Colored Mulch Market 2019 Season Recap
The colored mulch market saw nice growth in 2019, due in part to a strong housing market, a strong stock market and an overall strong economy. Wood was in plentiful supply as a result of a boost in land clearing for housing developments and commercial logging. Overall, consumers were spending money on mulch, both in bags and in bulk.
As we move into a new year, here are some of the market trends and challenges from 2019 and our market predictions for 2020.
Mulch colorant and coloring equipment trends
While brown mulch colorant remained king across the colored mulch market in 2019, black colorant continued to gain market share from red. Outside of the Carolinas, the most popular shade of brown continues to move darker and darker. Price increases for steel, engines and labor have all contributed to an increase in equipment prices.
2019 market challenges
The trucking industry saw improvement but was still cause for concern throughout 2019 as rates remained high for both long-haul and short-haul.
Labor availability is still the biggest challenge facing the mulch industry, due to low unemployment rates nationwide. Retaining operations staff through the long hours of the busy season was especially difficult for mulch producers.
2020 market predictions
When it comes to raw materials, almost all high-quality oxide is produced in China and virtually none is produced in the United States. As a result, the 25% tariffs imposed on Chinese imports, including those raw materials used to manufacture mulch colorant, will have dramatic cost implications on mulch colorant.
Additionally, carbon black will see cost increases due to new shipping regulations affecting the supply and demand of No. 6 fuel oil.
In 2020, the International Maritime Organization (IMO) will be restricting the amount of sulphur in fuel oil on board ships operating outside designated emission control areas. Maritime companies that are responsible for shipping raw materials used in mulch colorant will have to choose between these three options to ensure they are compliant with the new limit:
- Use low-sulphur fuels
- Install exhaust scrubbers, which would cost millions of dollars
- Use alternative fuels
The costs of the new regulation are estimated to be more than $15 billion. Ocean carriers may be forced to pass these added costs along to shippers and, as a result, to colored mulch producers. As carriers work within these new constraints and the demand for alternative fuels rises, there is also the potential for delays and disruptions in the shipping process.
Despite the market challenges that faced the colored mulch market in 2019, and the implications of the tariffs on Chinese imports and the new IMO sulphur limits, the 2020 season looks strong as demand for colored mulch continues to grow and as colored mulch continues to take market share from uncolored mulch.
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