Market News

Paint prices tipped to increase amid soaring raw material costs

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Crown Paints Group CEO Rakesh Rao. FILE PHOTO | NMG

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Summary

  • Paint prices are likely to rise by five to 10 percent in the coming days, on costlier raw material, manufacturers said.
  • Industry data shows that the price of a tonne of Titanium Dioxide, which is used to make paints, has gone up by 45.46 percent to Sh3,661 ($33) from Sh1,997.1 ($18).
  • Other components whose prices have risen are alkaline (30 percent) and acrylic (30 percent).

Paint prices are likely to rise by five to 10 percent in the coming days, on costlier raw material, manufacturers said.

Industry data shows that the price of a tonne of Titanium Dioxide, which is used to make paints, has gone up by 45.46 percent to Sh3,661 ($33) from Sh1,997.1 ($18).

Other components whose prices have risen are alkaline (30 percent) and acrylic (30 percent).

“Most of our raw materials have gone up by up to 60 percent,” Crown Paints chief executive officer Rakesh Rao told Money Market in an interview.

High freight charges are also likely to increase pressure on the prices of the commodity since all components are imported from China, India, and South Africa, coming on the back of a global supply chain recovery that brought a huge demand for shipping vessels, meaning shippers cannot meet the high demand for exports.

“The freight component has gone up by up to 70 percent. We were paying Sh133,260 ($1200) now we are paying Sh555,250 ($5000) per container,” he said.

Mr Rao added that they have already passed 10 percent extra cost to the market to recoup high production costs.

“We cannot just pass 30 percent to the market because the market cannot accept that. Somehow we are not able to pass the prices to the market because of the competitive environment,” he said.

Despite an increase in prices, the demand for paint has rebounded of late amid some recovery in the construction sector that suffered a slowdown last year at the height of Covid-19’s restrictions.

For example, in the half-year to June 2021, the Nairobi listed company recorded a 33.9 percent net profit growth to Sh339 million on higher sales.

The paints manufacturer had recorded net earnings of Sh253 million the year before. Its sales increased by a quarter to Sh4.9 billion from Sh3.9 billion.