The chemicals are the last of over 30,000 substances which have to be registered with ECHA with dossiers on their safety profiles under the European Union’s REACH regulation on the registration, evaluation, authorization and restriction of chemicals.
Already two tranches of the total of industrial chemicals on the EU market have been registered since the regulation came into effect 10 years ago. The last tranche, which have to be registered by the end of May next year, is the largest covering around 25,000 substances, which are produced or imported in annual amounts between 1 and 100 tons.
The vast majority of the producers or importers of the chemicals – comprising around 60,000 registrants – are SMEs supplying niche markets like those for speciality additives for coatings and related formulations.
European coatings companies are worried that a considerable number of the SMEs may not register their chemicals because of the costs and administrative burden of registration. To avoid breaching the regulation, unregistered chemicals will have to be taken off the market after the mid-2018 deadline.
Since they are downstream users of chemicals, most coatings companies have no registration obligations except to provide their chemicals suppliers with information about the ways substances are applied for inclusion in the registration dossier.
But some coatings companies, especially SMEs in speciality segments, make or import some of their formulation chemicals which they have to register. Also some coatings distributors, many of them SMEs, import or even produce themselves chemicals which require registration.
“The impact of REACH registration costs on SMEs is a big worry,” said Marco Susnik, REACH specialist at The European Association of Craft, Small and Medium-sized Enterprises (UEAPME), which has many members in the coatings value chain.
“There are a lot of complex supply chains in the coatings and other sectors where SME producers are importing raw materials to make specialist chemicals,” he explained. “They could stop making these products because the registration costs are too expensive, which will affect hundred and probably thousands of downstream formulators like coatings producers.”
The European Council of the Paint, Printing Ink and Artists’ Colours Industry (CEPE), the European trade association for coatings, has been keeping a close eye on the REACH registration process through its membership of a chemical customers’ alliance called the Downstream Users of Chemicals Co-ordination Group (DUCC). The downstream users organization is a member of the Directors’ Contact Group (DCG), a body representing the European Commission, the EU executive,
regulators and industry which has the task of sorting out difficulties with REACH registrations.
“We are concerned that the portfolios of chemicals suppliers, particularly for low-volume products, might not be 100-percent the same after registration,” said Janice Robinson, CEPE’s product regulations director. “There is no cause for panic yet. We would like suppliers to signify as early as possible which chemicals they will not be registering so that chemical companies have sufficient time to look for alternative sources of supply.”
A study on SMEs, commissioned by ECHA and published in October (2017), found that a large proportion of smaller companies are not preparing themselves properly for the mid-2018 deadline. “Unfortunately, a sizeable number of SMEs have moved too late and will face tough decisions in terms of rationalization of their substance portfolio,” it said.
The report, by Risk & Policy Analysts (RPA), Loddon, Norfolk, England, segmented SMEs into six groups ranging from those which have already started organizing their registrations to those who currently cannot afford the costs of registration or are taking no notice of the REACH rules.
Even among groups which are aiming to register as much of their portfolios as possible companies have not yet begun the registration process, according to the study.
A group which RPA calls the Planners, accounting for 35-40 percent of SME chemicals sector, tend to take registration the most seriously with many having had experience already with REACH registrations. But 49 percent of medium-sized, 64 percent of small and 77 percent of micro Planners had not yet put in place the administrative resources and budget needed for registration. Around a third were intending to reduce parts of their portfolios after the registration deadline.
Companies in another group – the Key Component Manufacturers who make specialist chemicals and are key suppliers to low volume, high margin coatings producers – are aiming to rationalize their portfolios by withdrawing the least valuable substances from the market.
Some of their products are so vital to coatings and other customers that an average of 10 percent of purchasers are helping to finance the suppliers’ registration costs. In Italy the proportion is 20 percent.
The most vulnerable to the impact of the registration are three groups -- the Strugglers, No-Hopers and Ignorers – who might make up as much of 40 percent of the SME sector, according to RPA.
Companies within these groups may have to withdraw large proportions of portfolio products just to offset registration costs. “(The No-Hopers) have gone or will go out of business once they have verified and understood the cost of registration of their substances,” predicted the report.
One strategy by companies in all three groups could be to reduce the output of individual chemicals so that it falls below the one tons-a-year threshold above which compliance with REACH registration rules is required.
The most expensive part of the registration process is the price of the safety data required for registration dossiers, a high proportion of which is owned by large chemical producers providing basic or intermediate chemicals. Charges for access to safety data can range from €10,000 – 25,000 ($12,000- 30,000) to as much as €250,000, according to RPA.
ECHA put forward a proposal in October (2017) for giving SMEs free access to safety data. But this has been opposed by the Brussels-based European Chemical Industry Council (CEFIC) representing the larger chemical producers.
Just how many chemicals are registered by SME by the middle of next year could depend on a compromise thrashed out within the DCG by SME representatives, like UEAPME and CEFIC.