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issue: January 2005 APPLIANCE Magazine

Materials Forecast 2005
Coatings


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by David Simpson, Contributing Editor

Price pressures impact coatings - petroleum-based and porcelain enamel.

Looking at the organic powder coating market, Craig Deitz, marketing and product manager at DuPont Powder Coatings U.S.A., Inc. (Houston, TX, U.S.), says there were no shortages to appliance producers or their suppliers in 2004. “The powder coating industry experienced a shrinking market from 2000 through 2003, due primarily to the economy. In 2004, we are seeing a return to growth, albeit moderate,” Mr. Deitz says.

“Sales prices have been raised due to raw material prices going up,” he adds. “Feed stocks for resins that are petroleum-based have gone up considerably. Increased demand from Asia and increased transportation costs due to [the terrorist attacks of] September 11 have all contributed. We are leveraging our extensive buying power to maintain raw material costs, but we continue to see unprecedented price increases with no end in sight. The largest hikes are in epoxy technology. I can’t predict how long this phase of our economy will last.”

Supply has not been an issue for organic coatings supplier PPG Industries Inc. (Delaware, OH, U.S.) or others in the industry, comments Scott Campbell of PPG. “On the demand side, we have seen that the tenuous macroeconomic recovery has increased manufacturing activity. This, in turn, has increased the demand for our coatings products, which has been a welcome trend. We anticipate growth in volume in 2005 due to continued growth in the appliance industry,” Mr. Campbell says.

“Many of the components of our products are derived from oil, which has had a well-publicized run-up in price,” he continues. “Also, some commodity resins that form the backbone of our coatings have dramatically increased in price because of capacity constraints. These two factors have forced us to pass on price increased to our customers in 2004.”

Porcelain enamel, despite not being petroleum-based, is not immune from price pressures. Notes Klaus-Achim Wendel, managing director of Wendel GmbH (Dillenburg, Germany), “In our industrial sector, we are facing constantly rising purchase prices for the most important raw materials in our production. Furthermore, the cost of energy will rise noticeably—i.e., gas 30 to 40 percent—and electricity between 15 and 20 percent.

“In summary, it is clear that the production costs for enamel frits will increase in a range from 3 to 5 percent,” Mr. Wendel says . “As a result, it is to be expected that producers will pass on these increases to their customers to at least partly cushion the impact of these cost increases.”

According to Jack McMahon, Pemco Corporation (Baltimore, MD, U.S.), for a number of years, manufacturers of enamels, especially in Europe and the U.S., have been absorbing costs rather than passing them on to their customers. “A variety of costs continued to increase, including insurance, benefits, and energy. None of these costs were passed on. Only the additional costs due to cobalt and nickel were passed on, and even these additional costs were not fully recovered,” he notes. “Now we are seeing some fairly significant movement in prices for other raw materials as well. As we go forward, we can’t see these pressures alleviating. I can’t see any of the manufacturers in Europe or the U.S. absorbing these increases much longer.”

Cullen Hackler, executive director of the Porcelain Enamel Institute (Norcross, GA, U.S.) adds that frit prices in the U.S. have been up 5 to 10 percent, with price increases expected in 2005, perhaps in the range of 5 to 6 percent. “Energy prices have added pressure, as melting of the raw materials is a key part of the frit-making process,” he explains. “In addition, environmental compliance costs continue to increase and are a primary driver, along with energy, on upward price pressure for all frit-making raw materials. The key metals-cobalt, nickel, and copper-remain volatile, particularly cobalt. which comes from politically charged Africa and Russia.”

Brad Devine, market development manager at Ferro Corporation (Cleveland, OH), says his company has seen a 10-percent increase in porcelain enamel pricing in 2004. “I expect pricing to increase 5 to 10 percent again in 2005 due to the increased cost of raw materials such as cobalt, nickel, copper, titanium, zircon, natural gas, and electricity needed to produce our porcelain enamel products,” he predicts.

Materials Forecast 2005

 

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