• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Research
    • Markets & Technologies
    • Raw Materials
    • Top Companies
    • Directories
    • Jobs
    • Events
    • Microsites
    • More
  • Magazine
  • News
  • Research
  • Markets & Technologies
  • Raw Materials
  • Top Companies
  • Directories
  • Jobs
  • Events
  • Microsites
  • Current / Back Issues
    Features
    Business Corner
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    World Reports
    eBook
    Top Features
    Additives Update

    Pigment Supplier Directory

    Interior Architectural Coatings

    Biocides Update

    Powder Coatings Market
    Breaking News
    Online Exclusives
    Distributor News
    Financial News
    Paint & Coatings Manufacturer News
    People In the News
    Price Increases
    Product News
    Video Bites
    Raw Materials & Equipment
    Suppliers News
    Live From Shows
    Top News
    PPG Reports Q4, Full-year 2020 Financial Results

    BASF Begins Implementing Ralignment of Global Business Services Unit

    Nouryon Appoints Curtis Espeland to Board of Directors

    AMETEK Brookfield Opens Media Room at US HQ

    PPG Directors Announce Quarterly Dividend of 54 Cents Per Share
    Top Companies report
    Market Research
    White Papers / Tech Papers
    Technical Papers
    Product Spec Sheets
    World Reports
    Adhesives and Sealants
    Aerospace Coatings
    Architectural Coatings
    Automotive Coatings
    Automotive Refinish
    Business Operation
    Color Trends & Forecast
    Construction Chemicals
    Corrosion Control
    Industrial Coatings
    Laboratory Equipment
    Marine Coatings
    Market Trends & Forecast
    Powder Coatings
    Production Equipment
    Radcure Coatings
    Special Purpose Coatings
    Wood Coatings
    "Green" Coatings

    AMETEK Brookfield Opens Media Room at US HQ

    AkzoNobel Supplying Powder Coatings for Landmark Water Pipeline in China

    IGL Coatings Launches Graphene Reinforced Dual System Ceramic Coating

    Miller Paint Declares Simple Serenity its 2021 Color of the Year

    TAUBMANS Paint by PPG Releases ‘Chromatic Joy’ Palettes
    Additives
    Binders
    Pigments
    Solvents

    Active Minerals Announces Shipping Container Surcharge

    Huntsman Finalizes Acquisition of Gabriel Performance Products

    LANXESS Acquires Biocides Specialist INTACE

    dar-tech, inc. Becomes U.S. Midwestern Distributor for ZS Interpolymer

    OQ Chemicals Announces Carboxylic Acids Price Increase
    Buyers Guide
    Company Capabilities
    Distributor Guide
    Add New Company
    International Buyers Guide Companies
    Pilot Chemical Company

    ROSS Mixers

    Siltech Corporation

    Active Minerals

    Shepherd Color Company, The
    Industry Events
    Webinars
    Live From Show Event
    Top Events
    The Waterborne Symposium (2021)

    Cleveland Coatings Society Zoom Meeting

    Surface Finishing Mexico 2021

    Cleveland Coatings Society Zoom Meeting

    Cleveland Coatings Society Zoom Meeting
    Companies
    White Papers/Tech Papers
    Product Spec Sheets
    Equipment
    Literature/Brochures
    Videos
    International Buyers Guide Companies
    ROSS Mixers

    Keim Additec Surface USA LLC

    Active Minerals

    Pilot Chemical Company

    Eagle Specialty Products
    • Magazine
      • Current / Back Issues
      • Features
      • Editorial
      • Business Corner
      • Digital Edition
      • eNewsletter Archive
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
    • Breaking News
    • Directories
      • Buyers Guide
      • Distributor Guide
      • Corporate Capabilities
      • Trade Associations
      • Add Your Company
    • Markets & Technologies
      • Adhesives and Sealants
      • Aerospace Coatings
      • Architectural Coatings
      • Automotive Coatings
      • Automotive Refinish
      • Business Operation
      • Color Trends & Forecast
      • Construction Chemicals
      • Corrosion Control
      • Industrial Coatings
      • Laboratory Equipment
      • Marine Coatings
      • Market Trends & Forecast
      • Powder Coatings
      • Production Equipment
      • Radcure Coatings
      • Special Purpose Coatings
      • Wood Coatings
      • "Green" Coatings
    • Raw Materials
      • Additives
      • Binders
      • Pigments
      • Solvents
    • World Reports
      • Africa Report
      • China Report
      • India/Asia Pacific Report
      • Europe Report
      • Latin America Report
      • Market Research
      • Russian Report
    • Top Companies
    • Online Exclusives
    • Slideshows
    • Experts Opinions
    • Blog
    • eBook
    • Infographics
    • Videos
    • Podcasts
    • Whitepapers
    • Jobs
    • Microsites
      • Companies
      • White Papers/Tech Papers
      • Product Spec Sheets
      • Equipment
      • Literature/Brochures
      • Videos
    • Events
      • Industry Events
      • Live From Show Event
      • Webinars
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Europe Reports

    How Do Low Oil Prices Affect Raw Material Suppliers?

