Significant Concerns for Coating Materials Suppliers
The raw material prices and logistics of coatings are facing challenges, impacting manufacturers across geography. Asia is one of the key supplier for coating material and a major driver for growing price. China, one of the biggest suppliers, is tightening raw material supplies due to environmental crackdown. Other major reason of price hike in China is increasing labor cost. The feedstock price hike is continuing since last year, especially in the third or fourth quarter. Due to this feedstock price upward trend, many coating manufacturers have declared price hike in advance. The impact of price hike in China has mixed response from market. Some of the big and multinational manufacturers are taking it as a positive sign because it can remove extremely low-cost competitors and it can provide a boost to firms opportunities. Amid such few constraints, growth is expected to be solid along with the broader economy. However, companies relying on Chinese suppliers are left facing issues like tight raw material supplies, intense cost pressure, and difficulties to find alternatives.
Looking deep inside the country level, China is facing sudden price changes due to feedstock issues. For example, the price of epichlorohydrin doubled late last year in a matter of weeks. Epichlorohydrin is widely used to make epoxies, the price hike is mainly owing to capacity shutdown in China. A sudden shift has been prompted water-born coatings growth which gained further market due to a new tax introduction on solvent emissions. The coating manufacturers also feels that supply chains have become increasingly inclined to disturbance, particularly around trucks and railcars. According to the general manager/coating materials at Dow “A main reason is a labor shortage in the trucking industry, as there are not enough people who want to drive trucks”.
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According to Arkema’s coating group president, “volatility in raw material prices is here to stay”. The global additives head at Clariant says, “Demand is a big factor moving prices up”. “There has been a lot of activity as manufacturers scramble to find alternatives to solvent-borne systems,” says, global director/coatings research and development at Dow Chemical.