Record commodity prices driving up coating costs

Citation

(2005), "Record commodity prices driving up coating costs", Anti-Corrosion Methods and Materials, Vol. 52 No. 5. https://doi.org/10.1108/acmm.2005.12852eab.019

Record commodity prices driving up coating costs

Record commodity prices driving up coating costs

International Protective Coatings is set to initiate further product price rises in response to the unprecedented rise in raw material costs.

“By the end of 2004 the prices of all of the raw materials key to the manufacture of our protective coatings increased significantly” said Mr Brian Smith, International Paint's Protective Coatings Commercial Director. “In 2005, we continue to see record highs in the prices of raw materials used throughout our business and this leaves us with little choice but to regrettably raise the prices of our products”, he continued.

Record oil prices continue to drive the increase in raw material costs. This year has seen record highs for crude oil at over US$55 per barrel. OPEC production has almost reached their capacity of 28.5 million barrels per day. China's and indeed India's continued appetite for oil and a decline in Russian oil production have added to market pressures. A key concern now is also the shortfall in global refining capacity with demand forecast to continue outstripping supply.

Key raw materials used in protective coatings that have experienced significant price increases include zinc, epoxy resins and titanium dioxide.

Zinc, which is used extensively in anti-corrosive products, has reached its highest price for five years. The price of zinc has increased by 15 per cent already in the first three months of 2005 and analysts forecast further increases during the year. Zinc prices are being hit by decreasing inventories and supply shortages due to unprecedented demand from China. No new mine production is planned until late 2006 at the earliest.

Epoxy resins manufacturers continue to launch frequent price increases to counter the impact of high energy and feedstock costs. Epoxy bulk liquid production remains “sold out” globally with producers preferring to supply the healthy and more lucrative polycarbonate market. The price of liquid epoxy resin has increased by 14 per cent so far this year.

Titanium dioxide producers have announced another global US$150 per tonne (7 per cent) price rise effective from 1 April 2005. There has been no investment in new titanium dioxide production plants since the 1980s and with global demand expected to increase by 5 per cent in 2005 rutile producers are expected to increase prices still further this year.

Paint can packaging costs have also risen by 11 per cent so far this year as a result of last year's 72 per cent increase in the price of iron ore. Steel producers have passed this on to metal packaging manufacturers. The situation is further exacerbated for steel producers by the shortfall in coking coal that is used to stoke blast furnaces, which saw prices move up by 120 per cent last year.

“In such a volatile climate of incessant price rises International Protective Coatings has little choice but to reluctantly pass some of these increases onto our customers” said Mr Smith.

For more information, please contact: Brian Smith, Worldwide M&PC Commercial Director. Tel: +44 (0) 207 479 6425; Fax: +44 (0) 207 479 6560; E-mail: brian.smith@internationalpaint.com

Ian Fletcher, Worldwide PC Commercial. Tel: +44 (0) 191 402 2625; Fax: +44 (0) 191 402 2630; E-mail: ian.fletcher@internationalpaint.com