British ferro-titanium producers have moved to allay any worries about trading with Europe after the UK's exit from the European Union trading bloc ('Brexit'), with most confident they can satisfy the EU's strict regulations on chemicals.
The EU's regulations on the Registration, Evaluation, Authorization and restriction of Chemicals (REACH), which came into force in 2006, monitors the production and use of chemicals and their impact on health and the environment.
Prior to 2021, UK manufacturers and importers that sold or distributed chemical substances or formulations had to adhere to the REACH regulations, which are widely regarded as the most complex legislation in the EU's history and among the strictest laws regulating the use and sale of chemical substances.
"REACH may prove to be a problem for UK-based producers and it may be that they will have to open an entity on the continent that is registered for titanium supply or they will have to make agreements with importers or distributors that hold the necessary REACH numbers for sufficient quantities," an EU-based producer told Fastmarkets. "So, yes, there will be some costs associated to this somehow."
UK-based ferro-titanium producers, or EU producers with a strong UK presence, had been worried about the potential ramifications of Brexit on their costs, with possible new expensive import tariffs and losing their competitive edge to Russian sellers, another major supplier.
Another worry for British producers was that Brexit would hand new opportunities to rivals in the EU, because it would be more difficult for British ferro-titanium producers to sell in the EU due to increased documentation and difficulties in obtaining feedstock, such as scrap turnings.
However, major British producers said they have things in hand for the time being, while the sector awaits the UK's own version of REACH - regulations that the EU would be satisfied were in line with its own.
"The REACH situation is relatively straightforward as far as we are concerned," one UK-based producer said. "Anybody who holds the relevant registrations for EU systems will shift those to a UK equivalent, [which should be] a relatively simple process.
"However, any new registration [with REACH] will be a much more difficult process. [But we suspect] that all major alloy producers in the UK will have undertaken the process already," the producer said.
"We registered ferro-titanium for REACH going back a number of years and prior to the year-end of 2020 had made arrangements to transfer our REACH registration to a EU entity, so we reckon that we are fully compliant and ready," another UK-based producer said.
"We would not be surprised, however, if others were not so prepared. With our group companies and the number of products that we deal with, we had to be prepared. And [it is likely that we have sufficient] resources, in terms of personnel, to deal with the changes - [because] it would have been a disaster for the group if we left anything to chance," he added.
According to the European Chemicals Agency (ECHA), which manages the technical, scientific and administrative aspects of REACH, any company established outside the EU is not bound by the obligations of REACH, even if it exports into the EU customs territory. The responsibility for fulfilling the requirements of REACH, such as registration, lies with the importers established in the EU, or with the
representative of a non-EU manufacturer established in the EU.
The UK government intends to achieve "associate membership" of ECHA, which means the UK would avoid duplicate testing and related costs under REACH regulations. However, that is not yet guaranteed and several British producers have already implemented contingency plans, such as setting up new companies in the EU.
In 2016, after the UK referendum on EU membership, some British producers had considered opening a nameplate office in the EU on the continent to have a physical presence there and clear their future trading under REACH. But even trading companies without physical assets or production capacity have a measure of protection outside REACH.
"Concerning REACH it is not a simple and straightforward situation," one EU-based producer said. "If, for example an end-user has REACH registration for titanium then there are no problems with supplying to them. From the other side, if an EU trader is buying from the UK and has no REACH registration, it could make things difficult. However, we don't really expect it to be a major problem because it is pretty easy to obtain REACH registration."
Major UK ferro-titanium producer FE Mottram, based in Sheffield, England, will be unaffected as its owner on the continent, Metraco, is fully REACH compliant, Fastmarkets understands.