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Will the paint companies hike prices in new year?

Though not confirmed by the manufacturers nor the dealers, some analysts expect paint manufacturers to hike the prices again in January to absorb the rising cost of materials. Asian Paints, the market leader has already hiked the prices four times during the current financial year which was followed by other paint manufacturers. Four price hikes by Asian Paints during the year so far had a cumulative impact of 20-22%.

However, paint users are of the opinion that another hike in price may not come through as the prices of some of the raw materials have started moderating. They point out that crude oil price is down 20% from its recent peak and most of the raw materials of paints industry are crude oil derivatives and their prices react after a lag of few months. Interestingly, price of Titanium Dioxide, the main raw material paint manufacturing, is hovering around at its peak price of Rs 425/kg for last couple of months.

Meanwhile, fuel price is also on correction mode and diesel costs are down 12% after hitting a peak in October 2021. Paints are a bulky and freight-intensive items and freight cost formed 6.2% of total sales in FY21 for Asian Paints.

Also, emergence of Omicron may force the government (at least in some cities) to go for another round of restrictions which may affect the demand in general and that for paints in particular. In such scenario hiking price may impact the demand.

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