Increased Crude Oil Price Triggered Rising Costs of Paint Production

The escalating oil price impact can be felt almost in all sectors of industry. Raw materials cost is one of the major factors affecting the paint industry. The manufacturing of paint involves more than 300 items, most of them being petroleum-base, thus, resulted in the rising costs for production.??

One of the key ingredients that has been affected is titanium dioxide. Titanium dioxide is a derivative of crude oil that possess light scattering property and is utilized in order to give whiteness, covering, as well as durability of color. The skyrocketed price of crude oil, made this raw material became a scarce commodity. While in 2021, one ton of titanium dioxide was traded for EUR 2,650, it is expected the price increase in 2022 would reach to EUR 3,600.?

The high price of crude oil forces the companies to raise their prices. Although the calibrated price hikes have been done, it is still not enough to match the rise in input costs. Paint companies have been trying to overcome this issue by jacking up the price up to 22 percent higher than previous year with no visible results.?

Moreover, tinplate used for packaging its product also acts as the contributor to the pushed up paint price. The Ukraine crisis plays a role for the skyroting metal prices, which may also affect the already pressurized margins in sectors like paints. In addition, the paint industry already faced trouble due to the supply crunch as a consequence of the disruption caused by the pandemic, including congestion at ports and unavailability of containers.

According to Asian Paints, one of India’s largest paint companies, current input cost inflation was unprecedented in 40 years during its third quarter earning call. With the ongoing Russia-Ukraine conflict, the surged up oil price would likely stay advancing.?

Reference:

Gaurav Sharma. (2022, August 29). Crude oil shock for paint industry. Retrieved from https://www.moneycontrol.com/news/business/markets/crude-oil-shock-for-paint-industry-8190151.html?

Rona Rita David. (2022, August 2). Paint Market Crisis: Oil Derivatives Affected by the Oil Price. Retrieved from https://energyindustryreview.com/analysis/paint-market-crisis-oil-derivatives-affected-by-the-oil-price/