Buying a can of paint will become more expensive from July, with decorative paint majors, including Asian Paints, Berger and Kansai Nerolac, planning to increase prices by three per cent.
The paint majors had raised prices by four per cent in May. The companies are believed to be contemplating yet another increase in the next few months. The increase in product prices had been driven primarily by runaway input costs, said Anuj Jain, vice-president, sales & marketing, Kansai Nerolac.
With raw materials accounting for 60 per cent of total cost of production, any hike in input prices has a direct impact, compelling companies to revisit product prices.
Key inputs that go into the making of paints include titianium dioxide, which has increased by over 12 per cent in the past three months, vegetable oils and monomers (used to make emulsions), also up by the same amount. The price of titianium dioxide (TiDox), in particular, has been worrisome, say the companies. In the past year, the increase has been 30 per cent, going from $2,000 a tonne to $2,600 a tonne. “And, it is likely to increase further,” says Abhijit Roy, senior vice-president, sales & marketing, Berger Paints.
That is because demand for TiDox has, in general, been growing across the globe, while the supply has been lagging, say analysts. “During the economic slowdown, a number of units manufacturing titanium dioxide actually closed down. Following the economic revival, however, demand for the raw material has been growing, leading to a supply-side crunch. This is what is pushing up the price. The situation is likely to be tight till additional capacities don’t come onsteam. This won’t be till next year,” says a commodity analyst.
The global TiDox market is pegged at over 4.6 million tonnes a year. Demand has been growing at five to 10 per cent over the past year. It is slated to continue growing at the same rate for the next five years.
Decorative paints address household and architectural requirements. It makes up about 75 per cent of the Rs 17,000-crore paint market in India.