As the COVID pandemic continues, paint suppliers are struggling to cope with shortages of raw materials and rising chemical prices.

Just over a year ago, the manufacturing industry began to prepare for the difficult times that the COVID-19 pandemic will surely bring. Some industries, such as commercial aerospace, have been hit particularly hard, while others have performed better than originally expected. When everyone is looking forward to a rebound, the challenge is far from over. The fight against COVID-19 continues, and although vaccination efforts dominate the headlines, business interruptions for more than a year have led to countless other related struggles. Supply chain issues continue to hinder the entire manufacturing industry. From COVID-related labor disruptions to winter storms, things seem to have been moving horizontally-note the not-so-subtle reference of this 400-meter-long cargo ship blocking traffic in the Suez Canal for nearly a week. It’s hard to see the global supply chain instead of saying out loud, “Almost everything that can go wrong is there.” But saying something like this might prepare us for the next “hold my beer” moment, so let’s not even think about it. . 

Michael Guckes, chief economist at Gardner Intelligence, wrote in his May column that the Gardner Business Index survey reported that the number of respondents reporting a slowdown in the supply chain in March increased by 90%. Industry associations stated that coating manufacturers all over the world are facing difficulties in sourcing raw materials.

As far as the paint industry is concerned, there are many reasons for supply chain disruption:

Products Finishing is listening to reports from chemical suppliers that the delivery time has been extended by approximately 2 weeks due to the impact of COVID on the labor force. Even for stock powders produced in large quantities for the industry, powder delivery time has increased.

"Delivery time is a challenge for any product other than the largest stock of colors," said Tim Milner, owner of JIT Powder Coating (Farmington, Minnesota). "For frequently used products, we need 4 weeks, if we need matching products, we need close to 7 weeks. A supplier rumored that TGIC is subject to major restrictions due to trade issues in China, and while promoting HAA alternatives , Has been earnestly increasing the price of TGIC. We have seen the price of all powders increase by 4-7%-all this is evidenced by the'material supply chain problem'."

It is not surprising that such disruptions in the supply chain lead to price increases. In Europe, the cost of key components of the coating system, such as epoxy resin, has increased by 60%. The global chemical industry B2B website Echemi reported in late March that more than 20 chemical companies, including BASF, DuPont, Dow, DSM, and LANXESS, raised prices. The price increase is largely due to the difficulty in purchasing raw materials used to make materials such as resins and epoxy resins. Examples include neopentyl glycol (NPG), a component of many resins used in powder coatings, and triglycidyl isocyanurate TGIC, a curing agent used in polyester powder coatings. In mid-March, Echemi reported that architectural coating companies such as Nippon and Dulux were out of stock due to a shortage of titanium dioxide. 

“Our industry is going through a period of extreme instability in the supply of raw materials-this situation leads to price increases and surprises the entire production chain from raw material suppliers to paint manufacturers,” concludes Guido Pozzoli, CEO. Stardust Powder Coatings promised in a statement released by the company that it has consolidated its relationship with suppliers to ensure continuous supply of raw materials in times of difficulty.

Many paint manufacturers are working with their suppliers to ensure they have materials on hand. But there is only so much supply.

Quint Towle, Sales and Marketing Director of Powder Technology (Schofield, Wisconsin), spoke with Products Finishing and learned about the plight of American suppliers struggling to source materials to make coatings for their customers.

"Finished raw materials are now more expensive because precursors are more expensive, and there is more demand now than a few months ago," he said. "And the supply is less than it was a few months ago."

If the supply chain dilemma that the entire manufacturing industry is experiencing is caused by a perfect storm of events, it will be a simplified matter. A lot of comparisons have been made of periods such as the Great Recession that occurred between 2007 and 2009. However, the COVID-19 pandemic has some unique factors that will drive economic discussions and return cases in the coming years.

Thor worried that the ending had not yet arrived. "This is the biggest supply crisis we have dealt with so far," he said. "Our initial concern was to ensure that we can obtain enough raw materials-not everyone does-we feel we have solved this problem. Our second concern is price control and forecasting: the price of some epoxy resin products It is now about 100% higher than in November last year-and is expected to be even higher before stabilizing."

Towle points out that many raw materials like TGIC are not manufactured anywhere outside of Asia at all. As long as China continues to run out of supplies, prices will continue to rise. After all, who will absorb the price increase? Currently, paint suppliers are caught between the raw material suppliers and the original equipment manufacturers and customers they serve. Many of them are eating costs-but how long can they hold on? 

Towle said: "We have been telling our customers,'Let us first focus on ensuring that you get quality products when you need them, and then let us work together to set pricing and find the right solution for everyone.' Although some customers may be willing Some degree of reformulation is done with cheaper raw materials, but most OEMs have strict coating specifications and require high-quality ingredients."

When the supply chain is stable, who can say what the prospects of the coatings industry will look like. Hang there.

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