Paint producers hoping for a break next year on prices and availability of raw materials have been told by a panel of experts at CEPE’s annual conference that the situation is likely to worsen.
The conference, held in Dublin in October, hosted a dedicated session to look at the forecast of price trends for next year but despite the slowdown in the EU, paint raw material costs are expected to rise again.
The main cause of the increases is the sharp climb in price of TiO2. Costs have risen by more than 60% between 2010 and 2011 and the result is an average increase of at least 30% each year.
A stretched global supply and demand due to capacity shutdowns and a lack of investment between 2000 and 2010, has contributed to this situation. In addition, after the worldwide crisis of 2008/9 sparked an increased number of closures, certain emerging countries such as Asia, experienced a rebound in demand, placing further pressure on prices.
Subsequently, the pressure on paint producers is expected to carry on and intensity will depend on the speed and strength of the global growth or slowdown. There is also volatility with other main components in paint formulas – particularly binders with cost increases between 20-40%. Such ingredients are mainly derived from petrochemicals feedstock and the continuing fluctuations in oil costs means prices are expected to vary month by month. The end result is a shorter validity of price agreements on emulsions and resins