Monday, 31 October 2005 17:00

Paint companies raise prices to offset increasing costs

Several paint companies have announced price increases across the board. 

DuPont Performance Coatings has implemented price increases for all of its products, reflecting unprecedented and sustained increasing costs for energy and feedstocks. Businesses participating in the announcement include DuPont Original Equipment (OEM) finishes, DuPont Automotive Refinish Systems, including DuPont Industrial and CoatingsSolutions, and DuPont Advanced Coatings Systems.

An analysis by DuPont Corporate Economist Robert H. Shrouds indicating that record-high energy prices will be a factor in the global energy outlook for the foreseeable future prompted the company to raise prices on all products.

"Oil and natural gas prices have increased dramatically during the past 18 months. On top of that, raw materials for DuPont Performance Coatings have increased by more than 15 percent in that same period," said Edward J. Donnelly, DuPont group vice president - DuPont Coatings & Color Technologies, which includes DuPont Performance Coatings.

"We expect that our costs for oil derivative and energy intensive materials will continue at elevated levels."

Price increases for DuPont OEM products will range from 12 to 25 percent, depending on specific product and existing customer contracts. Despite continuous improvements in productivity and aggressive global sourcing, structural price increases for key raw materials have put the business in a loss position that would prohibit reinvestment economics.

Automotive Refinish Systems products, used in the collision repair industry as well as for trucks and industrial equipment, will rise by varying amounts depending on geographic region and product line. The increases, which will be announced separately, will depend on timing of previously announced increases, local raw material conditions and the magnitude of increases being experienced in transportation costs.

BASF follows suit

BASF is also increasing prices for its entire product line in North America in order to address the record increases in feedstock and energy costs that it continues to experience in North America.

"We've taken significant actions over the last few years to drive down costs under our control in order to mitigate the effects of rising feedstock and energy prices during that period," said Klaus Peter Loebbe, BASF chairman and CEO. "In light of the continuing and unparalleled increases, these price actions are necessary to maintain a healthy business and to continue to meet our customers' supply requirements."

Although the effects of recent hurricanes have exacerbated raw material and energy costs, continuing imbalance in supply and demand for petroleum based materials, especially natural gas, is believed to be the major driver of the present situation in North America. Since 2003, prices for crude oil and natural gas have increased roughly threefold and fivefold, respectively, with no signs of moving back down. These increases have put enormous pressure on margins in the chemical industry where pricing has not kept pace.

"Energy conservation alone cannot adequately address the widening gap between available supply and the market demand for petroleum feed stocks, especially for natural gas, a key raw material for the chemical industry," said Joe Breunig, president for BASF's Chemicals, Plastics and Coatings businesses in North America. "A comprehensive approach to energy management that includes development can, however, help to stabilize feedstock and energy pricing and strengthen the chemical industry in the region."

PPG as well

PPG Industries has raised prices between 5 and 11 percent, depending on product line, for its industrial coatings in North America, effective November 1.

"We continue to mitigate some raw material cost increases through aggressive cost-reduction programs," said Matt Marek, general manager, industrial coatings. "However, the magnitude and continuing nature of the cost increases for all forms of energy and raw materials require us to address this situation with another increase in our prices. Today's price increase announcement continues actions we took beginning last year to help offset inflation in energy and raw materials."

The increase applies to industrial coatings, including liquid, powder and electrodeposition coatings, as well as pretreatment chemicals used in the manufacture of appliances, agricultural and construction equipment, automotive parts and accessories, coil, extrusion and other finished products.


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