Upstream Raw Material Cost Price Increases Waterborne Coating Prices "Crazy"

After visiting some building material markets and paint factories in Chengdu, the author found that the price of paint has been rising all the way, especially since the arrival of the “Five Happiness” and the implementation of a series of real estate policies in the building materials industry, and the price increase rate has exceeded 10%. As early as the first half of last year, the price of raw material for coating materials had risen. Since the beginning of this year, as the price of raw materials continued to rise, the “price increase valve” for the coating market price finally opened.

The relevant CEOs told reporters on April 10: “The prices of major raw materials such as titanium dioxide, solvents, synthetic resins, etc. have all increased significantly. The prices of paints for major brands have followed up. After the year, almost every barrel of paint prices has increased by 20-30 yuan. When selling major brand paints, if prices do not increase, they can only run at a loss.”

Waterborne paint prices are the most "crazy"

In fact, starting last year, the price of raw materials used to produce water-based paints rose by 30% to 40%. Although major paint manufacturers in the world are trying to reduce costs, as the international crude oil prices continue to soar, the operating costs of enterprises are high. In order to absorb the unfavorable factors caused by rising raw material prices, Jordan Coatings, a world-leading professional coating manufacturer and supplier, has increased its product prices in Europe, the Middle East and Asia since March 1 this year; Aksu, the world's largest coating manufacturer Nobel, also recently announced that all its paint products sold in China will be raised by 10% to 20%.

The raw materials for paints are mostly petrochemical products and are vulnerable to the impact of international crude oil prices. The sharp rise in international crude oil prices has driven up the prices of basic raw materials such as olefins and aromatics. In addition, other raw materials such as epoxy resin, titanium dioxide, solvent, copper, etc. have also been affected by inflation. The price increase is very obvious, and the rising trend has not shown signs of abating.

Paint production companies also face the pressure of rising labor costs and production and operation costs. According to statistics, the average price of major raw materials for coatings rose by 10% to 60%. Therefore, paint companies can only make appropriate adjustments to product prices to offset the impact.

Increased procurement costs in the upstream market and sluggish demand in the downstream market

In addition to the raw material price increase, the price adjustment of refined oil has also increased shipping costs. For the previous 10,000 yuan, it is now necessary to pay more than 2,000 yuan in transportation costs. Li Guoding said: "Now the paint price has been increased by almost 10%, and the price of a 5 litre paint has risen by 30 to 40 yuan. Now it is more appropriate to buy, because these goods are basically inventories. If the new products are listed, they will rise. The price range may be higher."

Xu Shouqi, senior engineer of industrial products research, told reporters: The main price increase is paint now, with an increase of more than 10%. If corporate production costs increase, and the downstream market demand does not keep up, the profitability of paint companies will be greatly reduced.

In the survey, a number of decoration companies have stated that the current decoration market situation is not optimistic. On the one hand, due to the state's control policy on real estate, most people who buy a house wait and see; on the other hand, because of rising raw materials, unless it is some rigid demand, decoration The relative reduction in people. Compared with last year, the proportion of renovation projects they received this year has dropped by about 15%.

The purchase price of the upstream market has increased, and the downstream market has been in short supply. Such a severe inflation situation has cast a shadow on coating companies, especially the enterprises with poor production technology, and the meager profits, coupled with unfavorable market factors, have brought about Unprecedented competitive pressures.

"Although some companies have a certain inventory, they can maintain a certain market running time, but it can only be maintained for a month or so. In the short term, the demand in the terminal market will shrink, and it will not be able to support the development of enterprises. Enterprises can only overcome the difficulties by taking the road of innovation." Xu Shouqi Suggestions.

The person in charge of the company told the author: "Only when the company pays close attention to saving energy and reducing consumption, but also reducing raw material and energy consumption to ease the cost pressure caused by rising resource prices, the price of the product can be kept at a stable range. At the same time, the government should give appropriate The subsidy encourages enterprises to purchase energy-saving equipment and achieve the purpose of reducing energy consumption.” She also suggested that some SMEs with unclear competitive advantages may consider switching their development ideas and responding to the country’s development plan for the promotion of emerging industries in recent years. Some price wars were withdrawn from the market, strengthening the cultivation of core competitiveness of enterprises, researching new industries, new technologies, and strengthening and expanding in the industry subdivided industries, and further expanding the development space of enterprises.