METALS AND OIL PRICES PUSH UP PAINT COSTS

[proud_ionian]

MAJOR marine coatings producer International Paints says that “unprecedented” raw material costs have forced it to push up its prices

“Over the last few years we have seen the costs of all of our key raw materials rise significantly and last year was no exception,” said Mr Brian Smith, International Paints’ Marine Coatings Commercial Director. “Most significantly the international metals market is booming, and this new pricing level looks set to stay - creating a new cost base for Marine Coatings,” he added.

International Paints notes that, during 2005, oil also continued to reach record levels, with Brent crude oil peaking at US$67 per barrel, and is currently still trading at around US$62 per barrel. Overall, 2005 saw a near 50% increase in the price of oil. Increasing Chinese and Indian consumption has led the rise in international oil demand, however a number of supply factors also hit prices in 2005; the ongoing instability in Iraq, low refinery capacity in the US, and hurricanes affecting production in the Gulf of Mexico. It is widely believed that the price of oil has now established a new platform that is unlikely to ease off during 2006.

Paint solvent prices are closely linked to the oil price, and consequently 2005 saw significant price rises of over 20% for key solvent groups used in the production of International Paint’s marine products. The company says concerns remain over solvent refining capacity, and therefore supply is likely to remain constrained in 2006.

However, it points out, even these vast solvent price increases have been eclipsed by the new pricing platform established in the market for zinc, copper and aluminium metals.

“In 2005, and now already in 2006, we are seeing record highs in the costs of raw materials used throughout our business. This new cost base looks set to stay, and therefore unfortunately we are left with no choice but to raise the prices of our Coatings,” said Mr Smith.

source: MGN