"Prices for all market segments, including appliance, are trending upward due to unprecedented raw material price increases," said Trena F. Benson, marketing manager, DuPont Powder Coatings USA (Houston, Texas, U.S.). "Supplies of raw materials have been affected by consolidations, strong demand in Asia, and recent storms, all merging to cripple output. While sourcing activities are becoming more challenging, we do not see a problem in meeting our customers' needs due to the leveraging power of our company.

"Increasing energy costs are also driving coaters to re-evaluate their options," she said. "As a result, interest is growing in our low-energy powder coatings to reduce their BTU usage."

Looking at usage trends, she sees appliance producers offering a greater variety of colors in an attempt to stimulate the industry. Also, she sees the dye sublimation process (digital transfer printing onto a powder coated surface) taking off in Europe, and she expects it to catch on in the U.S.

During the last 18 months, the powder coatings industry experienced unprecedented price increases for all key raw materials, and indications are that prices will remain elevated and extremely volatile in the near term, suggested Rohm and Haas Powder Coatings (Philadelphia, Pennsylvania, U.S.). While the company implemented a global cost reduction strategy, it increased prices in October. M. Reggie Horne, general manager, North America, explained, "The sustained increases in raw materials, energy, and freight costs and the efforts of Hurricane Katrina have made the situation worse and we expect costs to remain significantly high well into 2006."

Although porcelain enamel is not organically based, it too faces challenges. According to Brad Devine, sales and marketing manager, Industrial Coatings Group, Porcelain Enamel Division at Ferro Corporation (Cleveland, Ohio, U.S.), "Raw material, compliance, and energy costs to produce porcelain enamel coatings continue to escalate at a rate not seen for several years. Cobalt, nickel, lithium, zircon, and many other raw materials have experienced significant price increases during the past 3 years. Our lean manufacturing efforts have made a positive contribution but cannot offset the overwhelming impact of the energy and raw material issues. In 2005 we were forced to implement a 10 percent to 20 percent price increase for porcelain enamel products in the third quarter to recover some of these additional costs. I expect another increase to be necessary in 2006 if costs continue to increase."

In particular, Devine expressed concern about natural gas, which is a critical component in the melting of glass and the production of porcelain enamel products. While his company has not experienced shortages, he said, "I anticipate that gas prices will continue to trend upwards at least through the winter heating season and probably beyond. I expect this to affect porcelain enamel pricing in 2006 and beyond."

"We've seen a drastic increase in the costs of raw materials used in making porcelain enamel, and in energy costs," said Jack McMahon, president of Pemco Corporation (Baltimore, Maryland, U.S.). The company implemented a 10 percent to 25 percent cost increase last September, passing on costs that had already occurred. "A couple of years ago, there was concern mostly about cobalt and nickel. Today, most other raw materials have also increased, in some cases dramatically. We are also having a little trouble getting some of these key materials. While we can adjust the chemistry of some of our porcelain enamels, there is only so much adjustment that can be done and still hold the properties required by the customer.

"Energy is a wild card-what will natural gas and electricity do? We use a lot of gas to heat our smelters. Already natural gas has gone up to over double what it was a few years ago. It's not likely to drop back to its old prices."

McMahon added that his company is helping customers to become more efficient by such means as increasing line speeds and decreasing waste. These kinds of programs are especially important as appliance companies struggle with higher costs. Indeed, obtaining technical assistance from suppliers is one way for appliance companies to maximize the usefulness of today's high-priced commodities.