The RSMA (Road Safety Markings Association) have carried out a survey investigating the availability of resin/rosin and titanium dioxide (essential constituent raw materials in thermoplastic road marking materials) in the UK market. Here’s what they say:
RAW MATERIAL SUPPLY AND PRICE SURVEY JANUARY 2011
Introduction
The Road Safety Markings Association (RSMA) is the trade body for the road marking sector in the United Kingdom representing the interests of its’ 90 member companies. Membership is drawn from Contractors, Manufacturers and third party suppliers, with RSMA member contractors installing approximately 90% of all road markings laid in the UK annually and manufacturing members producing in excess of 90% of the materials installed.
The RSMA raw material questionnaire issued in January 2011 is the fourth survey undertaken by the Association since April 2010, investigating the availability of resin/rosin and titanium dioxide (essential constituent raw materials in thermoplastic road marking materials) in the UK market, following extensive shortages throughout 2010. This fourth survey included, for the first time, questions relating to the increase in factory gate prices in 2010 resulting from these shortages along with questions on the current price pressures on finished materials resulting from ongoing increases being imposed by suppliers of these two raw materials.
Methodology
All eight principle thermoplastic manufacturers in the UK were surveyed by the Road Safety Markings Association between 5th January 2011 and 11th January 2011, with all surveyed providing responses to the questionnaire issued to them.
All respondents are accorded equal weighting in the analysis of their responses.
The summary of responses from Section A. and Section B., shown below, highlights only specific answers to questions as the additional questions not referenced were merely sub sets of the main question and the specific responses are summarised under the main question response.
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Section A. Issues surrounding Resin/Rosin Supplies as at January 2011
1. In terms of supply availability only i.e. not related to cost.
Have you or are you experiencing difficulties in sourcing required levels of resin/rosin materials for the manufacture of road marking materials
37.5% of manufacturers are still facing supply difficulties in resin supplies, however only 12.5% believe that this shortage may cause supply difficulties in delivering finished product to contractors in the coming months.
2. With the escalation in resin/rosin raw material costs, do you anticipate a rise in the factory gate prices for your road marking materials?
All manufacturers anticipate a rise in factory gate prices as a result of the raw material price increases they are facing in resin supply. The average rise in factory gate prices across all responding manufacturers is anticipated to be 13%, although some manufacturers feel rises have the potential to be significantly higher.
Section B. Issues surrounding Titanium Dioxide Supplies as January 2011
1. In terms of supply availability only i.e. not related to cost.
Have you or are you experiencing difficulties in sourcing required levels of titanium dioxide (TiO₂) for the manufacture of road marking materials
62.5% of manufacturers are facing supply difficulties with Titanium Dioxide supply (based on product availability and not price). Those facing difficulties are receiving supply limited to 25% to 50% of required product.
Manufacturers variously identify the Titanium Dioxide market as in disarray or likely to face severe supply difficulties by the third quarter of 2011, unless there is a significant change in circumstances. Notwithstanding this no manufacturers are predicting short term manufacturing problems based on scarcity of TiO₂
2. With the escalation in titanium dioxide material costs, do you anticipate a rise in the factory gate prices for your road marking materials?
All manufacturers are reporting that the increased costs of Tio2 will lead to an increase in the factory gate price for road marking materials in the short term and that the impact of this raw material shortage will be price rises averaging 13.5%
Section C. Overall Situation
1. In terms of trying to determine the impact of the raw material shortages in 2010 what has been the average change in the prices you charge per tonne of road marking material since January last year?
Across all surveyed manufacturers the average rise in a tonne of road marking material since January 2010 has been 16.5%, with an overall range of between 7.5% and 20%.
2. Considering your responses to questions 4b in Section 1 and Section 2 what range of increase in cost of finished product would you anticipate in the coming quarter, as a result of raw material price increases?
Respondents indicated that they felt that rises in the cost of a tonne of thermoplastic would range from 7.5% to 20%+ in the first quarter of 2011, with an average increase of 13.75% per tonne of thermoplastic. This rise relates specifically to the raw materials included in this survey and do not factor in inflationary pressures resulting from other raw material/constituent materials involved in thermoplastic manufacture.
3. Considering your responses to questions 4b in Section 1 and Section 2 what range of increase in cost of finished product would you anticipate in the coming year, as a result of raw material price increases?
Respondents indicated that they felt that rises in the cost of a tonne of thermoplastic would range from 7.5% to 20% in the remainder of 2011 (excluding the increases being identified in first quarter of 2011), with an average increase of 13.75% per tonne of thermoplastic. This rise relates specifically to the raw materials included in this survey and do not factor in inflationary pressures resulting from other raw material/constituent materials involved in thermoplastic manufacture.
Section D. Conclusion
The supply situation for resin/rosin and titanium dioxide continues to provide major concerns in the road marking industry; however, the price impacts of the supply shortage have now become the issue of greatest concern to the sector over the actual availability of the materials.
Whilst some issues of supply remain of concern the overall picture is one of significant ongoing upward price pressures for all manufacturers. These pressures are likely to have significant impacts for contractors and these issues need to be brought to the attention of clients, in support of a flexible approach, acknowledging that the projected increase cannot be absorbed within the terms of a road marking contract.
In order to maintain the level of service defined in many contracts it is likely that clients will have to acknowledge that additional uplifts will be required to be paid, otherwise a level of default in the delivery of road marking contracts will take place.
This is likely to affect all road marking manufacturers in all countries. It is inevitable that manufacturers will shortly have to increase their prices, possibly significantly, with a possibility of further price rises throughout the year.
Adbruf will try to keep their quoted prices valid for as long a period as possible. However, as a result of the current uncertainties, it may not be possible for Adbruf to quote prices that are valid for longer than one month. They understand that many of their customers are in the process of quoting for work and that uncertainties over the price they will pay for their materials makes this a very difficult task. Increases in raw materials costs, however, will be an industry-wide problem and all they can suggest is that you take into account the likelihood of material prices increasing during the year.
We hope this information is useful and please do not hesitate to contact us regarding the RSMA report or our product range.
