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Even under the best of circumstances, raw materials are almost an ongoing problem for paint and coating manufacturers.
With the intensification of tensions in the Middle East and the intensification of the global trade war, raw material price fluctuations have brought severe challenges to the entire Indian coatings industry in 2019, and will do so in the foreseeable future.
For each branch of the manufacturing industry, raw materials are perhaps the most important factor of production.
However, in the paint and coatings industry, raw materials play a greater role due to the intensive nature of the industry's raw materials.
Even small fluctuations in raw material prices will have a major impact on the profitability and operations of paint manufacturers.
India is completely dependent on the import of crude oil and its derivatives.
Due to the rising prices and uncertainty caused by political reasons in the Middle East, nearly 90% of the raw material demand in the Indian paint and coatings industry has been hit hard.
The prices of crude oil and crude oil-related derivatives (such as monomers and solvents) put pressure on Indian paint manufacturers in 2019.
Raw material prices have risen by almost double digits.
This year, the prices of rutile and titanium dioxide have also risen sharply.
Compared with the construction business, industrial paint manufacturers have been hit harder by the sharp increase in raw material prices.
In the past 12 months, the slow growth of demand in the industrial sector, coupled with the sharp increase in raw material prices, has severely hit the country’s industrial coatings manufacturers.
However, the situation has begun to improve, and raw material prices have begun to weaken in recent months.
For example, in the financial report data for the second quarter of fiscal 2020 (July 2019 to September 2019) of the country's largest paint and coatings manufacturer, Asian Paints, raw materials accounted for 57.
6% of total sales.
The figure for the same period in 2018 was 60.
1%.
CEO KBS Anand said on the Asian Coatings Earnings Conference in late October 2019: "Raw material prices have maintained a healthy growth from July 2019 to September 2019.
However, we need to beware of fluctuations in key raw materials, especially It is crude oil and related derivatives.
” Table 1: The raw material cost of the top four coatings manufacturers in India as a percentage of sales revenue The impact of crude oil prices The impact of crude oil pricesPhthalic anhydride, pentaerythritol, methyl methacrylate, aromatic hydrocarbons and other raw materials are crude oil derivatives, and they can be used as binders, solvents and additives.
In fact, nearly 50% of the raw materials used by paint companies are crude oil derivatives, which account for about 30-35% of the total cost of raw materials in the Indian paint industry.
Volatile crude oil and derivative prices pose risks to the profitability of Indian paint and coating manufacturers.
Indian paint companies are increasingly inclined to produce water-based paints that are less sensitive to changes in crude oil prices.
In addition, due to the ease of cleaning the walls, and due to their good corrosion resistance and high gloss, the demand for these coatings in the construction and automotive industries is increasing, and customer preference for these coatings is also rising.
This has led most coating companies to continuously increase the share of water-based coatings in their investment portfolios, which is expected to increase profit margins in the long-term.
However, the demand for oil/solvent-based coatings will always exist, so the risk of fluctuations in crude oil prices cannot be completely eliminated.
Mukesh Goyal, the Delhi regional chairman of the Indian Small Coatings Association and the boss of Carlo Paints & Chemicals Pvt.
Ltd.
, told the "Coating World" magazine in a conversation that the impact of rising raw material prices on small and medium-sized paint manufacturers is very important.
severe.
"Small paint manufacturers do not have the bargaining power of large paint manufacturers and must face the impact of rising raw material prices.
Large paint manufacturers can always choose to increase prices when raw material prices rise.
However, for smaller manufacturers It is difficult to raise prices because most of our customers are located in price-sensitive small towns and rural areas.
" Titanium Dioxide Problem Titanium Dioxide Problem The crude oil derivative titanium dioxide used as a binder, solvent and additive accounts for about paint With 25% of the total content, titanium dioxide is by far the most important material in the coatings industry due to its whiteness, opacity and refractive index (that is, its ability to bend and scatter light).
It can be obtained in two forms: anatase and rutile.
Of these two forms, rutile-type titanium dioxide is more durable and stable, and is also believed to be more effective in scattering light.
Anatase pigments are mainly used in cheap dispersion coatings, self-cleaning coatings and road marking coatings.
Rutile pigments have a wider range of applications and actually cover all types of paints.
Approximately 70% of India's domestic demand for titanium dioxide is met by import delivery, and China is the main country that exports titanium dioxide to India.
The steady growth of China's titanium dioxide output in 2018 and the first half of 2019 brought the price of titanium dioxide under control.
The high volatility of the rupee in 2019 has increased the import costs of Indian paint manufacturers by almost the same amount.
Table 2: Prices of Rutile and Anatase in India However, due to the Indian government's prohibition on mining minerals on beaches, it is expected that the production (and prices) of domestic titanium dioxide in India will cause problems for Indian paint manufacturers in the next few years.
The beach minerals ilmenite and rutile are the basic raw materials for the manufacture of titanium dioxide.
The Indian government banned private companies from mining beach minerals in 2019, affecting the entire chain of interconnected producer and user industries.
