Pavement Marking Materials Shortage Tests Manufacturers, Contractors in 2010 Season

Worldwide shortage of raw materials produces production and inventory declines.

Pavement marking contractors having a tough time getting paint, epoxy, and thermoplastic materials - and paying more for them -- as a result of a worldwide shortage of raw materials will likely be facing that situation for the remainder of 2010 and possibly beyond, according to a recent report and survey by the American Traffic Safety Services Association (ATSSA).

According to the Report on Raw Materials Shortages in the U.S. Pavement Markings Industry, a shortage of raw materials producers need has resulted from the limited availability of some resins and rosins that are used as binders in some pavement marking materials. In addition there is a shortage of Titanium Dioxide, a white pigment with a high coefficient of reflection that is used to produce white and yellow marking materials.

"…All of the producers that we surveyed anticipated that raw materials prices would be higher in the future when compared to a year ago, even if supplies normalized or increased, due in part to increased demand, including on an international basis," the report noted. "In looking at the effect of raw material cost increases on finished product prices in the marketplace, virtually every manufacturer anticipated an increase when compared to a year ago."

ATSSA reports that because of the shortages every pavement marking manufacturer was producing material below their capacity.

  • 78% of manufacturers reported that they were having difficulty obtaining resins/binders to produce pavement marking materials
  • 56% reported difficulty in obtaining Titanium Dioxide. "Of those that reported little or no difficulty in obtaining TiO2, it was generally due to the fact that they had either stockpiled product in anticipation of a shortage or had located product in the marketplace at much higher costs than historically had been the case."

As a result of their inability to obtain the raw materials, markings manufacturers reported their production was down significantly relative to normal production at this time of year. Paint producers reported production down an average of 50%, thermoplastic producers reported production down an average of 43%, and epoxy producers reported production down an average of 78%.

ATSSA says there is "a significant concern" that as inventories continue to decline safety on roadways could be jeopardized, particularly for overlay projects that require new centerline, edge line and lane markings. "Indeed this could adversely affect project completion," ATSSA reports.

"The further result of reduced production is that roadway marking contractors who have contractual obligations as subcontractors to general contractors or as direct contractors to state and local governments to mark roadways may very well be unable to deliver their product within the timeframe and cost structure of the original project plan."

In addition, 100% of producers also reported their timeframe for delivery of pavement marking products has increased when compared with the average of the last three years.

"Although it was not a formal question in the survey, anecdotally, almost all manufacturers indicated that the timeframes they quoted were for existing customers, and that they were not able to serve new customers at this time," ATSSA notes.

Development of Shortages
The manufacture of paint, epoxy and thermoplastic includes raw materials that enhance color, brightness, and binding in the finished product. While the materials are not the same for each product they include Acrylic Resin, Rosin Esters, Liquid Epoxy Resin and Titanium Dioxide (Ti02)2.

ATSSA reports that what it terms "a perfect storm" of events has contributed to the shortage, including the economic downturn that has forced chemical companies to cut back on production to stay profitable.

ATSSA reports that two key components of Acrylic Resin, propylene and acrylic monomers, are in short supply. Likewise, Liquid Epoxy Resin and Converted Epoxy Resin are also in short supply due to the loss of production of a critical raw material, phenol, which Dow Chemical Co. produces in Texas. In March Dow announced it was developing an allocation plan for phenol, and ATSSA confirmed in a survey that marking material manufacturers have been forced to reduce production of liquid epoxy resin and converted epoxy resin because of the lack of raw materials.

In addition, two components in the resin system for thermoplastic, Resins and Rosin Esters, have restricted availability. According to ATSSA, resins are derived from gum rosin or pine tree sap and while some is produced in the United States, most is imported from China and countries along the equator. ATSSA attributes the lack of availability of these resins largely to an "an incredibly poor" 2009 harvest of gum rosin along the equator and in China, in 2009. But it reports that because China has increased its road construction they are using more of the product and exporting less. And, ATSSA reports, the largest domestic manufacturer of rosin esters closed one of its three production facilities, eliminating one-third of the available production.

"Additionally, the global leader in the refining of Titanium Dioxide was forced to pull back production due to the economic downturn, resulting in current shortages for all users of this pigment," ATSSA notes, adding that the current shortages are worsened because "these raw materials have other uses, some of which have historically brought higher prices."

ATSSA reports that these and other events have resulted in a decline in production of pavement marking materials in the United States. That, in turn, has forced material producers to place many of their pavement marking customers on allocation, meaning producers are rationing material to its customers.

ATSSA reports that as raw materials become scarce, prices have gone up, and those price increases are now being felt by pavement marking contractors throughout the country as manufacturers announced a price increase in late April.

"Now as the economy has begun to improve, overall demand has increased, but full production has not returned, thereby exacerbating the shortages," ATSSA notes. "The pavement marking industry has in the past been one of the lowest priced and least profitable industries for the suppliers of resins and pigments. However, as a result of these shortages, the pavement marking industry now has to compete with other more profitable industries in order to maintain allotted supplies, resulting in higher production costs."

Raw Materials Definitions and Uses

Acrylic Resin, is the backbone or glue that holds all of the other raw materials together to make finished water-based paint, including colored traffic paint. This resin and its derivatives are used in just about every water based paint including house paints.

Rosin Esters are the main component in the resin system for Alkyd Thermoplastic. They are derived from gum rosin or pine tree sap. Rosin Esters are used in many other applications such as adhesives, inks and coatings and even food products such as chewing gum and soft drinks.

Liquid Epoxy Resin (LER) is the backbone or glue for epoxy paint. It is a petroleum derivative that is manufactured in chemical reactors by several large chemical companies around the world. LER is used in hundreds of applications in many different industries from floor coatings to waterproofing coatings.

Titanium Dioxide (Ti02) is refined from Titanium which is a mined ore. Ti02 is the pigment that makes traffic markings opaque and white and yellow markings bright. Ti02 is used in virtually every industry imaginable from coatings to medical to foods and other products like tooth paste.

Source: American Traffic Safety Services Association