World

Painting is costly and difficult to find.This may be just the beginning

The customer is Home Depot Inc in Louisville, Kentucky. Push the shopping cart past the paint samples in the store.

Luke Charlett | Bloomberg | Getty Images

Housing improvements are exacerbated as the shortage of supplies and rising prices make the lives of those who do it themselves more difficult.

For example, if you find paint and can afford it.

From the unusual freeze in Texas earlier this year to the surge in demand and ongoing supply chain problems, a combination of factors has led to paint shortages and soaring prices.

Customers across the country find it difficult to get the paint they want, as shopkeepers struggle to keep their products on shelves and respond to rising costs from suppliers.

Randy Moser, owner of Bath Paint, a specialty store in Emmaus, Pennsylvania, located in the Lehigh Valley, about 53 miles north of Philadelphia, said: “This has been this way for a while and doesn’t seem to improve in the next 3-6 months.”

NS COVID-19 Pandemic It spurred a wave of new interest in projects around the house. Retailers are facing a torrent of demand for goods, such as gardening, adding pools, and painting new paint.

It in itself increased supply and pushed costs up, but it wasn’t the only thing.

The rapid freezing in the South slowed the production of petroleum, an important component of paint. While a shortage of other products is squeezing the supply chain, there is a rush of demand for shanti lace, tricorn black and green smoke (to name the three most popular colors).

Sherwin-Williams is the largest paint manufacturer in the United States with annual sales of $ 18.4 billion. Company officials were open to investors’ call to foresee additional “pricing behavior” to address rising input costs.

Julie Young, vice president of global corporate communications at Sherwin-Williams, said in a statement on CNBC, “These production turmoil, coupled with the surge in construction and industrial demand, put pressure on raw material supplies and caused prices to rise rapidly. I raised it. “

“The pace at which capacity is back online and supply is stronger is still uncertain,” Young added. “We have been very active in managing supply chain disruptions to minimize the impact on our customers.”

However, prices are rising and supply is becoming more difficult.

Companies are trying to deal

Producer price Painting and coating manufacturing August’s rise in August was 10.6% from a year ago, the largest annual increase since January 2009. Producer price index rising at a pace of 8.3% per year The most exponential increase in metric history for the month up to 2010.

At the same time, the sales Paint and wallpaper The number of stores in June increased by 7.8% each year to $ 1.34 billion. Sales growth has slowed since it hit a record high in April, but has remained strong.

Moser, who runs his business in his Pennsylvania store, feels that costs will increase in many ways as demand continues.

“Sure, it affected us in the sense that only certain products weren’t available, so we need to start selling one product and then switch to another,” he said. rice field. “Since the pandemic began, so many people have drawn and done the construction of homes along with all the other constructions. Things can handle the amount of inventory you have been withdrawn. I didn’t have it. “

Small stores are in a pinch in ways that large retailers don’t.

Robert Muhammad of 4 Seasons Paint Store in Brooklyn, New York, said some large companies are prioritizing large stores and cracking down on small retailers for product availability. According to Muhammad, some major manufacturers are facing pressure or disconnection from stores to sell only their own products.

“It’s really difficult for small businesses,” he said. “What are you selling? Those who are looking for supplies are only selling big stores.”

For consumers, it all can cause problems in the next few days. Paint can be in short supply and costly for the foreseeable future.

“If you want to work around your house, get in your car and buy paint now,” AkzoNobel CEO Thierry Vanlancker told Bloomberg News earlier this week.

A global paint maker based in the Netherlands said the latest investor update is expected to significantly increase prices in late 2021.

How long the turmoil will last is a matter of debate between policy makers and economists.

The debate over “temporary” inflation

NS The Federal Reserve claims a series of current high inflations Is temporary, and the word “temporary” is the central bank’s preferred term and is already showing signs of decline. White House officials personally say they are sensitive to rising prices, but while observing some major prices for hardware, wood, building materials, etc. falling from their peaks, We are seeing supply chain problems subside.

However, Some opponents of the Federal Reserve Board..

Dallas Fed President Robert Kaplan said Thursday that supply-demand imbalances “will last longer than some people expect,” but more companies are struggling to fill jobs. I have to pay wages. Kaplan said he was seeing “increasing price pressure next year.”

“There is an upward risk based on what we are seeing now,” he said.

While Wall Street economists generally support a temporary position, there are many opinions that the current situation could certainly continue into 2022.

For example, Morgan Stanley expects inflation to continue to rise until the first half of next year and then to deflation in the second half of next year. The company’s equity analyst, Vincent Andrews, wrote in a note to customers this week that the current state of the paint industry is “raw material availability issues / peak cost inflation, but only in the early stages of price achievement.” Said. ..

Andrews states that many factors, such as fallout from Hurricane Aida and the functioning of the chemical industry’s global supply chain, can help determine sustained inflation in paints. He said the current main problem is the lack of epoxies, acrylics, certain solvents and additives.

“Companies seem to be most confident in the current strong demand environment that will last until 2022, but because they are related to the raw material environment, they monitor production levels like any other company,” he said. Told.

At his paint shop in Emao, Moser said customers are dealing with higher prices in his store, just as they are dealing with inflation everywhere else.

“It’s everywhere, in every way, a grocery store, wherever you see it,” he said. “Now everyone is working on the same issue.”

Become a smarter investor CNBC Pro..
Get stock selection, analyst phone calls, exclusive interviews, and access to CNBCTV.
Sign up and get started Free trial today..

Painting is costly and difficult to find.This may be just the beginning

Source link Painting is costly and difficult to find.This may be just the beginning

Back to top button