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How Paints and Coating Sector Globally Impacted by the Commodity Gyration

How Paints and Coating Sector Globally Impacted by the Commodity Gyration

How Paints and Coating Sector Globally Impacted by the Commodity Gyration

  • 25-Apr-2022 9:47 AM
  • Journalist: Nicholas Seifield

Since the start of 2022, global market dynamics have witnessed persistent fluctuations in the first half of the quarter due to the uncertainty in the energy values. The sturdy stance of the OPEC+ alliance over the increment in the production output of Crude Oil led to an imbalance in the supply-demand outlook. The economic recovery from the pandemic-induced disruptions rebounded, supporting the demand for Crude Oil across the globe while proportionally raising the benchmark prices. In the second half of the first quarter, the Russian authorities announced conducting a “special military operation” over the Ukrainian territory that brought another round of gyration over the upstream energy value chain and further drove the crude oil prices to a seven-year high. After the western authorities took some strict measures by implementing sanctions on Russia, which further worsened the overall scenario across the region as Russia is the second-largest producer of Crude Oil.

All the downstream value chains observed the repercussions of the unprecedented hike in the Crude Oil offers, besides dampening the economic recovery rate for several nations and regions. The paints and coating industries are among the majorly impacted sector with the strengthened cost support from the upstream. Paints and Coatings are mixtures of several ingredients, including Titanium Dioxide and Zinc Oxide as pigments with several solvents. The solvents market observed a persistent hike as the quotations for numerous solvents gained by 200%-300% on a year-on-year basis, strengthening the pigments producer’s will to marginally raise the offers for pigments in anticipation of better netbacks.

In the first quarter of 2022, the European market is going through a severe energy crisis amidst low temperatures. On top of that, the impact of COVID is still prevailing in the European paints and coating industry. In comparison, the demand outlook in the Northern Hemisphere is likely to ramp up as the building and construction activities are more active in warmer weather, that likely to support the inquiries from the paints and coating sector. In contrast, the Indian players are at more headwinds and tailwinds due to inflation challenges and intensifying competition ahead of the upcoming peak season in the region. That prompted the wait-and-see sentiments amongst several Indian players, even though few participants actively participated to ensure the supplies for the raw materials inventories. 

As per ChemAnalyst, the inflationary cycle is likely to keep its presence and impact the global market dynamics across several regions. In addition, inflation took a toll on the paints and coating industry. Several analysis showcased that the challenges and intense competition will likely drive the quotations upwards in the forthcoming period.  

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