    ...

    Sean Milmo, Euroepan Correspondent01.19.15
    For coatings producers one of the big benefits of the sharp fall in oil prices in the second half of  last year (2014) should be a drop in raw material costs.

    Some commentators are also predicting a rise in demand due to the effect of lower oil prices cutting the production and distribution costs of a wide range of industrial and consumer products.
    However, neither is likely to happen on a significant scale in the short-term in Europe.  While oil prices have been plummeting suppliers of some coating raw materials have in fact been announcing price increases.

    At the same time, rather than boosting demand, the oil price drop has had the opposite effect in Russia, which has been one of Europe fastest growing coatings markets.  Instead the country which relies heavily on revenues from oil and gas exports  is expected to be stuck in a recession this year (2015).

    Nonetheless if oil prices stay at the current low level or fall further, analysts are forecasting that in the longer term they could start bringing down raw materials costs in many sectors.
    “Continued low prices will create a glut in oil and its derivatives following a flow of investment funds into the sector in recent years and an expectation of continued high growth in China,” explained Paul Hodges, chairman of International e-Chem, a  London-based chemicals consultancy.

    “Raw materials suppliers will have to cut their prices because otherwise they will not have any customers,” he added.

    This will first require the removal of a number of obstacles in the supply chain which have curbed the availability of some coatings raw materials.

    “Since the 2008 financial crisis in Europe, producers of raw materials like basic chemicals have tended to keep low stocks,” said Amit Sharda,  chemicals analyst at Oxford Economics, Oxford, England.  “This has resulted in a lack of sufficient flexibility in the system for downstream users to stock up their own raw materials in order to take  advantage of upstream price decreases.”

    The result has been that even  at times of economic crisis or supply/demand imbalances  prices have gone up, sometimes  steeply.

    “As coatings manufacturers, we would of course, expect to see a knock on effect from the falling price of oil onto raw materials in the wider market,” said Tom Bowtell, chief executive of the  British Coatings Federation (BCF)
    “(But) raw material prices for the coatings and inks sector have been rising almost continuously since 2002 and increased by well into double figures in the two peak years of 2008 and 2011 while other years also showed steady increases,” he continued. “ Many solvents were typically 30 percent  to 40 percent higher in price (in 2012 compared with 2012).It is only in the last 18 months that we have seen any real softening of purchase prices and even this means only a 3% fall in overall raw material prices in the last year - a drop in the ocean compared with what has gone before.” 


    Raw material suppliers which are currently attempting to push up their own sales prices  are  blaming other factors outside the oil value chain.

    Clariant, the Swiss-based  coatings materials supplier, for example, said that increases in operating costs was the main reason behind the announcement in late 2014 of a 10 percent rise in prices of additives for coatings and other products made by its Plastics and Coatings segment.

    “Most of our raw materials in Plastics & Coatings are at least 3 – 4 steps downward in the value chain (from oil),” said Ernesto Dongiovanni, Clariant’s head of marketing, polymer additives. “Therefore the impact of a lower oil price is substantially less pronounced as other factors--inflation in labor costs etc.-- outweigh this effect.”

    Prices in the coating raw materials supply chain have also been deeply influenced in recent years by cutbacks in capacity following the 2008 recession and a lack of investment in new  plants or expansions.  

    This is reflected in variations in price trends between segments.  Figures from the European Chemical Industry Council (Cefic), Brussels, which include downstream sectors  like  coatings, show that in the first three quarters of last year  (2014) chemical producer prices dropped 1.7 percent, but petrochemical prices declined by  over double that  level while those for polymers  dipped  by  only 0.3 percent.

    Europe’s ageing chemical plants are vulnerable to supply interruptions  which has prevented some prices decreasing by as much as would be normally expected after a drop in oil prices.  “There have been a relatively high number of breakdowns,  and outages in basic chemical plants over the last few months,” says one chemicals analyst.

    Some commentators are predicting that due to the lower margins stemming from lower oil prices, there will now be more plant closures.  The rating agency Moody’s reckons that as much as 6 percent of European capacity for ethylene, the building block for organic chemicals, could be closed down.

