Raw Materials Continue to Rise, How Is the Impact of The Coatings Industry?

Recently, Mitsubishi Chemical HD Group issued a price increase letter saying that the price of PET bottles will be raised again from June 21. The increase is a 10% increase on the existing basis!

On May 20, Mitsubishi Chemical issued a price increase notice again, announcing that the price of modified polyphenylene ether resin will be raised worldwide from June 1 in:

The domestic increase is more than 64 yen/kg (about 3354 CNY/ton)

The foreign increase is more than 0.6 US dollars / kg (about 4016 CNY/ton)

Recently, BASF officially issued a price increase notice, announcing that from June 1, the price of polyols will be increased! The specific increases are as follows:

Neopentyl glycol rose by 110 US dollars / ton (about 736 CNY/ton)

1,6 ethylene glycol flakes rose by 441 US dollars / ton (about 2951 CNY/ton)

1,6 ethylene glycol melting rose by 441 US dollars / ton (about 2951 CNY/ton)

Polycaprolactone rose by 441 US dollars / ton (about 2951 CNY/ton)

ε-caprolactone rose by 441 US dollars / ton (about 2951 CNY/ton)

1,5-Pentanediol rose by $441/ton (about 2951 CNY/ton)

On May 18, Mitsui Chemicals announced that it will increase the price of bisphenol A (BPA) from May 21, with a maximum increase of 49 yen/kg (about 2,568 CNY/ton), which is following the announcement in late March. Second time this year.

Recently, titanium dioxide manufacturers have announced price increases one after another. As a basic chemical product in the manufacturing chain, the price increase of titanium dioxide can be said to affect the whole body.

One part of the industrial chain is highly prosperous, and the upstream often benefits while the downstream is under pressure. However, it is also faced with rising raw material prices, and the life of coating companies will be even more difficult than when the price of titanium dioxide skyrockets in 2021.

"According to the self-adjustment mechanism of market prices, the price of titanium dioxide will increase, and the downstream coating companies will also increase the price. If the downstream price does not rise, it will lead to the squeeze of industry profits, the bankruptcy of the company, the clearing of production capacity, and the reduction of supply. When the market is in short supply. , paint prices have returned, and the market has returned to equilibrium." said Chen Yumu, an analyst in the asset management industry.

For an industry, the price increase triggered by the cost side is far more terrifying than the demand side.

From June 2020 to June 2021, the resumption of work and production in the domestic manufacturing industry is in full swing, and the demand for industrial coatings used in real estate and automobile industries is strong. The supply of titanium dioxide as a raw material is in short supply, and the price has nearly doubled in one year. , soared from 1265 CNY/ton to 2450 CNY/ton. In the second half of 2021, the demand for titanium dioxide entered the off-season, and the price corrected, but it still remained above 20,000 CNY/ton.

However, in the context of the sluggish downstream market, profits are already under pressure, coupled with the increase in the price of titanium dioxide on the raw material side, it is undoubtedly worse for paint companies. At the beginning of 2021, the "two red lines" of real estate enterprise loans were introduced, the real estate market was gradually sluggish, and the demand in the paint industry was weak. The reporter found that there are three listed companies in Shandong involved in the paint business, namely Wanhua Chemical, Taishan Petroleum and Shengquan Group. In March this year, it was reported that Yantai Wanhua New Material Technology Co., Ltd., an indirect subsidiary of Wanhua Chemical, planned to invest in a new Wanhua New Material Industrial Protective Coating Project.

"The recent reduction in mortgage interest rates and the introduction of the policy of unbundling and purchasing restrictions will boost downstream demand for coatings. The most difficult days for coating companies in the industry are at the stage of thinning profits and bankruptcy." Chen Yumu said.