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
ISM: Manufacturing sector contracted in April
The Index had briefly showed expansion in March, but has indicated a contracting manufacturing sector for 17 of the last 18 months.
Chicago Business Barometer falls to 16-month low
The Chicago Business Barometer slipped further in April, now at the lowest measure recorded since November 2022.
Leading nonres indicator falls to more than three-year low
An important economic indicator for the nonresidential construction industry declined in March to its lowest point in more than three years.
Fed Beige Book: Economy improves, but manufacturing weak
While general economic conditions across the US improved slightly over the last six weeks, activity in the manufacturing sector was weak, according to the Fed’s latest Beige Book report.
SMU Community Chat: Simonson with the latest on construction
A lot of economists were predicting a recession last year. Ken Simonson, chief economist for The Associated General Contractors of America (AGC), wasn’t one of them.