    Cefic was predicting in December that  total  output of chemicals including downstream products like coatings will rise only 1 percent in 2015—around the same level as in the previous year (2014). “Monthly data point to continued anaemic growth, with energy-intensive petrochemicals output falling,” said Hubert Mandery, Cefic’s director general.

    Nonetheless there has been some evidence of a sudden rise in business confidence. In October the EU chemical industry confidence indicator (CCI) soared to its highest level since July 2011.
    Stronger European demand for coatings later this year will be offset by depressed sales in countries like Russia.  Tikkurila, the Finnish coatings producers which has a big presence in Russia, has issued a profits warning because of reduced demand in the country and a sharp depreciation of the Russian rouble.

    There could also be decreased coatings exports to oil producing areas outside Europe like the Middle East, where the construction sector has been booming.

    The tight supply/demand balance in chemicals  in Europe is likely to trigger a rise in some raw material prices in the event of any  surge in coatings sales in the region.  This could happen before low oil  prices start to have a major influence on raw material costs.

    “Even if there would be an impact on raw materials prices from lower oil prices, its effects could be delayed by several quarters,” said Dongiovanni
    Related Searches
    • Solvents
    • Additives
    • polymers
    • Market Trends & Forecast
    Related Knowledge Center
    • Additives
    • Solvents
    • Market Trends & Forecast

    Related Europe Reports

    • Additives | Business Operation | Price Increases | Solvents

      Key Topic at European Coatings Show is Costs

      A big topic of discussions at the ECS was the way cheap oil had or had not led to underlying decreaes in raw material costs.
      Sean Milmo, European Correspondent 05.15.15

    • Market Trends & Forecast | Solvents

      EU’s New CLP Regulation on Labeling Cause Concern

      ...
      Sean Milmo, European Correspondent 02.23.15

    • Market Trends & Forecast | Solvents

      Europe Shifts Priority From VOC Control to Economic Growth

      ...
      Sean Milmo , European Correspondent 12.15.14


    • Additives | Binders | Market Trends & Forecast | Pigments

      Demand for Dispersions in Europe Driven by New Technologies and Expanded Capacity

      ...
      Sean Milmo, European Correspondent 11.06.14

    • Solvents

      Biocidal Products Regulation Could Prove Challenging for EU

      ...
      Sean Milmo, European Correspondent 07.07.14

    • Industrial Coatings | Solvents

      Sustainability Initiatives in European Coatings Sector Reach New Phase

      he European coatings trade association (CEPE) has been drawing up criteria for formulators to check the greeness of raw materials.
      Sean Milmo, European Correspondent 06.09.14


    • Additives | Industrial Coatings | Pigments

      Recovery in Europe Could Be Stalled by Ukrainian Crisis

      Optimism is being undermined by worries about the economic impact of the Ukranian crisis, particularly on coatings demand in Russia and other Eastern European countries.
      Sean Milmo, European Correspondent 04.15.14

    • Pigments | Solvents

      European Coatings Market Embraces Sustainability

      ...
      Sean Milmo, European Correspondent 01.14.14

    • Additives | Marine Coatings | Solvents

      Certifications for Biobased Materials Gains Steam in EU Coatings Sector

      The certification schemes are enabling companies to show that they are at the forefront of moves to set high sustainability standards.
      Sean Milmo, European Correspondent 07.19.13


    • Powder Coatings | Price Increases | Solvents

      Economic Slowdown in Europe Results in Raw Material Prices Softening

      ...
      Sean Milmo, European Correspondent 02.07.13

    • Additives | Binders | Pigments

      Dispersions Market Ripe With Growth Opportunities

      Suppliers to this market are seeing increases in sales and profits.
      Sean Milmo, European Correspondent 08.15.12

    • Business Operation | Market Trends & Forecast | Pigments

      Coatings Producers Feel The Weight Of TiO2 Price Hikes

      Sachtleben’s takeover of crenox shakes up TiO2 market.
      Sean Milmo, Europe Correspondent 07.24.12


    • Industrial Coatings | Solvents | Wood Coatings

      Industrial Coatings Segment Tackles VOC Issues

      Previously confined to the decorative coatings segment, the VOC issue is now at the forefront of industrial coatings as well.
      Sean Milmo, Europe Correspondent 06.05.12

    • Industrial Coatings | Solvents
      Centralizing Deco Paint Operations To Maximize Efficiencies

      Centralizing Deco Paint Operations To Maximize Efficiencies

      Recently announced plant projects for Jotun and AkzoNobel highlight trend among paint makers to centralize production.
      Sean Milmo, Europe Correspondent 05.15.12

