Why Are My Product Prices Going Up? Are There Really Supply Challenges?
(Why Prices are going up in the paintshop - real or not? ) - Author - Andy Potts November 9th 2021 (reading time 1 mins)
We're all feeling the pinch currently, whether it's in our private lives the cost at the pumps or even the price of toilet rolls!
The story is no different at the office, purchasing departments are reporting huge pressure to absorb new price increases...price increases that aren't just higher they are blowing the roof off! Every sector and industry has a story to share why prices are increasing from containers to raw materials and labour shortages. So from a paint shop viewpoint why are prices rising so rapidly in the paint & consumables industry?
Well before we share our own Ultrimax view... lets take a look at the view shared by the industry body and their findings into why price increases have ocurred across their entire membership base.
The British Coatings Federation Viewpoint on Pricing
The BCF as the standard bearer for the paint industry have their own take on the price increase situation from a press release dated November 1st 2021.
Raw material prices show new surge
September showed a new surge in raw material prices affecting the paint and printing inks sector with manufacturers now coming under further huge cost pressures.
With raw materials accounting for about 50% of all costs in the industry and with other costs such as energy also increasing rapidly the impact on the sector cannot be overstated.
Oil prices have now more than doubled in the last 12 months and are up by a staggering three-and-a-half times on the pre-pandemic low point of March 2020 more than matching the huge increases seen during the OPEC led oil price crisis of 1973/ 1974 and more recently the sharp price rises reported in 2007 and 2008 as the world economy headed into recession. At $83 per barrel, oil prices today are now up from an average of $42 in September a year ago.
Solvent Heavily Affected
The impact on paint and printing ink producers is obviously very severe with solvent prices now 82% higher on average than a year ago and with resins & related materials seeing a price hike of 36%. For some important solvents used by BCF member firms’ prices are up by 2 or 3 times with notable examples being N-Butanol up from £750 per tonne to £2,560 in a year.
Other big increases of 2 or 3 times were seen for N-Butyl Acetate, Methoxy Propanol and Methoxy Propyl Acetate.
Higher prices were also seen for resins and related materials with, for example, the average price for Solution Epoxy Resin up 124% in September on this time last year.
Elsewhere, many pigment prices were also sharply higher with widely used Titanium Dioxide prices 9% higher than a year ago. In packaging, prices were higher across the board with, for example, 5 litre round tins up 10% and with drum prices 40% higher in the last month.
Reliable forecasts are hard to come by but with most major forecasting bodies expecting oil prices to remain north of $70 per barrel for 2022 the indications are that higher costs are here to stay.
BCF, 1 November 2021
The above shows that the situation is currently quite extreme with huge swings in the cost of manufacturing materials like solvents. The story is the same in the dry goods consumables industry. Twelve months ago shipping containers cost $2000 each to bring in goods from destinations such as China. That price has now increased to £11000 Per trip!
That's an average 80% increase on prices listed only 12 months ago, so it's no shock that industrial companies can no longer hold prices for their customers no matter how important that customer is to turnover.
The future for business will have some stern conversations across the negotiating table, but in this unique situation globally ...we are all in this together and we are all facing the same challenges domestically and globally.
Can You Mitigate The Risks?
Wherever there is volatility there is opportunity, to coin an old stock market saying...with prices rising for quality manufactured goods it leaves room for challenger products and lower priced goods to fill the void. These products may allow purchasing departments to stick within the budgets set before 'pandemic' became a daily word. We would always advise at the moment to buy stock well in advance and if you can plan for projects in the future do so with us to place a degree of control over your supply levels and to mitigate for an overloaded courier network.
Ultrimax View On Price Increases
At Ultrimax like many companies we looked at these alternative lower cost products for both paint and consumables. Ultimately the opportunity cost of providing our customer base with inferior products could devalue the Ultrimax brand, which stands for quality, reliability and integrity. At Ultrimax like many companies we have therefore been forced to push through some price increases across the product range to maintain these high quality standards and material ingredients expected of our paints and thinners.
Ultrimax will guarantee the same level of product quality, reliability and durability at a time when we have seen other companies reduce material levels , change paint formula and swap out products for inferior alternatives to maintain margin.
The Ultrimax Promise To Quality & Innovation
At Ultrimax we only see value in providing the best, we have refused to 'reduce quality' of the raw materials in our paint products and because of that our paints and solvents are regarded amongst the best in the industry.
Our commitment to quality also extends to our dry goods, our recent product launch for sanding discs culminated from a need for increased quality in the sector. Ultrimax has been involved in the dry sanding disc market for many years and a constant wish was to control the quality and UK stock level of sanding discs and pads. After much research over 2020 the Ultrimax range was born producing 3 high quality level products ideal for steel, joinery and a wide range of other sectors.
The 3 products are constructed from top quality Aluminium Oxide and Stearate materials with a full range of durable grit types. Ultrimax have shown a great commitment to the range by increasing stock levels for the UK which has allowed a cost-effective price in the current trading arena of price increases.
Take a look at the 3 products and receive some free samples by filling in your details here - Order Free Sanding Samples From Ultrimax.
Ultrimax Sanding Products - New For 2021
|Ultrimax Velcro Sanding Discs - P40 - P500||Ultrimax PSA Sanding Discs - P80 - P400||Ultrimax Hand Sanding Pads - P180 - P800|
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