REACH: safety has its costsThe chemical-tanning sector seems to have surpassed pretty smoothly the REACH deadline of 31 May 2018 and reassures its customers on the continuity of supplies. Financial disbursements related to the registration of substances have been though rather burdensome for the small and medium companies of the sector
It has been a couple of months since the decisive deadline of May 31, 2018 that saw the conclusion of the transitional phase of REACH, and the apocalyptic scenario that someone had feared fortunately did not occur, because companies got organized in time making also extensive stocks of the most used substances. At the moment there are no particular difficulties in finding chemical elements to realize the many formulas, that are necessary for the tanning process, therefore the concerns are postponed until the end of the year when the stocks are exhausted and companies will have to purchase on the market on a moment-based availability.
Suppliers of chemical auxiliaries tend to downsize the issue and reassure customers: the transitional period of the Reach Regulation has given everyone time to get organized and there is no fear of shortages or disappearances of important substances. Some manufacturers report that they have already replaced without problems certain ingredients within their own formulations with valid alternatives giving notice to customers.
“The effects of the May 31 deadline can only be fully assessed towards the end of the year, once stocks have been used up by the companies - explains Ernesto Pisoni, President of the Italian Association of Leather Chemicals (AICC). But there is nothing to worry about, the system will be fully operational within a short time. In this respect should be taken into account the following: so far Italy has registered just over 3,000 substances out of the 20,000 registered in total in the EU. It seems a low number if you consider that it is the country most interested in the chemistry of leather. Probably large chemical multinationals have taken the lion’s share in the recordings and the consequences of this are all to be verified”.
The concern about the possible unavailability of some products is connected to the official numbers, as explained by Stefano Arpisella of CentroReach: “There were plans to get requests for the registration of about 30 thousand substances, but to date there are still missing about 10 thousand. Most likely they were little used substances that were not convenient to record, but it will take a few months to understand the real situation”.
Another central theme is the possible price increase of chemical formulations linked to the registration costs. As is well known, the registration of substances has led to a considerable financial disbursement by companies. “The costs incurred by the Italian tanning chemical sector are hard to quantify, for sure we can calculate though amounts above twenty million euro” explains Maurizio Maggioni, secretary of Unpac, the Italian association that brings together chemical-tanning companies. It will be difficult to offload these disbursements onto the final product prices which, among other things, are already suffering from the considerable recent increases in raw materials. After the price increases of 2017, also the first quarter of 2018 recorded double-digit increases in the quotations of the main commodities commonly used in the sector, which suggest further adjustments to the chemical-tanning industry price lists.
While he is waiting to see what will happen on the market, the entrepreneur Claudio Rosati of LMF Biokimica says: “On our side we invested a lot of money for registration, now we have to understand what will happen. I am eager to see if it will be possible to recoup at least some of these important costs. We hope that at least in the end, after a period of adjustment, the situation will get back to normal.” Marco Frediani of KLF Tecnokimica is also worried about how the market will move: “I am afraid of price increases and speculations that I fear are inevitable. We too registered a certain quantity of several substances but I am not sure that they will be sufficient for our needs. My fear is that for some substances monopoly regimes will be created”.
“The adjustment to Reach is a business cost that can not be passed on to customers - says Andrea Meucci of Dermacolor - After all, today the market can not keep up with further burdensome price increases. For our part, we have dragged into price lists only those linked to the increases of our suppliers”.
Antonio Montecalvo of Alanchim says: “We have invested a lot of resources on Reach but so far nobody has been able to add even a small percentage of these costs to the price, because the market is already stressed by the price increases of raw materials. However, we must be very careful in the near future because margins are increasingly reduced”.
To sum up, if the deadline of May 31 has passed without major traumas, it can not be said that the chemical-tanning sector is straightforward on its future at least from an economic-financial point of view. The sector is squeezed between the costs incurred for regulatory compliance and a tanning market which is naturally unwilling to accept further increases in addition to those already applied in the last year. A partial cost redistribution incurred for registrations along the supply chain is, however, perhaps inevitable, but it will still take some months to understand the extent of these increases and in what percentage they will reach the final customer, i.e tanneries.
After a long transitory phase the regulation for chemical safety in Europe is getting to the heart of the matter. From 1 June 2018, unregistered chemicals (unless exempted for quantities of less than 1 ton/year) can no longer be marketed or used for the production of items, except for the disposal of stock quantities purchased before that date. Since the “no data, no market” principle is at the basis of the European REACH regulation, companies that have not registered the substances at ECHA (European Chemicals Agency) by 31 May 2018 can no longer produce, import and use them.
In fact, Reach establishes that all manufacturers and importers of chemicals must identify and manage the risks associated with the substances they manufacture and market. The purpose of the registration is to build a technical dossier showing all the characteristics of a specific substance. In addition, all exposure scenarios must be provided for the permitted uses and for which the registration is made.
What will happen now?
The word of the expert Paola Ulivi of Danger & Safety