Trade Resources Economy EURATEX Urges European and Local Authorities to Investigate The Suspected Cartel

EURATEX Urges European and Local Authorities to Investigate The Suspected Cartel

Among the most crucial issues raised during Euratex General Assembly held on June 4th 2014, special attention was paid to the growth of dyestuffs prices.

Alberto Paccanelli, President of EURATEX, stressed forcefully that, “the EU high quality weavers and finishers are facing an unwarranted and difficult crisis due to unacceptable price-hikes in the dyestuffs market, which impacts the overall competitiveness of this important link of our value chain.”

He added,  “I solemnly call on the buyers further down the supply chain to accept to pass through prices increases to maintain the competitiveness of the European textile industry source of high-quality, high-fashion and highly sustainable products. It is a matter of solidarity as the situation is quickly deteriorating.”

Since one year the European industry is facing an unprecedented and not controllable growth of dyestuffs prices. This is combined with shortages in the raw materials leading to the inability to produce the fabrics in the colours and quality standard requested by contracts and unreliable delivery of dyestuffs that is causing uncertainty in the orders fulfilment. Another negative factor is long lead-time as textile companies in the EU saw their dyestuff orders slashed considerably with long delay in their delivery or cancellation of their order.

Mr Paccanelli raised a warning regarding today’s situation, “The lack of ability of our small companies to pass on the costs in their supply chain due to the pressure on the prices for textiles in the world market means that many companies may simply be going out of business in the very near future, thus hampering the overall innovativeness, competitiveness and financial position of the high-quality SMEs textile producers in the EU.”

This situation has been confirmed by two enquiries launched by EURATEX in the last months. Those established that the maintenance of a high-quality and reactive European industry is put into jeopardy by the record growths in dyestuffs prices due to disappearance of chemical intermediates originating from China and India who have driven the competition out from alternative supply sources.

Examples of the most impacted intermediate chemicals include H acid, bromaminic acid and anthraquinone derivatives. Most dyestuff types have been impacted by the current raw materials market situation, including the most widely used in textile manufacturing such as reactive and direct dyes for cellulosic fibres, as well as disperse, acid and metal complex dyes for synthetics and wool fibres.

The shutdown of production units and strong reduction of the remaining capacity has been triggered by stricter standards for waste water by the respective environmental departments.

Mr Marchi, Director General of EURATEX reacted confirming that,  “Although these regulatory moves are welcomed from an environmental stand point, it has backfired since our industry and possibly also others (e.g. tanning industry) in the EU are experiencing severe shortages and tremendous price rise of the raw materials necessary for our production. It has become apparent that the competitiveness of our industry, mainly composed of SME’s, is being extensively hampered. These conditions are threatening all the efforts made by the EU companies to innovate and produce sustainable and quality products.”

EURATEX analysis has concluded that over the past few months the price of some dyestuff has been increased by 80% at least. The intermediates going to the formulation of these dyestuffs have increased on the other hand by up to 167% - 447% (see graph)! A situation that is worrying knowing that this is now also impacting other key industries like the automotive supply chain.

In conclusion Mr Alberto Paccanelli stated that,  “It seems that there will be no let-up in the price volatility. We are facing a long term dilemma as we have a strong indication that investors in China and India are walking away from the chemical sector while the biggest intermediates companies increased their “cooperation and partnership” as way to dictate and impose the price. Realising the vital need of being able to pass through the price hikes further down in the value chain, EURATEX urges European and local authorities to investigate the suspected cartel in the chemical intermediate market."

Source: http://www.fibre2fashion.com/news/Association-news/euratex/newsdetails.aspx?news_id=164521
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EU Textile Sector Facing Difficulty to Access Dyestuffs