INSIGHT: Manufacturers fear ‘discontinuity risk’ from Reach

12 October 2010 18:03  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS)--While the sellers of chemicals in the EU seem to be making progress with the first tranche of Reach registrations covering bulk and hazardous substances, consumers down multiple supply chains are again expressing their disquiet.

Chemicals firms have had years to understand and prepare for Reach registration, but it is becoming more widely apparent that the supply chain communications process that was supposed to be embedded within Reach has failed.

Manufacturers in the UK fear a “discontinuity risk” from Reach if certain substances aren’t registered and EU supply suffers. They have been lobbying Brussels for greater clarity on the matter.

The fear is that that the supply of important chemicals will dry up. It has been suggested that the knock-on effect has already been felt and is pushing up prices in some markets.

Users of chemicals will only find out in March or April next year if certain substances on which they rely have been registered.

The suppliers of those chemicals must meet a 30 November deadline for registration of chemicals sold in volumes of more than 1,000 tonnes/year and of toxic substances of very high concern (SVHCs), or withdraw from the market.

The registration deadline is the first big test of the Reach process and of the way in which the European Chemicals Agency (ECHA) handles Reach registration applications, or dossiers.

Reach registrations for substances sold in the EU in lower annual volumes in 2013 and 2018 are expected to be much greater in number.

If a relevant chemical is not registered with the chemicals agency by the deadline, then it cannot be sold on the EU market. "No data, no market" is the rule.

The UK’s Financial Times reported this week that engineering, paper, glassmaking, automobile and military equipment suppliers were all concerned.

The manufacturer's group EEF and a number of other industry bodies have expressed their concerns about non-registrations to the UK government, which in turn has raised the issue with the European Commission.

The downstream industries represented by the various trade groups want clarification from the ECHA that a 12 month period of grace will be granted within which supplies of critical chemicals can be guaranteed, the EEF said.

A tricky, time-consuming, and sometimes costly, process it may be but suppliers have to register under Reach to stay in the market.

And they are doing so in droves. 1,532 chemicals were registered last week, the 40th week of the year, and the ECHA accepted 1,020 registration dossiers. By the end of the week, 5,940 dossiers had been registered.

There can be little certainty, but one estimate earlier this year suggested that 9,000 registrations could be made in 2010 which might cover 5,000 individual substances. Only some 2,500 substances have been registered to date.

“The task ahead in the coming weeks is truly daunting,” REACHReady director Jo Lloyd said on Monday. But she added that confidence among the Reach advisory group’s members that lead registrants should submit in time was building.

These lead registrants are expected to make the first registration of a substance based on the data they have collected from as many producers, sellers and users of a substance as possible.

Sellers of the substance in the EU can then follow the lead with a cut down registration package: in that way the ECHA is not over-burdened with length registrations containing repeat data.

But confidence has been gained at a cost. Some joint registrants feel they are being "held to ransom" to gain access to the data they need to support their own registration, the UK Chemical Industries Association (CIA) said.

“There is also a communication cost as during the frantic activity to submit by the deadline, many registrants have failed to reassure their customers that everything is on track, damaging customer-supplier relationships that have been built up over many years,” the asociation told ICIS.

It is that uncertainty which is starting to spread across downstream industrial markets.

“In the absence of the reassurance many downstream users are seeking from their suppliers, a common question we get asked on our helpdesk is ‘what happens if my supplier fails to register my use?’”, Lloyd said.

“Here we can offer some good news. If you receive goods for a use outside the scope of registration you will not initially be doing so illegally; a recipient of a registered substance has six months from receiving the news from the supplier to tell ECHA of the use and a year to complete a safety assessment that the substance can be used safely.”

The ECHA is providing some leeway once the initial registration has been made but it is still up to the supplier to make the first contact.

Under Reach, a company that misses the 30 November deadline must stop supplying from 1 December.

“ECHA warned everyone about this and calls for a delay are receiving little sympathy, despite strong arguments from some sectors,” the CIA says.

Reach was supposed to generate dialogue and data sharing up and down supply chains but it does not appear to have done so. There is little time left to get things right.

To discuss issues facing the chemical industry go to ICIS connect

By: Nigel Davis
+44 20 8652 3214

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