The global supply chain is frustrated, how will the coatings industry break through?

With the continuous spread of the epidemic, the global supply chain and economy have been impacted to varying degrees. In order to further rescue the market, European and American countries have to adopt economic stimulus plans. Loose currency liquidity has further contributed to the rise of this round of commodities. Following this, raw materials have begun to be in short supply and chemical prices have continued to rise.

Although the trend of anti-globalization has been obvious in the past two years, after all, economic and trade exchanges are tightly connected, and no one will be able to leave anyone for a while. The logic here is the logic of the supply chain and the logic of the division of labor and cooperation in the global market.

As a result, the manufacturing industry has begun to make long-term preparations for the predictable difficulties caused by the epidemic. Among them, the impact on the aerospace and commercial fields is more obvious. Although the situation in other industries is slightly better than expected, the challenge is far from over, because the supply chain involves many industries and the response has varying degrees of lag. If there are problems in some links , It will form the Dornomi brand effect, and then affect the development of the entire manufacturing industry.

The supply chain is interrupted, and companies are affected differently

When it comes to the coatings industry, there are many reasons for the disruption in the supply chain.

* The domestic economy is showing a V-shaped trend of resuming work and production, leading to the use of many raw materials for export in the early stage, so the domestic raw material supply is relatively tight.

* Due to the epidemic, port operations and labor were affected, resulting in a backlog of some import and export goods, and a shortage of containers.

* The blizzard in the United States last winter triggered the Texas energy crisis, causing energy prices to soar to record levels, affecting the entire oil supply chain and disrupting shipping.

* Unexpected events caused the interruption of raw material production. For example, the LG chemical plant in South Korea and the domestic Guodu chemical plant exploded and were forced to shut down.

However, under the long-term interruption of the supply chain, investment-grade companies with abundant capital and scale have little impact. They generally have a certain amount of raw material inventory and consolidated supply; while companies with high leverage or capital inflows are severely affected. At least they have to close business or sell.

Chemical prices have risen and lead times have been extended

The damage to the supply chain caused by the above reasons has led to price increases. For example, the key ingredient of coatings-epoxy resin, has increased by as much as 60% in Europe. Global chemical website ECHEMI reported at the end of March that more than 20 chemical companies, including BASF, DuPont, Dow, DSM and LANXESS, have raised prices. The reason for the price increase is largely due to the difficulty in purchasing raw materials used to make materials such as resin and epoxy resin. In mid-March, ECHEMI reported that due to a shortage of titanium dioxide, architectural coatings companies such as Nippon and Dulux were also out of white paint.

At present, paint suppliers are caught between the raw material suppliers and the OEMs and customers they serve. Many people are bearing unpredictable cost increases. How long can they hold on?

Perhaps in the future, some customers will be open to formulating cheaper raw materials to some extent, but most OEMs still have strict requirements on coating ingredients, and they need high-quality ingredients.

Who can predict what the pattern of the coatings industry will look like when the supply chain is stabilized? At present, only by continuing to persevere can we find a way to break through.