Tracking: Five factors for the price increase in the paint industry

In the past two years, the prices of domestic paints and coatings have continued to rise, and the main reason for their price increase is the rise in crude oil prices. It is understood that the raw materials for paints and coating products are all derived from crude oil products, which are greatly affected by fluctuations in international crude oil prices. The rise in oil prices has forced the prices of paint raw materials to increase immediately, which has dealt a great blow to paint companies that are already struggling.

All kinds of pressures have already brought heavy pressure on the building materials industry. The rise in oil prices has driven the price of raw materials soaring, the prices of paints are almost upside down, and the paint industry is facing a major reshuffle. According to statistics, there are 7,000 Chinese paint manufacturers. Comments about the big reshuffle in the coatings industry have often been heard. Before and after the financial crisis, it was proposed that the paint industry would reshuffle. However, because of the Chinese government's investment of RMB 4 trillion, the rapid growth of the Chinese paint industry in 2011 drove China into the largest paint country.

However, the situation in 2011 is different. To summarize, there are four factors:

Rising costs: The price of raw materials has risen, raising the cost of paint products. According to Fusite Paint (Beijing) Co., Ltd., since October 2010, the company's raw material emulsion, titanium dioxide, additives and other raw materials have appeared 10% to 30% of varying degrees of gains.

Demand decline: The national real estate market regulates and controls, reduces trading volume in a short period of time, affects the real estate market, and affects the related paint demand.

It is difficult to raise prices: China's paint market is heavily homogenized, allowing downstream customers to easily replace products, and to curb paint manufacturers, especially SMEs without product advantages, to control the price of their products.

Inflation: It will cause problems for all paint manufacturers. However, for a long time no technology has been invested in small and medium paint factories, 2011 will be a year of life and death.

"After the Chinese New Year, the price of paint per barrel rose by 20 yuan to 30 yuan, but the paint market profit is getting smaller and smaller. Such a bucket of 5 litre Dabao paint is now priced at 400 yuan. During the promotion period, customers buy topcoats. To send the primer, the profit of a bucket of paint is only 30 yuan, to remove the storefront, rent and other expenses, and finally only 5 yuan of profit space." March 6, Jimei home paint building materials factory Chen Hui said.

The profit space is shrinking and the production cost is increasing day by day. The prices of paint raw materials—solvent materials, titanium dioxide, rosin, emulsions, and auxiliaries are all closely related to the trend of oil prices. The additives used in the production of titanium dioxide are petroleum by-products, and solvent materials in coating materials are also petroleum products. With the recent sharp rise in international oil prices, the prices of these raw materials have also risen correspondingly.

“In addition to the oil price increase factor, the price of upstream raw materials titanium ore and titanium slag has doubled since October 2010. The raw material market is now approaching madness.”