Solvent Shortages Driving Up Paint PricesFebruary 2, 2022
Supply shortages have become the theme of 2021 in a number of industries, and paint manufacturers are struggling to meet consumer demand. The paint industry depends heavily on petrochemical inputs, including solvents. Petrochemical producers in Texas and other Gulf states have been running at reduced capacity all year because of weather-related disruptions. This has made solvents harder to get and more expensive when they can be shipped to manufacturers. As a result, major paint companies, like Sherwin-Williams and AkzoNobel, have publicly stated that prices will continue to rise across the board.
This low-supply environment makes solvent recovery systems more important than ever for manufacturers as a means of getting the most from solvent inventories. Manufacturers looking to increase production efficiency can source solvent recovery systems directly from the supplier. Industrial solvent recycling systems can be integrated into existing plant machinery.
Gulf Petrochemical Production Struggling Due To Bad Weather
The Texas deep freeze last winter inflicted a prolonged power outage on the region that slowed down petrochemical production. That situation started the jump in prices for paint manufacturers who need a variety of resins, additives, and solvents. The power loss even caused some damage to petrochemical plants.
The Sherwin-Williams CEO said that the initial repair timelines communicated by suppliers to the paint company have proven unreliable. Even after seven months, some chemical plants have not returned to their previous output levels.
Hurricane Ida exacerbated this problem. Storm damage appears to have left chemical plants unable to resume operations. Initial estimates about getting back online at the end of September have not materialized. Delays are expected to persist for the near future according to the Sherwin-Williams CEO. With supplies of solvents and other chemicals expected to remain tight, solvent recovery systems will become increasingly attractive to numerous manufacturers.
Paint Company Leaders Not Expecting Relief Soon
A basic tenet of economics is that strong demand and low supply equal higher prices. All costs for producers have risen a record-breaking 8.3% in August. As for supply costs for the painting and coating industrial, that sector experienced a 10.6% jump in expenses in August.
Demand for paint continues to remain robust. The stay-at-home orders of the pandemic inspired many people to take on home improvement projects, which often involve paint. As a result demand spiked and has remained strong in 2021. At the consumer level, paint stores have reported an annual increase in sales of 7.8% in June. Although the peak of consumer demand hit in April, sales remain very strong.
Although high product demand should mean better profits for paint manufacturers, this is not the case. Sherwin-Williams warned its investors in September that raw material shortages have triggered serious cost increases for everything from steel for paint cans to solvents for the paint. The statement to investors told them to expect lower revenue and profits in the coming quarter.
The story coming from the Netherlands company AkzoNobel is the same. The CEO said price increases have been planned for the remainder of 2021.
As these manufacturers grapple with solvent shortages and higher solvent prices, solvent distillation presents a viable means of controlling input costs. Solvent distillation systems separate usable chemicals from chemicals soiled during production and processing. Companies with on-site solvent recycling systems can squeeze extra uses from solvents that might otherwise go to waste facilities.
Paint Supplies Low At Stores
The strain on paint inventories has prompted suppliers to favor large chain stores at the expense of smaller retailers. However, no matter where consumers shop, they will encounter lower supplies, higher prices, and fewer color choices.