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Thursday, 23 May 2019

Scarcity of raw materials

Friday, 8 April 2011 | Posted by: Sonja Specks, European Coatings Journal

Maybe the story started during the worldwide recession. Raw material suppliers shortened investments and further developments and even had to decrease their headcount. During this period the demand by coatings manufacturers for raw material decreased, too. Both needed to adapt to the challenging fact of smaller sales volumes. Therefore, I can understand that it was not possible to increase the production capacity as fast as the economy became cured. But still it seems to be a fact, as I heard lately during the European Coatings SHOW, that it is very tough to buy titanium dioxide nowadays for a reasonable price. Softening agents seem to be less available, too.

The economic result is that when demand is high and the supply quite insufficient, prices increase rapidly. To insure a running production the coatings producers face increases of up to 30 % for titanium dioxide. The relation of raw material supplier and coatings manufacturer seems to be really tested. Is this an artificial shortage of the supplier as we can see it in the oil industry to increase the prices? Or is it really a mixture of increased energy cost, price adjustment and economic considerations to check, how large the demand really is, before starting to invest in expansion? And how can you avoid a lack in the production? Searching for new suppliers? What about the quality and the reliability?

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