Economy
Paint Increase Surprises Prepaint Market
Written by Tim Triplett
January 16, 2019
Sherwin-Williams has announced a 6 percent hike in the cost of paint effective in March, upsetting customers in the prepainted steel and aluminum market.
“There is no justification for this paint increase,” said one coil coater. “Oil prices are at their lowest level in years.”
Sherwin-Williams raised prices twice last year when oil prices were much higher, but did not lower the cost of the petroleum-based products when oil prices plummeted. “Paint prices have never dropped, which is amazing,” said one executive. Combined with last year’s increases, the cost of paint has gone up by nearly 20 percent, he estimated. “When you look at all the inputs, this price increase makes no sense. In my opinion, the other paint companies will not follow, so the pressure will be on Sherwin-Williams. They will have to decide how committed they are to the increase.”
“I can’t imagine the paint increase being successful. We see market conditions [in prepaint] being really tough right now with prices continuing to fall,” added a service center executive.
The prepaint market is extremely competitive, with excess coil coating capacity domestically and imports still arriving from Mexico and Asia despite the U.S. tariffs. On top of that, demand in construction and other key markets showed signs of slowing in fourth-quarter 2018, making it difficult for prepaint suppliers to pass along the additional cost. “Usually October is a great month for us in the Southeast, but not last October. Demand was not that strong,” the executive noted.
Sherwin-Williams did not respond to SMU’s request for comment.
Tim Triplett
Read more from Tim TriplettLatest in Economy
Chicago Business Barometer rose to 16-month high in March
The Chicago Business Barometer increased for the third-consecutive month in March. Despite this, it still reflects contracting business conditions, as it has since December 2023.
Durable goods orders rise again in February
Transportation equipment led the increase, rising 1.5% to $98.3 billion.
Consumer confidence falls for fourth consecutive month
People remain concerned about inflation, trade policies, and tariffs.
Housing starts ticked up in February
Single-family starts last month hit a rate of 1.10 million, a month-over-month increase of 11.4%, census data shows.
Architecture billings continued to slide in February
The ABI is a leading indicator for near-term nonresidential construction activity and projects business conditions ~9-12 months down the road (the typical lead time between architecture billings and construction spending).