    • Business Operation | Industrial Coatings | Market Trends & Forecast
      Coatings Industry Continues Strong Push To Recovery

      Coatings Industry Continues Strong Push To Recovery

      Q1 results better than expected.
      Sean Milmo, Europe Correspondent 04.19.12

    Trending
    • BASF Begins Implementing Ralignment Of Global Business Services Unit
    • PPG Reports Q4, Full-year 2020 Financial Results
    • AkzoNobel Supplying Powder Coatings For Landmark Water Pipeline In China
    • LANXESS Acquires Biocides Specialist INTACE
    • New Strategy Sets Hempel On Path To Leadership Positions
    Breaking News
    • PPG Reports Q4, Full-year 2020 Financial Results
    • BASF Begins Implementing Ralignment of Global Business Services Unit
    • Nouryon Appoints Curtis Espeland to Board of Directors
    • AMETEK Brookfield Opens Media Room at US HQ
    • PPG Directors Announce Quarterly Dividend of 54 Cents Per Share
    View Breaking News >
    CURRENT ISSUE

    January 2021

    • Additives Update
    • Pigment Supplier Directory
    • Interior Architectural Coatings
    • View More >

    Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
    You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

    • About Us
    • Privacy Policy
    • Terms And Conditions
    • Contact Us

    follow us

    Subscribe
    Nutraceuticals World

    Latest Breaking News From Nutraceuticals World

    NIH Study Compares Low-Fat, Plant-based to Low-Carb, Animal-Based Diet
    Gadot Positions Mineral Line for Vegan Market
    Nutritfy India to Launch Global Broadcast Channel Covering Nutrition
    Coatings World

    Latest Breaking News From Coatings World

    LINE-X Launches Dealer Program with International Truck
    PPG Reports Q4, Full-year 2020 Financial Results
    BASF Begins Implementing Ralignment of Global Business Services Unit
    Medical Product Outsourcing

    Latest Breaking News From Medical Product Outsourcing

    Cretex Companies CEO Steps Down
    Data Show Porex's Medical Device Filtration Materials Protect Against Virus, Bacteria Spread
    Endoscopic Hemostasis Devices Market Valued at $730 Million
    Contract Pharma

    Latest Breaking News From Contract Pharma

    Pfizer, BioNTech Enter Vax Pact with COVAX
    FDA Approves Janssen’s CABENUVA
    AGC Biologics Appoints Boulder Site GM
    Beauty Packaging

    Latest Breaking News From Beauty Packaging

    Coty Appoints Chief Procurement Officer
    Lageen Tubes Launches Mono-Material PE Tube Solutions
    Jason Jones Loses Battle with Covid-19
    Happi

    Latest Breaking News From Happi

    Carol’s Daughter Adds New Hair Products
    Moroccan Gold Series Launches NuDo Shampoo
    Youbody Debuts Waterless Body Wash
    Ink World

    Latest Breaking News From Ink World

    BOBST Demonstrates Future of Flexible Packaging Production at Virtual Open House
    Morancé Soudure France Adds Comexi F2 MC 10-color Flexo Press
    AR Packaging Acquiring Firstan Holdings Ltd
    Label & Narrow Web

    Latest Breaking News From Label & Narrow Web

    Gallus planning virtual event for March
    Lemu Group engineers mask-making machine
    Niagara Label upgrades with Nilpeter flexo press
    Nonwovens Industry

    Latest Breaking News From Nonwovens Industry

    Freudenberg to Establish Apparel Interlining Competence Centers
    Minet Adds Spunlace Line in Romania
    Lemu Group Engineers Mask-Making Machine
    Orthopedic Design & Technology

    Latest Breaking News From Orthopedic Design & Technology

    Cretex Companies CEO Steps Down
    Conformis Enters Development & Supply Agreement with SITES Medical
    Sectra, RSA Biomedical Sign Distribution Agreement for Implant Stability Tool
    Printed Electronics Now

    Latest Breaking News From Printed Electronics Now

    UDC Subsidiary Adesis' Website Wins 2020 MarCom Platinum Award
    Ambiq Wins IoT Semiconductor Company of the Year Award
    Ynvisible Names Michael Robinson CEO, Jani-Mikael Kuusisto SVP Ventures

    Copyright © 2021 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

    AD BLOCKER DETECTED

    Our website is made possible by displaying online advertisements to our visitors.
    Please consider supporting us by disabling your ad blocker.


    FREE SUBSCRIPTION Already a subscriber? Login