In 2006, the pavement sealcoating industry faced one of its most disruptive supply crises in decades. Virtually every producer of refined coal tar sealer encountered shortages or delays in RT-12 supply, leading to widespread delivery disruptions for contractors across North America. This was the fourth consecutive year the industry experienced at least a mild disruption in refined coal tar sealer delivery, and the factors behind it all traced back to one fundamental issue: the availability of crude tar. To understand how industries adapt to fundamental material shortages, consider the Rise and Fall of the Radial Arm saw, another story of a once-dominant material facing market upheaval. The coal tar story of 2006 offers a compelling case study in supply chain vulnerability, market competition, and industry adaptation.
The Origins of the 2006 Coal Tar Supply Crisis
Crude coal tar is a byproduct of the coking process used in steel production. Metallurgical coal is converted into metallurgical coke, and crude coal tar is recovered as a secondary product. This crude tar is then sold to processors who distill it into RT-12, the refined coal tar used in pavement sealers. For 50 years, crude tar served as the backbone of the sealcoating industry across most of the United States.
The Shrinking Supply of Crude Tar
A 1998 Koppers Industries report anticipated a 23 percent decline in coal tar supply through 2005 due to aging and closing of North American coking operations and the shift toward non-recovery coke ovens that produced coke without recovering coal tar. Mike Sutton, president and CEO of VFT Canada Inc., estimated that coal tar production in 2006 was down 25 to 30 percent from 2000 levels. Roughly 800,000 metric tons were produced in 2006, down from approximately 1.1 million metric tons in 2000.
The Koppers Bottleneck
Koppers Industries was the dominant player in coal tar distillation in North America, and its position was strengthened by the acquisition of Reilly Industries assets in early 2006. When Koppers faced disruptions, the entire industry felt the effects. Two major events triggered the crisis. First, a strike at a steel plant in Mexico shut down crude coal tar supply destined for Koppers. The problem was compounded by production cutbacks at other crude tar producers due to maintenance shutdowns and quality improvement initiatives.
Lee Lowis, vice president of Surface Coatings, reported that Reilly Industries informed his company in January 2006 they could not supply the contracted coal tar. “We knew then we were going to have some difficulties,” Lowis said. Surface Coatings ultimately switched to VFT and Tangent Rail Corp. STAR Inc., which operated 12 affiliates nationwide and bought 75 percent of its processed tar from Koppers, experienced the disruption acutely. Girish Dubey, president of STAR, noted that plants that did not buy from Koppers had far fewer problems securing RT-12.
How Sealer Producers and Contractors Responded to the Shortage
The response to the shortage illustrated the resilience of the sealcoating industry. Producers employed several strategies to stretch limited coal tar supplies and keep customers operational.
Blending and Substitution Strategies
The most common response was blending coal tar with asphalt-based sealer. Producers allocated coal tar on an as-needed basis, increased production of asphalt-coal tar blends, and ramped up marketing of straight asphalt-based sealers. Tim Vance, president of Vance Brothers, described a week-by-week management process. “We had some coal tar in storage from last year but once the season started we started blending material more and we sold some asphalt-based material straight,” he said. “If we just sold coal tar-only material we would have run out pretty quickly.”
Vance Brothers saved enough coal tar for pure coal tar sales when cooler weather made its properties critical. The Brewer Co. created a blended product for the first time. Bill Maclean, sales manager, acknowledged that a blend was a compromise compared to 100 percent coal tar emulsion but was necessary to maintain supply. Surface Coatings came close to running out and blended with asphalt-based sealer for a period. “It was an availability issue, not a price issue,” Lowis said. A 20 percent cut in August represented a 70 percent cut for the balance of the year.
Contractor Adaptation
Some contractors asked clients to postpone work until 2007 rather than switch to asphalt emulsion sealer, because their businesses were built on coal tar. Others accepted blended products and adjusted application methods. Surface Coatings went to its largest accounts, explained the supply situation, and referred them to other suppliers who might have coal tar. Lowis described this as a customer service measure, hoping those customers would remember the gesture in 2007.
“Our customers accepted it pretty well,” Vance said. “It was either that or we would have nothing to sell. There really wasn’t much else anyone could do.”
