Crude Oil Surge Could Trigger Paint Price Increase in India: Report

Paint prices in India could increase by 2 to 5 per cent in April if crude oil prices remain elevated, according to a report by Systematix Research. Companies are currently monitoring cost pressures and may delay price decisions until the end of March.

Why could paint prices increase next month?

According to the report, dealers expect paint manufacturers to consider price hikes if crude oil prices remain at their current high levels.

"If crude sustains at current high levels, most dealers expect product price hikes of 2-5% in April (more if crude climbs to higher levels for a longer period)," the report said.

However, paint companies have not announced any price increases so far and appear to be waiting for more clarity on the trajectory of crude oil prices and raw material costs.

Why are companies holding back price hikes for now?

The report indicates that manufacturers may wait through March 2026 to see whether crude prices stabilize before making pricing decisions.

Companies are also likely to remain cautious because of intense competition within the paint industry. As a result, any initial price hikes could be limited and implemented gradually rather than through a sharp increase.

How could price hikes be implemented?

Systematix Research believes the first round of price increases would likely be modest. The report suggests that the initial hikes could be limited to low single digits and staggered over the first quarter of FY27.

If crude oil prices continue to climb and remain elevated for a longer period, further price hikes may follow.

How do crude oil prices affect paint companies’ margins?

The report notes that profitability in the paint industry is closely linked to raw material costs, many of which are derived from crude oil.

According to its long-term analysis, a roughly 10 per cent quarter-on-quarter increase in crude prices has historically resulted in about a 130 basis point quarter-on-quarter decline in gross margins in aggregate.

The eventual impact on margins will depend on where crude oil prices settle, how long they remain elevated and how aggressively companies adjust their product prices.

What is the current demand trend in the paint market?

Despite cost concerns, demand across the paint industry remains stable.

Dealers across regions reported that overall demand is recording value growth in mid-single digits. The report also highlighted that the economy segment of the market is expanding faster than premium categories.

Products such as economy emulsions and distempers are currently witnessing stronger growth in most regions compared with premium and luxury paint products.

(With inputs from ANI)