Interview: A very concerned industry
The paint and coatings industry faces serious challenges in 2021 due to the rise in raw material prices. The supply and demand imbalance will have strong implications for the sector – and there is no sign of relief. We spoke to André Vieira de Castro, CEPE Chairman, about the situation.
How is the current situation affecting the paint industry?
André Vieira de Castro: Our industry is comparatively heavily dependent on a large number of raw materials. The current shortage and price hikes unfortunately concern core ingredients. Almost all raw materials are affected by the current situation.
What else is challenging the industry in this regard?
André Vieira de Castro: To ensure safe transportation of our products these must be adequately packaged. With plastic polymers and tin plates in short supply, we encounter additional cost drivers. On the import side, the situation is even worse. The industry obtains many raw materials, by container, from Asia. However, the Covid-19 pandemic did lead to erratic demands for international trade which affected the shipping container movements. The current global shortage of containers in the right places has led to a sharp increase in transportation costs: prices of containers between China and Europe have risen more than 400% since Q4 2020.
What does the situation mean for Europe’s competitiveness?
André Vieira de Castro: Overall, the coatings industry is very concerned with the developments of the present supply and demand imbalance. We are closely following the developments in the supply chain, which by its global nature, can be impacted by many different factors, including geopolitical, logistical, pricing and capacity components.
While the coatings industry seeks to cope as much as possible with the current uncertainties, the world market pressure should give European decision-makers pause for thought. While increased sustainability is undeniably the way forward, global competition should not be ignored in the measures of the EU Green Deal. Europe’s all-encompassing growth strategy is set to profoundly revise EU chemicals law, despite already having the strictest chemical legislation in the world.
With the European chemicals industry accounting for an ever-smaller part of the global industry, it is essential for Europe to have a strong chemicals industry with factories based in Europe in order to be more self-sufficient, otherwise it is the European economy as a whole which is under threat.
