Likewise, the ECE does not believe that prices will stabilize during 2012.
Source : UNECE Press Release : Raw Material Cost Expectations for 2012During the recent UNECE annual conference in Dublin attended by representatives of paint and printing ink manufacturers from across Europe, industry experts warned of price developments for raw material within the EU.
According to these experts, expecting reductions in raw material prices for 2012 is nothing more than an “illusion”, even talking about raw material prices being expected to increase during 2012.
Titanium dioxide (TiO2) is one of the whitest chemical substances in existence: it reflects practically all the visible radiation that reaches it and maintains its color no matter what happens when other compounds are discolored by light, and is a basic raw material in the formulation of paints.
This compound has seen its price increase by more than 60/70% between the beginning of 2010 and the end of 2011, which means an average increase of 30% per year.
This situation is the result of two factors that are expected to continue throughout 2012 and beyond:
– The existing mismatch between world supply and demand for this compound as a result of producers’ failure to make new investments during the period from 2000 to 2010, followed by a rebound in demand in emerging countries, especially in Asia, as well as the negative effects of the crisis during 2008 and 2009 on producers.
– The second factor is related to the sharp increase (more than 20%) in TiO2(ilmenite) ore prices.
In fact, the historical sources of supply of this raw material TiO2 are being depleted. This, together with the lack of investment in finding new mines, will lead to a further reduction in the supply of ilmenite, thus increasing its price.
Therefore, the pressure on paint producers will continue during 2012. The intensity of this pressure will depend on the growth or slowdown of the world economy. Reformulation of products to partially substitute TiO2 is one solution that may alleviate the supply/demand balance.
Petroleum Derivatives
The price of emulsions or resins, which are mainly derived from petrochemical feedstocks, have increased over the last 12 months by 20 to 40%, depending on the type. Again, for similar reasons:
Increased demand in emerging economies, mainly Asia.
In addition, the price of oil, the key raw material, will continue to fluctuate widely, with the uncertainty affecting the global economy of late.
In conclusion
At the end of this conference, it became clear to all participants that during the coming year, paint producers will each have to find their own way to deal with these increases in raw material prices.
