Demand for raw materials in the paint industry soared over the pandemic as quarantined consumers took to DIY projects and home improvement. But supply just couldn't keep up.
"The raw-material shortage is still something we have a meeting once a week to discuss what are we out of this week," Jeff Grasty, president of Florida Paints, told CNBC.
Sales at paint and wallpaper stores in the U.S. spiked 7.8% annually in June 2021 to $1.34 billion. The pace of sales increases has slowed but is nevertheless robust. For example, the latest data available shows a sales total of $1.1 billion in November.
Two of the largest paint companies, Sherwin-Williams and PPG, have said worsening supply chain shortages are impairing their ability to manufacture products.
That impairment is due to a confluence of factors. Paint companies source pigments from global trade networks, making their products vulnerable to supply chain issues and climate change.
Money Report
"To make a gallon of paint the exact same as the next one, you have to have that same amount of color pigment in it," Tony Piloseno told CNBC.
Piloseno started his own paint company and now works with Florida Paints. He fell in love with mixing paint at a part-time job during his college years, and now he brings that love of color to his large TikTok following.
Feeling out of the loop? We'll catch you up on the Chicago news you need to know. Sign up for the weekly> Chicago Catch-Up newsletter.
"I get orders that sometimes I can't even keep up with," Piloseno said.
So far the higher prices haven't put a lid on sales. Indeed, producer prices for painting and coating manufacturing rose 15.7% in December 2021 from a year ago. For comparison, on a 12-month basis, the producer price index was up 9.7% to end 2021, the highest calendar-year increase since 2010.
"If nothing else happens in the chemical supply chain, we're forecasting the fourth quarter of 2022, and possibly into the first quarter of 2023, before we see some sort of normal," said Dan Murad, CEO of the ChemQuest Group.
Watch the video above to learn more about how the paint supply chain works, what it takes to manufacture paint and why prices are rising.
