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Raw Materials Shortage Shakes This Painter's Business

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EDITOR'S NOTE: The California News Times uses the current issues in the paint industry to illustrate the overall supply chain crisis we’re facing in 2021. The report notes that paint is the perfect raw material to show just how wide and deep the supply chain crisis is because it is needed in almost every industry in some capacity. The price of paint is skyrocketing now for several reasons. It was already in higher demand thanks to the 2020 DIY boom, and now, energy and materials costs are rising to produce paint, and the supply chain bottleneck is causing shortages on shelves. This is crushing many small businesses that rely on paint and thin margins. If the problems continue longer, though, bigger and bigger companies (and the people who work for them) will be affected. 

Malcolm Carr’s key raw material costs have skyrocketed like never before as a global supply chain crisis has shaken his business.

Car’s Tuscan-based company shines on superyachts — and the cost of his most important ingredient, paint, has skyrocketed.

“Raw material issues can be the last nail in many people’s caskets,” Kerr said his business, the Storm Yacht, is facing serious tensions. “At some point, something is going to break because we can’t continue to cut prices and increase costs. There’s nothing good going on.”

Paints are one of the most widely used industrial products with complex supply chains and are ideal raw materials to explain the depth of the crisis.

Paint is needed in almost every sector, from aerospace, construction, electronics to automobiles. It is also used in applications in the marine, medical, military, pharmaceutical, semiconductor and textile industries.

The tightness of the global supply chain has boosted the cost of everything from paints and steel to energy and grain prices.

In the energy sector, the crisis forced businesses to go bankrupt as soaring prices hit producers.

In the $ 164 billion paint market, dominated by global manufacturers such as Sherwin-Williams, PPG and Akzo Nobel, consumers are moving as producers raise prices to protect margins in the face of rising costs. It is borne by the brunt.

Prices also skyrocketed due to the DIY boom during the blockade and the shortage of supplies after extreme weather. Texas When Louisiana Started production at a petrochemical factory that produces raw materials for paints.

raw materials, A vertical bar graph with an estimated share of 2021 showing resins and latexes, which account for the largest costs in paint manufacturing.

Photo: California News Times

Transportation bottlenecks, truck driver shortages and power shortages in China have spurred supply disruptions.

AkzoNobel, Europe’s largest paint producer, plans to build a 15% price increase in 2021 and continue to raise prices next year as the cost of including liquid tin cans soars surprisingly.

Michael McGarry, CEO of PPG based in Pittsburgh, said costs surged 25% each year. This is “three times the inflation peak of previous coating materials in recent history.”

Pressure on paint producers’ costs is exacerbated by formulation diversity, requiring the input of thousands of raw materials, most of which are soaring prices such as oil, natural gas and titanium dioxide. It goes back to.

Paint additives are one of the worst hits. Dan Kersting, Director of Global Business Development for Additives at Allnex, a resin supplier based in Frankfurt, states that these are important “salt and pepper” ingredients in paints.

This has led paint companies to consider diversifying their sourcing of additives, despite their low usage. So far, it has been well supplied by a few major suppliers such as BYK, Dow and BASF.

Yacht hull being painted, raw materials
Yacht hull being painted © Luke MacGregor / Bloomberg / California News Times

“When the supply chain is pinched, the additives are hit hardest first,” says Kirsting. “Previously it was price, price, availability. Now it’s where you are, where your backup is. We approve your product, but you want to approve it from two sites. think.”

Pressure is expected to force more regionalization of the paint supply chain as producers seek to mitigate the risk of over-reliance on raw materials in remote parts of the world.

Katalina Lindstroem, Chief Operating Officer of the Danish paint group Hempel, said:

Jeremy Pafford, Head of North America for consultancy ICIS, said: Over the last two years, multiple rungs have been clipped. From a logistics perspective, it is difficult to attract reinforcements.

“It’s amazing how many people have very few diverse suppliers.”

raw materials

Photo: California News Times

However, the car marine coating business is under increasing pressure as superyacht paint prices were agreed with the shipyard about two years ago, leaving little room for quick pass-through of costs.

Other sectors, such as insurance, are also plagued by absorbing the pain of rising raw material costs to repaint cars involved in a collision. David Creswell, chairman of the AutoBody Professionals Club industry group, says painting accounts for almost a quarter of the cost of repairing a car.

Bonding ingredients added to the paint mixer
Bonding components added to the paint mixer © Bartek Sadowski / Bloomberg / California News Times

Martin Milliner, claims director at LV = General Insurance, one of the UK’s largest car insurance companies, said rising paint prices are “a problem in repairing so many cars.”

Normally, we repair 110,000 cars a year, but this number is rising due to a shortage of new cars due to a shortage of semiconductors. This has led to more cars being repaired after the accident, further raising prices.

“We are using more paint to repair more cars,” Milliner said, adding that insurance premiums will probably start to rise next year due to cost pressures.

For the coating industry, semiconductor crunches also mean fewer cars need to be painted to reduce production.

Some executives have evaded concerns about the paint market and said rising product prices will help increase profit margins without impacting consumer demand.

AkzoNobel’s Chief Financial Officer, Marten de Vries, said:

However, other executives close to the customer are afraid that demand will weaken.

Rick, an online paint retailer, has maintained prices at the expense of margins after a year of cost increases that have accelerated over the past four months.

Lucas London, Chief Executive Officer, said: “We definitely see a strong price consciousness.”

Originally posted on California News Times.



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