Market Forces and Competition for a Limited Resource
The Aluminum Industry Factor
Roughly 75 percent of coal tar was sold as carbon pitch to the aluminum industry. The remainder was split among the railroad, roofing, and sealcoating industries. This created a fundamental economic pressure: aluminum could pay more for coal tar derivatives than sealcoating could. “As distillers of coal tar we have a decision to make: which customers are we going to supply?” Sutton said. “Frankly the answer is we will supply the customer who can provide the best return for us.” With the North American aluminum market projected to grow 2 to 3 percent in 2007, competition was expected to intensify. VFT planned to reduce refined coal tar production by 50 percent in 2007, redirecting capacity toward the more profitable aluminum market.
Declining Distillation Capacity and Import Limitations
North America had roughly 15 coal tar processing plants in 1990. By 2007, that number had fallen to seven. Each closure permanently reduced the ability to produce refined coal tar sealer. Importing crude tar was not viable. China no longer exported crude tar due to its own industrial growth. India priced its crude tar at U.S. domestic levels, and shipping costs made it uneconomical for sealer production. Rising fuel costs led many countries to burn coal tar as fuel rather than sell it for industrial processing.
Lessons Learned and the Future of Pavement Sealcoating
The Shift Toward Asphalt-Based Sealers
One significant outcome was the accelerated adoption of asphalt-based sealers. STAR reported increased asphalt sealer sales in 2006. Dubey noted that having asphalt-based coatings with a 10-year performance track record was a saving grace. Some projects required ASTM D-5727-00 compliance, mandating 100 percent coal tar sealer, for which no substitute existed. The table below summarizes the key differences between the two materials.
| Property | Coal Tar Emulsion | Asphalt Emulsion |
|---|---|---|
| Raw material source | Steel coking byproduct | Petroleum refining |
| Oil and fuel resistance | Excellent | Moderate |
| Temperature range | Wider, performs in cooler weather | Narrower, requires warmer conditions |
| Supply stability (2006) | Declining, tied to steel/aluminum | More stable, tied to oil prices |
| Industry track record | 50+ years as standard | Growing acceptance |
| Cost trend (2006-2007) | Rising due to scarcity | Comparable, subject to oil volatility |
Conflicting Outlooks
Industry leaders offered sharply different perspectives. Al Morris, president of Coopers Creek Chemical, took the long view: “It’s just the nature of the industry that it’s a drastic situation from time to time. I’ve been in the business for 50 years and I’ve seen a lot of things come and go.” He cautioned against over-reliance on petroleum: “I guarantee you there’s a lot more volatility and uncertainty in [the petroleum] market than there ever has been in coal tar.”
Dubey was less optimistic: “I’m concerned about what direction the coal tar business is going. If I could change everything to asphalt emulsion I would do that.” He predicted continued difficulties and noted STAR was equipping more plants for asphalt sealer production.
Practical Advice for Contractors
Industry leaders offered several practical recommendations:
- Maintain strong supplier relationships and accept available material to build loyalty for future shortages.
- Be transparent with customers about the material being used. Honesty about switching from coal tar to a blend builds trust.
- Adapt application processes to the specific material, as coal tar and asphalt sealers differ in drying time, temperature sensitivity, and technique.
- Evaluate all costs carefully and adjust pricing. The industry had gone 15 years without significant cost increases, but the 2006 events signaled a new pricing environment.
Vance captured the industry’s resilient spirit: “I like to think we’re not just in the coal tar sealer business, we’re in the coatings business. I like to think that our customers are in the coatings business too and they’ll adapt based on what coatings are available.”
The 2006 coal tar shortage was a watershed moment for pavement sealcoating. It exposed the vulnerability of relying on a single material tied to steel and aluminum markets, accelerated the adoption of alternatives, and forced a reckoning with long-term supply trends. For broader context on how pavement protection materials evolved, the Evolution of Plaza Waterproofing From Coal Tar pitch to modern membrane systems traces a similar trajectory. Canadian research detailed in What the Canadian Refined Coal Tar Sealer Study reveals about pavement safety added another dimension to the discussion. For a technical comparison of modern options, see Comparing Emulsion Based Sealers and Coal Tar for asphalt pavement protection. The industry that emerged from 2006 was more diversified, more adaptable, and better prepared for whatever material challenges lay ahead.