Raw Material Prices Rising Again

Raw Material Prices on the Rise Again The British Coatings Federation (BCF) shared its November 2021 information note on raw material prices with the industry. The statement read as follows: In September, raw material prices affecting the paints and printing inks sector experienced a new increase, and manufacturers came under greater cost pressures. The impact on the sector is undeniable given that raw materials account for approximately 50% of all sector costs, and other costs such as energy are also rising sharply. Oil prices have more than doubled over the past 12 months. A year ago in September, the average oil price per barrel was USD 42, and has now risen to USD 83. From the low price point before the pandemic in March 2020, prices have increased by more than three and a half times. This increase is comparable, remarkably, to the magnitude of the large increases seen in the 1973/1974 OPEC-driven oil price crisis, and more recently surpasses the sharp price increases reported in 2007 and 2008 when the global economy entered recession. With solvent prices averaging 82% higher than a year ago and resins and related materials showing a 36% price increase, the impact on paints and printing ink manufacturers is clearly severe. Prices for some key solvents used by BCF member companies have increased two or three-fold, with N-Butanol rising from GBP 750 per tonne to GBP 2,560 per tonne over one year as a notable example. Two or three-fold increases were also seen for N-Butyl Acetate, Methoxy Propanol and Methoxy Propyl Acetate. Higher prices were also observed for resins and related materials; for example, the average price of epoxy resin solutions in September showed a 124% increase compared to the same time last year. Pigment prices have risen further in many places, with commonly used titanium dioxide prices showing a 9% increase compared to a year ago. Packaged products showed generally higher prices; for example, 5-litre tinplate cans experienced a 10% increase and drums saw a 40% increase last month. It is difficult to make reliable forecasts, but most major forecasting organizations expect oil prices to remain above USD 70 per barrel for 2022, with indicators pointing to continued higher costs.