petrochemical-derived materials even
when oil was being charged at over $100
per barrel. Now the gap has been widening after years of trying to narrow it.
In segments reliant on petrochemical-based material, the effects of less expensive oil has been more marked than in
others. Coatings with a high solvents
content, for example, should have enjoyed improved margins.
However, overall, cheap oil has
provided fewer benefits than initially
expected for coatings producers and
suppliers of intermediates, additives
and other products further up the value
chain than base chemicals.
Another major factor in determining
raw material costs since mid-2014 has
been the weakening of the euro, used by
the majority of countries in the European
Union, against the U.S. dollar. By the end
of the first quarter of 2015, the euro was
worth around 20 percent less in dollars –
the currency on which prices for crude oil
and many other commodities are based
– than in the second quarter of last year.
In addition, poor demand over the
last several months in Europe has led to a
general softening of raw material prices.
Now amidst signs of an improvement
in the eurozone’s economy, demand has
been picking up in certain segments reinforcing an upward pressure on prices. In
some cases this pressure has been aggravated by shortages.
“We’ve been seeing shortages of acryl-
ic acids because of high demand for prod-
ucts in their value chain,” said Jens-Uwe
Kahl, managing director of Jobachem
GmbH, a German-based distributor.
“Some acrylics suppliers are now sold out
for as long as two months.”
Among the segments in which there is
a much stronger demand for raw mate-
rials are those required for UV coatings.
“Demand for UV coatings and materials is currently around three times higher
than the market as a whole,” said Kahl.
Producers of titanium dixode are hoping that after a period of low TiO2 prices
a revival in demand across a broad range
of coatings sector will help them raise
prices. Weak demand has been squeezing
margins in the whole value chain for the
pigment from the feedstock materials of
titanium and ilmenite to the TiO2 itself.
“Some TiO2 exporters into Europe
have been either pulling out of the re-
gion or have reduced volumes because of
a combination of poor demand and the
low euro,” explained Emilio Sambi, sales
director at Macri Chemicals, an Italian-
based TiO2 distributor. “There’s no sign
of any tightness in supplies as a result
of decreased imports, expect perhaps in
parts of Eastern Europe. Producers will
be lucky to push through any prices rises.
We’ll probably have to wait until next
year for any significant price increases.”
Improved demand will help coating
and raw materials producers in some sec-
tors to claw back any ground they may
have lost to products, such as some sol-
ventborne coatings, which have been
able to take greater advantage of the oil-
price drop.
Resins producer Hexion Inc. introduced at the exhibition a new epoxy
resin dispersion, which it claims closes
the cost-versus-performance gap between
water- and solventborne technologies by
delivering comparable corrosion resistance and substrate adhesion.
“There’s strong demand for epoxy
resins in the booming wind turbine
market in Europe at the moment while
there’s also growth in demand for them
in the European construction sector,”
said Dan Weinmann, Hexion’s global
segment leader.
“Solvent prices have not been falling
as much as expected after the decline in
oil prices,” he added. “There’re many fac-
tors beside the oil prices which drive sol-
vent prices such as logistics and the need
for special storage facilities. We think the
cost gap between solvent- and water-
borne will disappear.”
Raw material suppliers showed at the
ECS how much they have shifted their
strategies to concentrate on reducing
overall production costs. As a result they
have been putting far less emphasis on
selling prices.
A group of suppliers led by
Alberdingk Boley GmbH, a dispersions and renewables specialist, Kronos
International, the TiO2 producer, and
Altana’s Byk Additives & Instruments
business used the exhibition to launch
a new alliance called Network Modular
Technology (MOFA).
Instead of providing customers with
individual raw materials, MOFA companies will supply packages which combine
their products as semi-finished goods for
specific functions.
“The costs of the individual raw
materials within each package may be
higher than the current selling price be-
cause of the costs of the work of MOFA
companies in the design and production
of each one,” said Wolfgang Koenner, a
manager at Kronos’ research services.
“It will save MOFA customers consid-
erable production, storage and energy
costs. The time of a coating production
process normally lasting 3-4 hours could
be reduced to 20 minutes.”
If successful, the MOFA concept could
lead to radical changes in the way coat-
ings supply chains operate because raw
material costs would become indepen-
dent of the prices of the individual raw
materials themselves. CW
“Another major factor in determining raw material costs since mid-
2014 has been the weakening of the euro, used by the majority of
the countries in the European Union, against the U.S. dollar. By the
end of first quarter 2015, the euro was worth 20% less in dollars.”
