Middle Eastern conflict "ignites" upstream prices. More than 20 paint companies announce price hikes, with industry segmentation each adopting their own "approach."

The oil crisis caused by Middle East conflicts continues to impact industries worldwide.

Since crude oil accounts for over 40% of coating costs, paint prices are highly correlated with oil prices. As crude oil prices rise, prices for petroleum-derived solvents, resins, additives, and other related products quickly increase. According to CCTV Finance, taking epoxy resin, a main raw material for coatings, as an example, its price has risen from 14 yuan per kilogram to 20 yuan, a significant increase. Many companies are forced to reduce raw material procurement and reserves to control costs.

In response to rising raw material prices, more than 20 key companies in the domestic coating industry have issued price adjustment notices, covering all categories including architectural coatings, industrial anti-corrosion coatings, and waterproof coatings. Specifically, since March, several leading coating companies such as Oriental Yuhong (002271) and Sankeshu (603737) have announced price increases.

On March 25, multiple listed companies confirmed to the Daily Economic News reporter that the trend of price hikes is ongoing. Industry insiders say that future adjustments will depend on raw material costs and competitors’ pricing strategies.

Several Coating Companies Announce Price Increases

The situation with oil and gas transportation through the Strait of Hormuz has significantly affected the Asian market, with ripple effects intensifying as the strait remains closed longer.

A research report from Guojin Securities on March 24 stated that the closure of the Strait of Hormuz has been extended, and many indirect impacts are further amplifying. Downstream refining operations are beginning to adjust due to upstream supply instability and ongoing inventory depletion, leading to a contraction in some product supplies or strategic reductions in production. Globally, petrochemical products priced uniformly are experiencing cost-driven increases, with many downstream processing segments initially benefiting from inventory gains but now facing cost transmission pressures due to rising raw material prices.

The main cost components of coatings include film-forming substances (such as resins, emulsions, asphalt), pigments, solvents, and additives. This round of price increases driven by oil prices has nearly covered all key raw materials: BA (butyl acrylate), 2-EHA (2-ethylhexyl acrylate), MDI (diphenylmethane diisocyanate), TDI (toluene diisocyanate), neopentyl glycol, epoxy resin, and others are all surging.

According to a research report from China Post Securities, as of March 20, TDI raw material prices increased by approximately 24% week-over-week and 52% month-over-month. CCTV Finance reports that epoxy resin, a primary raw material for coatings, has risen from 14 yuan per kilogram to 20 yuan.

Back in early March, some companies had already issued price increase notices to upstream suppliers to pass on material costs. For example, on March 1 and 2, news reported that two listed companies, Oriental Yuhong and Keshun Coatings (300737), issued price adjustment notices. A Keshun staff member confirmed the authenticity of the notices to the Daily Economic News.

Keshun’s notice indicated that due to sustained crude oil price increases and market supply-demand changes, the prices of major raw materials like asphalt have risen rapidly, with cumulative increases exceeding 10%. Starting March 15, asphalt-based membranes and coatings will see price increases of 5% to 10%.

As raw material prices continue to rise, more coating companies announced price adjustments in mid to late March, with some forced to keep raising prices.

Shanghai Sankeshu Waterproof Technology Co., Ltd. disclosed in a March 20 notice that since the beginning of the year, prices for major raw materials like asphalt have continued to surge. Based on current trends, crude oil and related raw material prices are expected to keep climbing. Although the company had already increased prices by about 5% to 15% on March 15, these increases are far below the current raw material cost pressures. To ensure product quality and service stability, and to maintain long-term cooperation, the company decided to further adjust prices: starting April 1, 2026, prices for waterproofing products will be increased by an additional 5% to 12%.

According to industry media and CCTV Finance reports, more than 20 coating companies have announced price hikes since March.

Industry Divergence Emerges

Despite the overall trend of price increases, some companies’ prices remain stable, showing a divergence within the industry.

CCTV Finance pointed out that downstream acceptance of price hikes varies significantly: home decoration and automotive sectors are more tolerant, while traditional industrial sectors are more sensitive to price increases. Industry insiders say that in the short term, oil prices remain the key factor influencing coating prices. With ongoing cost pressures, future price trends are likely to see prices rise more easily than fall.

On March 25, the reporter interviewed several listed coating companies. An executive from a company specializing in automotive coatings told the Daily Economic News that upstream raw material prices have indeed increased, but the company currently has sufficient inventory and has not raised product prices.

Another representative from a listed automotive coatings company said that since their raw material inventory generally lasts one to two months, short-term raw material price changes won’t significantly impact downstream product prices. Even if they adjust prices, they will consider competitors’ actions. “Our company has accumulated experience over the years, and our funds are relatively sufficient. Whether to raise prices depends on whether we want profit or market share. Every company has its own strategy.”

An industry insider also mentioned that upstream suppliers have been informally notifying them of price increases, mostly through verbal notices, without specific percentage details. Overall prices remain manageable for now.