Chemical importers, distributors and downstream end-users selling thousands of chemical products to UK customers — including base oils — face additional administrative burdens, costs and supply chain challenges in the coming weeks as the deadline for companies to comply with the UK-Reach regulations approaches.
The Regulation, Evaluation, Authorisation and Restriction (Reach) regime is designed to protect human health and the environment from risks posed by chemicals. UK-Reach is a regulatory framework independent of EU-Reach, which came into effect on 1 January this year.
Under the regulation, all chemical substances including base oils, additives and lubricants must be registered under a Downstream User Import Notification (DUIN) with the UK's Health and Safety Executive (HSE) by 27 October. Registration can be made by the importer, distributor or downstream end-user, which are classed as importers under UK-Reach. Only Representatives (ORs), legal entities based in the European Economic Area (EEA), can also register a DUIN on behalf of a UK-based importer.
For some importers, their suppliers are registering the majority of chemicals that they sell to UK end-users. For others, they must take on the responsibility of registering each chemical and paying the appropriate fees. Registration fees are based on annual import volumes and range from around £2,000 to £28,000 per chemical. Fees are complicating negotiations between buyers and sellers who are proposing cost-sharing models. For others, the registration cost is compounded by requirements for legal advice or additional administrative and research costs.
Some are concerned that non-compliance could give competitors an advantage. For others, it is an opportunity to gain market share in cases where importers might choose to halt sales of certain chemicals if costs associated with registration exceed the profitability forecast of the product itself. At ChemUK expo last week, UK government representatives and advisory companies urged importers to check that each chemical product in their portfolios has been registered under DUIN before 27 October.
Other complications arising from Brexit, such as transport shortages and associated higher costs, are compounding pressure on UK chemical supply chains. Many importers expect that uncertainty and disruption will continue for at least another 12-months.
The UK market has become increasingly dependent on imports of base oils and lubricants as domestic production declines. Domestic output fell to 286,000t last year, 35pc lower than in 2017. Production rebounded in the first six months of this year, rising by 22pc from the same period last year to 168,000t. Imports in January-June held steady on the year at 169,000t. The majority of imports during this period came from EU countries — Belgium, Germany and the Netherlands — while imports from Russia doubled on the year to 14,000t.
