ILMA Compoundings - May 2019 - 26

"There are a lot of companies
that find multiple suppliers of
a particular product. They're
not necessarily going to buy
in large quantities long-term,
but they want to have them as
an option."
James Eggenschwiler, ILMA
consultant and director of global
trade, Redstone Group
As a best practice, anyone who is running a production
facility that relies on a raw material that is purchased from a
particular vendor in a specific country needs to have a plan,
Eggenschwiler said. "There are other Asian countries that are
trying to compete with China and supply product at the raw
material level. When you get into some additives that are a
little more unique, that is harder to do," he said.

Supply and Demand

Certain additives, such as many used in the metalworking
area, tend to come from China. "Domestic manufacturers
have converted to other chemicals," Leiter said.
Eggenschwiler has clients who can only buy a particular
item out of China because it is the only place that item is
sourced. "If you want it to really work as you've designed it
to work, you have to bite the bullet and buy it from China,"
he said.
Last year, there was a period where people were nervous,
so they started buying up the additives ahead of tariffs,
Leiter said, adding that some ILMA members experienced
supply chain disruptions as a result. "That messes up their
whole supply chain, especially if there isn't an immediate
alternative they can go to."
Damiani said trade concerns have made raw material supplies for those products only found in China even tighter,
and tight supply means the Chinese do not have to give any
price concessions. "We're pretty much stuck with the added
cost when it lands here in the United States," he said.
Eggenschwiler said he hears a mixed bag when it comes to
cost. "Some have said it has increased their costs, but they've

26

MAY 2019

| COMPOUNDINGS | ILMA.ORG

basically had good success at retaining customers by passing
on the price increase. There are a lot of folks that haven't
increased the cost," he said.
Lon Fanning, director of innovation and technical services
at DuBois Chemical, which is based in Sharonville, Ohio,
said he has experienced business as usual in terms of raw
material procurement. "We keep expecting to see costs go
up, but it isn't too much of a factor," he said.
When costs do increase, there is a lot of pain involved in
going to a customer and raising the price to cover the added
and new tariffs, Damiani explained. "We haven't done that
yet because of the uncertainty," he said.
Ron Powell, chairman of ILMA's global affairs committee and president of MorOil Technologies, said tariffs put
the U.S. at a clear disadvantage in a market that is very
price-driven.

More to Consider

The consensus is that the trade war with China could go on
for another four to six months, Eggenschwiler said.
While tariffs are a top concern, Leiter noted that exporters
also have to monitor chemical management. "They have
to certify they're on the [Toxic Substances Control Act
Chemical Substance Inventory] list. Sometimes people get
crosswise with EPA on that," he said.
One international trade issue ILMA members need to
be aware of is the International Maritime Organization's
low-sulfur requirement for fuel. "We've been telling folks it
could be disruptive to base oil supply," Leiter said.
Beginning Jan. 1, 2020, regulations put forth under the
International Maritime Organization will require all ships
to burn 0.5 percent maximum sulfur marine fuel. To make
the fuel, refiners are going to have to make changes to their
processing. Those changes could alter the current base oil
market, affecting supply as well as prices.
In addition, manufacturers exporting to South Korea
need to complete preregistrations within the first half of
2019 as part of K-REACH. The preregistration is a beginning document that lets a regulator know that this chemical
is coming into the country and is going to be re-registered
pursuant to the new law when the window opens for
registration to occur.
Depending on the annual volume associated with the
chemical, that window might not open for seven to eight
years based on how Korea is staging the registrations.
Manufacturers that don't complete preregistrations can't
ship that chemical to Korea until registration opens,
Eggenschwiler explained.
Long is a freelance writer and journalist. She can be reached at
925-750-7163 or mindy@mindylong.com.


http://www.ILMA.ORG

ILMA Compoundings - May 2019

Table of Contents for the Digital Edition of ILMA Compoundings - May 2019

LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
INDUSTRY RUNDOWN
TRADE ISSUES, TARIFFS CREATE CONCERNS FOR MANUFACTURERS
EMBRACING THE RAINBOW
THE FATE OF THE FAMILY TREE
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK
ILMA Compoundings - May 2019 - Cover1
ILMA Compoundings - May 2019 - Cover2
ILMA Compoundings - May 2019 - 1
ILMA Compoundings - May 2019 - 2
ILMA Compoundings - May 2019 - LETTER FROM THE CEO
ILMA Compoundings - May 2019 - INSIDE ILMA
ILMA Compoundings - May 2019 - 5
ILMA Compoundings - May 2019 - 6
ILMA Compoundings - May 2019 - 7
ILMA Compoundings - May 2019 - 8
ILMA Compoundings - May 2019 - 9
ILMA Compoundings - May 2019 - WHAT’S COMING UP
ILMA Compoundings - May 2019 - 11
ILMA Compoundings - May 2019 - INDUSTRY RUNDOWN
ILMA Compoundings - May 2019 - 13
ILMA Compoundings - May 2019 - 14
ILMA Compoundings - May 2019 - 15
ILMA Compoundings - May 2019 - 16
ILMA Compoundings - May 2019 - 17
ILMA Compoundings - May 2019 - 18
ILMA Compoundings - May 2019 - 19
ILMA Compoundings - May 2019 - 20
ILMA Compoundings - May 2019 - 21
ILMA Compoundings - May 2019 - TRADE ISSUES, TARIFFS CREATE CONCERNS FOR MANUFACTURERS
ILMA Compoundings - May 2019 - 23
ILMA Compoundings - May 2019 - 24
ILMA Compoundings - May 2019 - 25
ILMA Compoundings - May 2019 - 26
ILMA Compoundings - May 2019 - 27
ILMA Compoundings - May 2019 - EMBRACING THE RAINBOW
ILMA Compoundings - May 2019 - 29
ILMA Compoundings - May 2019 - 30
ILMA Compoundings - May 2019 - 31
ILMA Compoundings - May 2019 - 32
ILMA Compoundings - May 2019 - 33
ILMA Compoundings - May 2019 - THE FATE OF THE FAMILY TREE
ILMA Compoundings - May 2019 - 35
ILMA Compoundings - May 2019 - 36
ILMA Compoundings - May 2019 - 37
ILMA Compoundings - May 2019 - BUSINESS HUB
ILMA Compoundings - May 2019 - 39
ILMA Compoundings - May 2019 - COUNSEL COMPOUND
ILMA Compoundings - May 2019 - 41
ILMA Compoundings - May 2019 - 42
ILMA Compoundings - May 2019 - 43
ILMA Compoundings - May 2019 - WASHINGTON LANDSCAPE
ILMA Compoundings - May 2019 - 45
ILMA Compoundings - May 2019 - IN NETWORK
ILMA Compoundings - May 2019 - 47
ILMA Compoundings - May 2019 - 48
ILMA Compoundings - May 2019 - 49
ILMA Compoundings - May 2019 - 50
ILMA Compoundings - May 2019 - 51
ILMA Compoundings - May 2019 - 52
ILMA Compoundings - May 2019 - Cover3
ILMA Compoundings - May 2019 - Cover4
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