Rising Raw Material Costs to Push up Paint Prices

Paint prices are expected to move up by another 2-3 per cent beginning May primarily on account of rising input cost and crude oil prices. This will be the second price hike this year, the first being in March.

Market leader Asian Paints and Berger (the number two player) both have confirmed that there will be a 2 per cent increase from May 1, according to a report in the Hindu Business Line.

“There will be a 2 per cent price hike across the portfolio from May 1. This is primarily to offset the rise in raw material prices,” Mr. Abhijit Roy, MD and CEO, Berger Paints India informed.

In March this year, paint majors had hiked prices by 1.5 per cent citing cost pressures.

“Overall, there has been a 5 per cent rise in cost of raw materials across categories. This translates into a near 3 per cent impact on profitability or sales. In order to offset this, price hikes are likely in the range of 3 per cent this time,” said Mr. Roy, who is also the President of the Indian Paints’ Association.

Rising input cost

According to market observers, there has been an increase in titanium dioxide (TiO2) and other raw material prices. Weakening of the rupee has only added to the paint-makers’ woes. Although there has been some stability over the last two to three months, TiO2 prices are much higher than what they were last year. “TiO2 prices have moved up steadily. Plus there is increased consumption in European and the US markets with the economy showing signs of recovery,” said Mr. KBS Anand, MD and CEO, Asian Paints.

The other factor is an increase in the cost of raw materials (solvents and resins) from China. Any raw material being supplied from China has seen an upward revision of prices primarily on account of capacities being shut down there because of environmental concerns. Similarly, monomer prices are moving up due to rising crude oil prices.