The actual impact of the ban is expected to have a significant impact on the production of titanium dioxide in 2020.
With the intensification of tensions in the Middle East and the intensification of the global trade war, raw material price fluctuations have brought severe challenges to the entire Indian coatings industry in 2019, and will do so in the foreseeable future.
For each branch of the manufacturing industry, raw materials are perhaps the most important factor of production.
However, in the paint and coatings industry, raw materials play a greater role due to the intensive nature of the industry's raw materials.
Even small fluctuations in raw material prices will have a major impact on the profitability and operations of paint manufacturers.
India is completely dependent on the import of crude oil and its derivatives.
Due to the rising prices and uncertainty caused by political reasons in the Middle East, nearly 90% of the raw material demand in the Indian paint and coatings industry has been hit hard.
The prices of crude oil and crude oil-related derivatives (such as monomers and solvents) put pressure on Indian paint manufacturers in 2019.
Raw material prices have risen by almost double digits.
This year, the prices of rutile and titanium dioxide have also risen sharply.
Compared with the construction business, industrial paint manufacturers have been hit harder by the sharp increase in raw material prices.
In the past 12 months, the slow growth of demand in the industrial sector, coupled with the sharp increase in raw material prices, has severely hit the country’s industrial coatings manufacturers.
However, the situation has begun to improve, and raw material prices have begun to weaken in recent months.
For example, in the financial report data for the second quarter of fiscal 2020 (July 2019 to September 2019) of the country's largest paint and coatings manufacturer, Asian Paints, raw materials accounted for 57.
6% of total sales.
The figure for the same period in 2018 was 60.
1%.
CEO KBS Anand said on the Asian Coatings Earnings Conference in late October 2019: "Raw material prices have maintained a healthy growth from July 2019 to September 2019.
However, we need to beware of fluctuations in key raw materials, especially It is crude oil and related derivatives.
” Table 1: The raw material cost of the top four coatings manufacturers in India as a percentage of sales revenue The impact of crude oil prices The impact of crude oil pricesPhthalic anhydride, pentaerythritol, methyl methacrylate, aromatic hydrocarbons and other raw materials are crude oil derivatives, and they can be used as binders, solvents and additives.
In fact, nearly 50% of the raw materials used by paint companies are crude oil derivatives, which account for about 30-35% of the total cost of raw materials in the Indian paint industry.
Volatile crude oil and derivative prices pose risks to the profitability of Indian paint and coating manufacturers.
Indian paint companies are increasingly inclined to produce water-based paints that are less sensitive to changes in crude oil prices.
In addition, due to the ease of cleaning the walls, and due to their good corrosion resistance and high gloss, the demand for these coatings in the construction and automotive industries is increasing, and customer preference for these coatings is also rising.
This has led most coating companies to continuously increase the share of water-based coatings in their investment portfolios, which is expected to increase profit margins in the long-term.
However, the demand for oil/solvent-based coatings will always exist, so the risk of fluctuations in crude oil prices cannot be completely eliminated.
Mukesh Goyal, the Delhi regional chairman of the Indian Small Coatings Association and the boss of Carlo Paints & Chemicals Pvt.
Ltd.
, told the "Coating World" magazine in a conversation that the impact of rising raw material prices on small and medium-sized paint manufacturers is very important.
severe.
"Small paint manufacturers do not have the bargaining power of large paint manufacturers and must face the impact of rising raw material prices.
Large paint manufacturers can always choose to increase prices when raw material prices rise.
However, for smaller manufacturers It is difficult to raise prices because most of our customers are located in price-sensitive small towns and rural areas.
" Titanium Dioxide Problem Titanium Dioxide Problem The crude oil derivative titanium dioxide used as a binder, solvent and additive accounts for about paint With 25% of the total content, titanium dioxide is by far the most important material in the coatings industry due to its whiteness, opacity and refractive index (that is, its ability to bend and scatter light).
It can be obtained in two forms: anatase and rutile.
Of these two forms, rutile-type titanium dioxide is more durable and stable, and is also believed to be more effective in scattering light.
Anatase pigments are mainly used in cheap dispersion coatings, self-cleaning coatings and road marking coatings.
Rutile pigments have a wider range of applications and actually cover all types of paints.
Approximately 70% of India's domestic demand for titanium dioxide is met by import delivery, and China is the main country that exports titanium dioxide to India.
The steady growth of China's titanium dioxide output in 2018 and the first half of 2019 brought the price of titanium dioxide under control.
The high volatility of the rupee in 2019 has increased the import costs of Indian paint manufacturers by almost the same amount.
Table 2: Prices of Rutile and Anatase in India However, due to the Indian government's prohibition on mining minerals on beaches, it is expected that the production (and prices) of domestic titanium dioxide in India will cause problems for Indian paint manufacturers in the next few years.
The beach minerals ilmenite and rutile are the basic raw materials for the manufacture of titanium dioxide.
The Indian government banned private companies from mining beach minerals in 2019, affecting the entire chain of interconnected producer and user industries.
The actual impact of the ban is expected to have a significant impact on the production of titanium dioxide in 2020.
