The British Coating Federation warns that sharp price increases for epoxy resins and supply bottlenecks are adding to the difficulties of paint and coatings manufacturers in the UK and across Europe, and further compounding the already existing pressures caused by the Covid-19 pandemic and resulting disruption.

On top of this, some manufacturers are also reporting additional friction being caused by the new trading conditions the UK has agreed with the EU, where 60% of the UK industry’s raw materials are sourced.

Epoxy resin prices have increased sharply since the latter part of 2020, while polyester resin prices are also on the rise. In particular, recent data from the German Paint and Printing Inks Association show very significant increases for epoxy resins - an important binding agent for many paints and coatings - of as much as 60% in recent months. UK paint manufacturers are also seeing sharp increases and with some suppliers to the industry resorting to monthly price increases.

Strong demand from certain markets is driving up prices, while a V-shaped economic recovery in China is also fuelling demand for these essential raw materials. In addition, the situation is being compounded by a current global shortage of containers which has led to a sharp rise in transport costs from Asia to Europe thus further restricting supplies to Europe.

Similar problems are affecting the market for polyester resins with factory closures in Singapore and Sweden as well an explosion at a factory in China adding to the difficulties. This in turn has resulted in suppliers diverting product to their local markets rather than Europe, further pushing up prices.

There are also problems with bisphenol-A, with stocks being diverted to polycarbonates. Neopentyl glycol and methanol are also both reported to be in short supply with road haulier problems creating delays in some cases and with higher shipping costs likely as we go into 2021.

This complex mix of higher demand, capacity and supply problems, together with restricted availability of transport resources is increasing uncertainty in the market and driving up raw material prices sharply.

On top of this, the coatings industry in the UK is faced with additional non-tariff costs related to the new UK customs arrangements with the EU for both raw material imports, as well as exports and imports of finished paints, coatings and printing inks.