Paint is the latest good that home renovators or builders may have noticed is harder to come by — and pricier.
Supply chain issues and raw material constraints coupled with increased demand during the COVID-19 pandemic have put paint in short supply and, in turn, driven up prices. While some industry insiders have offered predictions about when the issues causing price increases could abate, others have said they’ll likely persist for the near future.
CNBC reported based on data from the U.S. Bureau of Labor Statistics that the producer prices for paint and coating manufacturing rose 10.6% between August 2020 and August 2021. In response to increased raw material prices and production difficulties, some leading paint companies have hiked up their prices.
Sherwin-Williams CEO John Morikis said the company raised its prices in the Americas by 7% in August and again by 4% in September, according to The Associated Press. Morikis said more increases are possible in 2022.
“In addition to the significant supply challenges, raw material pricing remains highly elevated, and we are increasing our full-year raw material inflation outlook to be up a high-teens percentage compared to last year,” Morikis said in a Sept. 28 statement. “We continue to combat these elevated costs with pricing actions across all of our businesses.”
PPG said in second-quarter results released in July that “pervasive raw material supply disruptions drove year-over-year cost inflation of a mid-to-high-teen percentage” and that its selling prices increased 3.5%, with more “pricing actions” being implemented.
When could prices come down?
Predictions from experts and people within the industry vary on how long the issues driving prices up could persist.
Randy Moser, owner of Buss Paints in Emmaus, Pennsylvania, told CNBC that his store has seen “multiple price increases across the board from every manufacturer we deal with.”
“It’s been this way for a while now, and it seems like it’s not going to get any better over the next three to six months, either,” Moser said, according to CNBC.
David Cohn, owner of Catalina Paints in Los Angeles who said his business is seeing delays and “having trouble getting certain things,” offered a similar outlook to local outlet KABC.
“We have a good relationship with our supplier, and they’re doing the best they can, but they say this is going to keep going on for four or five months,” he said, according to the outlet.
CNN reported that, in general, there’s been “talk” of the current spike in consumer prices inflation being “transitory,” or temporary, but that Sherwin-Williams executives have a more grim outlook, including Morikis who told the outlet that the actions the company is taking “say we’re expecting them to be longer term rather than shorter term.”
“The reality is there’s a tight supply chain market, there’s a strong demand and we expect raw material costs will stay elevated for a period of time,” Sherwin-Williams CFO Allen Mistysyn told CNN.
Morikis also said in the September statement that “the persistent and industry-wide raw material availability constraints and pricing inflation we have previously reported have worsened, and we do not expect to see improved supply or lower raw material pricing in our fourth quarter as anticipated.”
PPG said in July that it expects supply chain disruptions to “persist through the third quarter.”
How did prices get so high?
The pandemic is only part of the problem.
During the pandemic, many Americans stuck at home took on renovation or do-it-yourself projects — driving up demand for materials such as paint and lumber, for which costs also recently soared during a supply shortage.
But earlier this year, a severe and deadly winter storm hit Texas, causing lengthy power outages, damaging suppliers’ plants and starting supply disruptions, CNN reported.
“Recovery of suppliers in Texas has consistently been slower than has been communicated to us all year, with some suppliers still not back to pre-storm operating levels seven months later,” Morikis told CNN.
CNBC reports that the “deep freeze in the South” hampered the production of petroleum, which is a key paint ingredient, and that shortages of other goods have “clogged up supply chains.”
“These production disruptions, coupled with surging architectural and industrial demand, have pressured raw material supply and rapidly driven prices upward,” Julie Young, vice president of global corporate communications for Sherwin-Williams, said in a statement to CNBC.
Damage from Hurricane Ida, which made landfall Aug. 29 in southeastern Louisiana as a dangerous Category 4 storm, has also impacted suppliers, according to Sherwin-Williams.
“Our suppliers are now reporting that the impacts of Hurricane Ida are more severe and will be longer lasting than initially thought,” Morikis said. “Production of several key resins, additives and solvents, expected to resume by late September, has been pushed out.”