Up to 5% increase in solvent-based paint prices expected in April: Indigo Paints

The ongoing Russia-Ukraine war has pushed the oil prices to multi-year highs. The price of Brent crude, for instance, rose to $118 per barrel on March 3.

As regards its impact, higher crude prices are the major headwinds for various sectors, including the paints industry as oil derivatives such as monomers and titanium dioxide are used as raw materials in paints. So, an impact of oil price rise may be seen in the paints sector, as raw material prices may go up.

Commenting on the boiling crude oil prices and volatility in the global markets, paint manufacturer Indigo Paints and speciality chemicals manufacturer Aarti Industries, in an interview with CNBC-TV18, claimed that the current price increases in the crude oil would have a limited impact on their industries in the short-term. However, it will take some more time to assess its long-term impact. Additionally, whether the prices of their products will go up depends on how long the conflict continues.

Hemant Jalan, CMD, Indigo Paints said solvent-based paints will have an impact when oil prices rise, and that its impact on their company sales is very limited as they have very little exposure to solvent-based paints, unlike others in the industry.

"Higher crude prices will have limited impact on their company sales and we may see 4-5% hike in solvent-based paints a month from now. Our solvent-based paints account for 12-14% of our sales," Hemant Jalan said.

Jalan also said their company was looking to get through the short term without a price increase, but if oil prices continue to rise, geopolitical tensions linger, and supply uncertainty increases, a price hike in the long term is a possibility.

He explained, "Last quarter, the paint industry put out a cumulative price hike of around 15%. This was done in tranches. This is a whopping increase for the industry as such an increase was not seen in the last 15 to 20 years. The crude price rise will have an impact on solvent-based paints. And, this is smaller for most paint companies. Our company is less exposed to solvent-based paints when compared with the rest in the industry. So, there could be a slight price hike in solvent-based paints may be to the tune of 4-5 percent in the next month if the Ukraine situation continues."

Jalan also said there is not much chance of a price hike in water-based paints.

Echoing similar views, Rajendra Gogri, CMD of Aarti Industries, said their business has a very small exposure to Russia, and that they do not anticipate any supply chain disruptions as of now.

"Our sales to Russia and Ukraine are very less... less than 0.3%. So, we don't see any impact. The few materials that are coming to us from Russia can be sourced from other places," said Gogri.

The CMD further said that crude oil prices going up may hurt some of their competitors in Europe, but demand won't be impacted due to higher prices.

"So far, the impact is on oil. A rise in crude oil prices increases our raw material prices. There is no demand contraction as of now. The supply chain won't be an issue for us as most of the raw material can be procured in India. But, prices could increase as they have competitors in Europe," Gogri opined.

When asked whether they have faced any impact so far due to the Russa-Ukraine conflict and if there could be a rise in raw material costs and how it is going to be passed on to customers, Gogri said "there is no significant impact on supply or margin because of the crisis, at present."