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Disinfectant Shortage to Last Weeks Without Raw Materials (1)

March 27, 2020, 10:00 AMUpdated: March 27, 2020, 6:04 PM

Disinfectants and sanitizers that help fight the novel coronavirus may be absent from store shelves for weeks, as chemical manufacturers struggle to get the raw materials they need to make the products.

Companies are starting to see limitations on the amount of isopropyl alcohol manufacturers can purchase, as well as “supply interruptions” with items such as the towelette material found in canisters of wipes, said Howard Bochnek, vice president of technology and scientific affairs at North American Infection Control Ltd.

“Raw materials suppliers are having a tough time keeping up with demand,” Bochnek said.

At the same time, the estimated time to deliver finished products is growing from a normal five to six weeks, to 14 to 16 weeks, he said.

“The doubling or tripling of manufacturing times is a reflection of both supply delays and backed up manufacturing once supplies are available,” Bochnek said.

Some disinfectant ingredients from China stopped arriving weeks ago, one trade association official said.

Companies such as Dow Chemical Co. which makes isopropyl alcohol, are seeking regulatory waivers to produce more products such as hand sanitizers that can help with the Covid-19 pandemic, Dow spokesman Kyle Bandlow said.

The company has begun producing hand sanitizer at its manufacturing site in Stade, Germany, and is repurposing an existing facility to produce hand sanitizer in the U.S., he said.

Meanwhile, S.C. Johnson & Son, Inc. is working with its suppliers to get those ingredients and boosting its own production capacity, said Stephen Hogan, senior director of global public affairs. S.C. Johnson makes at least seven disinfectants that the Environmental Protection Agency has said can be used to kill Covid-19, the disease caused by the new coronavirus.

“We are experiencing supply constraints for some key materials used to make our products,” Hogan said.

Liquor Industry

The alcoholic beverage industry is starting to pitch in as demand for sanitizers rises.

Pernod Ricard, an alcoholic beverage producer known for products like Jameson Irish whiskey and Absolut vodka, is producing thousands of gallons of hand sanitizer from denatured raw alcohol, glycerin, and hydrogen peroxide, according to Bloomberg.

But the alcohol industry is seeing shortages in some raw materials as well. Some of the denaturing chemicals—substances that make alcohol not meant to be consumed smell or taste bad enough to make it unpalatable—are “very hard to come by,” said Matt Dogali, president and CEO of the American Distilled Spirits Alliance.

The Alcohol and Tobacco Tax and Trade Bureau waived specific laws March 18 to allow distilled spirit makers to produce hand sanitizer, or ethanol for use in hand sanitizer, without having to seek federal authorization.

Hand sanitizers are not subject to federal excise tax if they are made with denatured ethanol, according to the agency. The stimulus bill, approved by the Senate and under review in the House (H.R. 748), would waive the tax for other alcohol used to make hand sanitizer.

The bill fails to include tax relief for beverage producers that want to send raw alcohol to sanitizer makers, such as Dow, that don’t have adequate materials.

“They’re arguing right now that they can’t get the supply of ethanol that they need, and they’re not wrong,” Dogali said of companies like Dow. “If we were to ship raw ethanol to Dow Chemical, then it may be subject to the tax.”

Facing Tariffs

The raw materials needed for cleaning supplies “can’t solely be sourced from the U.S.,” said John Nothdurft, director of government affairs for ISSA-The Worldwide Cleaning Industry Association. The group is calling on the Trump administration to drop tariffs on Chinese imports. China is one of the largest partners for chemical trade with the U.S.

Getting raw materials from overseas can be expensive. Companies that want to ship products by air are paying eight times higher prices than usual, said Robert F. Helminiak, an attorney and vice president at the Society of Chemical Manufacturers and Affiliates.

Shipments by air and ship were coming from China until about two weeks ago when they dried up, Helminiak said.

Dropping tariffs on chemicals and other materials that chemical manufacturers need would help, “even if those could be temporarily removed—until we come out of this state of emergency or the pandemic ends,” and then a little beyond so the supply chain can catch up, he said.

The Office of the U.S. Trade Representative on March 25 sought comments on removing tariffs from Chinese medical care products. USTR did not immediately respond to a request for comment.

USTR’s notice suggests that it will consider tariff waivers for medical disinfectants as well as for inputs used to produce medical disinfectants, according to Eric Parnes, a litigation and international trade attorney at Hughes Hubbard & Reed LLP. The China tariffs include chemicals used to produce disinfectants such as iodine, chlorine, and various acids, he said.

The pandemic has been a “war on invisible germs that spread faster than we can imagine,” Bochnek said.

“We are fighting that fight with fewer and fewer available manufacturing resources, in an era of ‘just in time’ manufacturing, where we do not have the capability to quickly increase manufacturing capacity to make the items we need, at the speed that we need to make and ship them,” he said.

Health Care, Responders First

Even when the companies get the materials they need, it may take a while before consumers see such products on store shelves or get them delivered to their homes.

A company can increase production 20% or more, but if those products head to hospitals, it could take weeks for consumers and commercial companies to receive their own supplies, said Owen Caine, who manages government relations and public policy for the Household & Commercial Products Association (HCPA).

Health care facilities, first responders, and any other sector the federal government identifies as a critical user will receive disinfecting supplies first, said Samantha Williams, senior director for corporate communications at GOJO Industries Inc. The company, known for Purell, a hand sanitizer, also makes two disinfecting wipes approved by the EPA.

GOJO began boosting production of disinfectants and sanitizers in two U.S. facilities and one in France last December as news of the coronavirus outbreak in China emerged, president and CEO Carey Jaros said in a statement March 23.

GOJO’s focus now is safeguarding “those working so hard on the front lines to keep us all healthy and safe,” Williams said. “We will constantly evaluate our capacity against urgent demand and will make products available for other end-users as we are able.”

(Updated with additional information from Dow in eighth paragraph. Previous version corrected information about Dow in seventh paragraph.)

To contact the reporters on this story: Pat Rizzuto in Washington at prizzuto@bloombergenvironment.com; Sylvia Carignan in Washington at scarignan@bloombergenvironment.com; Rossella Brevetti in Washington at rbrevetti@bloomberglaw.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Rebecca Baker at rbaker@bloomberglaw.com

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