RAW MATERIAL SHORTAGE CONTINUES IN 2011

The British Coatings Federation (BCF) is warning that a shortage of vital raw materials used in the processes for manufacturing paints will continue to be a major concern throughout 2011. A current increase in demand combined with the supply shortages will put greater pressure on manufacturers leading to a continuing inflationary spiral.

After raw material suppliers had de-stocked and shut down inefficient manufacturing plants during the 2009 recession, they experienced a rapid recovery of demand in Asia, which came as a surprise to many producers serving the paint industry.

The short supply of raw materials was originally reported by the BCF in the first half of 2010. The situation is likely to get worse throughout 2011 as the paint industry continues to suffer shortages triggered by recent plant closures on nitrocellulose, epoxies and titanium dioxide together with force majeure announcements by a manufacturer of acrylic acid and its esters.

“The sudden increase in demand coupled with the short supply of raw materials and reduction in production capability for paint manufacture continues to be of major concern to our member companies," commented Tony Mash CEO of the BCF. “On top of these issues, the recent metals commodity boom has had a serious impact on the availability and prices of tin and steel, which in turn, have had knock-on effects on the cost of packaging. Some BCF member companies have reported a break-down in long term relationships with European suppliers prompting manufacturers to look further afield for their raw materials."   

Titanium Dioxide has been a particular area of concern. The product has been in tight supply for over a year but none of the European suppliers has announced an expansion in capacity

“There is little or no clear view as to how long the shortages and product allocations are likely to last. As a result, paint manufacturers face a situation in which they have only minimal control over the cost and supply of the raw materials they need to manufacturer their products. The paint industry needs to raise awareness of these difficulties to both supplies and customers."