The constant concern to know if the prices of raw materials rise or fall force manufacturers in the paints and coatings industry to create strategies that allow them to compete so as not to be left out of the market.
by Duván Chaverra Agudelo
Andina Paint 2012 was once again a meeting place where the most outstanding professionals from the region came to learn about the new proposals and to talk a little about the market. The fair brought together 36 exhibitors, received around 350 visitors and was attended by more than 180 attendees to an academic program based on eco-efficient themes.
At the March event in Bogota, Colombia, we spoke to some of the manufacturers so that they would dare to forecast the trend in raw material prices for this year. Everyone agrees that it will be another year of uncertainty.
At the Brenntag Colombia stand we chatted a little with Dignora Benjumea, a chemical engineer, who commented on the issue of raw materials that in China there is talk of disaertion of the economy, as in Europe, so commercial developments are taking place in Latin America, in countries such as Mexico, Brazil, Peru and Colombia.
"In recent years we are feeling a variation in costs, where raw materials start to go up, they reach a cap and then they go down. At this moment we reach the crest of the wave in which costs are going up, basically because ethylene oxide - propylene oxide molecules, which are very basic in the issue of solvents, are in shortage; as there is not much availability, producers increase their offers and their derivatives," said the engineer.
As is customary in this area, manufacturers are not very optimistic when they talk about the rise /fall of prices. That is the case of Andercol and its representative Carlos Vargas, coordinator of Business Coatings, who commented that "it is complex to talk about stability, there are many factors that are affecting the cost of raw materials, but the evaluations that are made is that they will be stable, however, that is something changing and affects what we are seeing at the moment".
The professional added that "some raw materials have significant increases, they are being handled from the point of view of solvents, of petroleum derivatives, where we are seeing differences in the future. Between April and May we saw increases of between 5% and 6%."
What will happen?
These forecasts of increases expected by all industry players for 2012 are motivated by what happened in 2011, a year of increases. Carmen Linares, director of the paints and coatings division of Trichem Group, explains: "2011 was a year of price increases, basically because the most important product of all is titanium dioxide which doubled the price in the international market and that had an impact on our region; additionally, the large manufacturers of this raw material will prefer to move more product in Europe than in Latin America, which affects the domestic market."
However, there are specific cases in which some companies take advantage of price uncertainty to promote other products: "Those price increases for us also mean opportunities, although the issue of increasing costs generate panic in the world, that forces customers to go out to get and negotiate other options, because they need products. In this market dynamic there will always be opportunities, the industry will not stop because prices increase. The fact that they go out to look for other options allows us to enter the circle of players," Carmen added.
For Luiz Rizkalla, commercial director of the coatings and inks area for Latin America at Eastman, 2011 was a year in which "we had two very defined scenarios: in the first half of the year there was a very strong demand that drove prices to be up, later with what happened in Greece (crisis) there was a retraction of the markets and that affected products such as resins that came downward. The year 2012 began with a light of recovery in some markets such as Asia, America and the United States, where we have observed a rebound in the economy. Obviously there are inevitable situations such as the price of oil or the high demand in the United States in the use of gasoline and fuel, which causes the cost of oil to rise."
Luiz also believes that during this year, an economy as strong as China's will go into a process of deceleration, another factor that puts prices on the back burner: "2012 is looking like a challenging year in the sense that demanding markets like China are in a process of slowing growth and that affects the entire global economy; therefore, we forecast that Latin America will continue to grow but at a slower pace compared to previous years where we reach 7% or 9% growth depending on the country. Today we are optimistic, but not much."
For his part, the technical manager of Mesa Hermanos, Edgar Gacharná, also spoke about what happens in India, a country recognized for its manufacturing plants, where according to its production, the costs of raw materials are also affected.
"We reach the coatings sector with dyes and pigments; the situation of some countries such as India, where the closure of factories due to pollution problems have affected some products such as phthalocyanins, which last year registered increases of 40% and that closing that year fell a little, but the trend continues to rise, "explained Edgar.
Finally, Denis Rojas, from Aakash Chemicals, commented that domestic consumption in countries such as China and India is another factor that affects the prices of raw materials: "The Chinese market is very strong, and that is taking many products out of India. In China we had many problems due to the closure of raw material plants, for example they did not have carbazole to produce and the price rose from about US $ 50 to US $ 100. The other products remain more or less stable, but there is an increase in domestic consumption that is raising them. On the resin side we see an increase in world production due to the need for final package inks for China, so the shortage began due to lack of material."
Leave your comment