BRITISH COATINGS FEDERATION
Raw material crisis - By Tom Bowtell , CEO
The coatings industry is suffering from a major raw material crisis – on a scale that no one I talk to can remember , highlighted in a quote from one of our members - “ I can honestly say that in my 24 years within the industry I have never seen supply issues and price increases on the scale we currently face .”
This started towards the end of 2020 , and a combination on events and factors have combined to create a really difficult situation for the industry , just as demand has started to return in sectors like industrial coatings , and strong demand remains in the decorative sector . There are real concerns that the sector will not be able to meet the demand from UK manufacturing and construction , which will potentially impact the recovery post covid . Consumers may also start to see paint shortages on the shelves , so we have already alerted the Business department in Government .
At the end of April we asked for your feedback on the current status of the issue , and we received input from across our paint , coatings , and printing ink members , as well as associate members , including both raw material suppliers , chemical distributors and packaging manufacturers .
Tom Bowtell , CEO
The first thing to note is that there is a very wide range of raw materials affected . Whilst solvents and resins were most commonly referenced as being in short supply , there seem to be growing problems accessing pigments . Packaging materials have been hit hard too with global shortages of pulp and polymers impacting on cardboard and plastics . In all , problems accessing over 30 different raw materials were mentioned by members replying to our request for more information , with decreasing availability leading to increasing costs . To quote a member directly :
“ About 85 % of our raw materials have been affect greatly : resin , monomers , pigments and additives . There are not really any raw materials that are not affected .”
What is causing these shortages ? Reasons seem to span the global , regional , and local . Broadly , the issues seem to be :
Force Majeures – Over 40 incidents of force majeure have been declared this year alone . The biggest problems seem to have been the freak weather in Texas causing a shutdown there and a fire at a major plant in Europe . The impacts from these are still unwinding .
Covid-19 – Lockdowns and factory shutdowns have impacted , with the current terrible situation in India beginning to bite in particular .
Unprecedented global demand – While some parts of the world are locking down again , others are starting to open up , leading to strong consumer demand . Moreover , in some countries , like China , governments have not re-opened certain areas of the economy for export , retaining RMs for internal use .
Shipping – Lack of , and cost of , shipping containers , although this is partly linked to the pandemic too .
Brexit - Delays at ports in Europe and UK also are still causing delays and congestion , with some hauliers still avoiding making trips to the UK , especially in the case of consolidated shipments .
Oil prices – Oil prices have increased globally .
Maintenance - Planned maintenance shutdowns at factories have been hitting at the same time as all the other issues cited above .
The consequences are that BCF members have been struggling to access many raw materials and increasingly are being placed on allocation by suppliers . Some suppliers are not taking any new business and only providing to established customers . Deliveries are inconsistent and delays of 10 weeks or so are being reported . There is a lack of certainty around supply dates – some members state they do not know when supplies will arrive and often only get a phone call when a delivery is on the road . As one member told us :
“ The raw material supply appears to be a lottery – production sites do not know what is on the delivery trailers until they unload .”
All of this , in turn , means BCF members are starting to have to place customers on allocation themselves , and to pass on price rises down the supply chain .
Because so many of the problems are down to global trends and demand , it is difficult for proactive mitigation measures to be put in place . However , BCF has been working with the Chemical Industries Association to keep senior officials at the Department of Business informed of the ongoing situation . We have agreed to keep in regular touch and will continue to feed our members ’ experiences into Government .
How long will this situation last ? The more optimistic companies say they expect the situation to ease in Q3 2021 . Others fear problems will continue into next year , at least for certain products . A ‘ wisdom of the crowds ’ average suggests it will be Q4 this year before things will improve significantly . We will of course keep members informed as we find out new information .
Email : info @ bcf . co . uk Visit : www . coatings . org . uk
10 JUNE 2021 twitter : @ surfaceworldmag