Availability of Raw Materials

Let's stay with the costs. What, if a producer who has to apply for registration or the importer of a substance will not fulfil the registration for reasons of costs? Maybe the profit arising from this substance will be only a fractional amount of the costs of the registration. In such a case the registration will not pay off. The raw material in question will disappear from the market. For the downstream users of this substance, e.g. the formulator of a coolant, this is, of course, a problem. In case raw materials are no longer available existing products have to be reformulated. In the best case there will be an alternative which can be used instead from the technical as well as economical point of view. In the worst case there will be no alternative. Then the downstream user will no longer be in a position to produce. Possibly even the downstream user who follows in the supply chain and so on, up to the end user.

In most cases reality will be situated between the mentioned extreme cases. Very often there are technically reasonable alternative substances which are, however, more expensive than the originally used one. Since lubricant formulations are always a balancing act between technical necessity and economical feasibility the formulator has to be very careful when selecting the alternative substance and he has to decide which substance cannot be used for cost reasons.

Up to now all suppliers for whom we are the downstream user promise that they will not stop production of any substance due to REACH. But what can they say else at this time? The actual economic situation which will exist at the time of registration will be shown only in the moment when the registration consortia, the SIEFs, will be grouped. Only then it will be clear which data are available and which studies still have to be carried out. Only then the real costs for the registration of a certain substance will be evident. And only then it can be estimated whether the registration will be profitable. The SIEFs will be formed in the beginning of 2009. Until that time no clear statement can be made with regard to the discontinuation of raw materials.

Raw materials can also disappear from the market for other reasons. They can be subject to authorisation and their use can be banned or linked to restraints. Fortunately only those substances are subject to authorisation which are extremely hazardous. Such substances are normally not used in the lubricant industry. Therefore it is rather unlikely that lubricants have to be reformulated because the raw materials are no longer available due to the authorisation process.

In any case the possibility that raw materials will no longer be available in the future require a very close communication between all members of the supply chain. Therefore we are in permanent discussions with our strategic suppliers and request their opinion to this subject. Thus we can guarantee that we will always be directly informed about the developments with regard to the availability of raw materials.