pressures of the global market should give European decision-makers pause for thought. "More sustainability is undeniably the way forward, but global competition should not be ignored in the EU Green Deal measures," concludes André Vieira de Castro: "Europe absolutely needs a strong chemical industry with factories in Europe to be more self-sufficient, otherwise the European economy as a whole is at risk."
www.cepe.org

 

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