Consumers told to brace for high costs of paint products

By Steve Umidha

Consumers have been warned to prepare for a sharp rise in the costs of paint products as crude oil prices continue to ripple through the economy.

Sounding the alarm on Monday, the Chief executive of Crown Paints Plc. Rakesh Rao said the firm will increase the price of its products by up to eight percent and subsequently 10 percent this month in the wake of rising crude oil prices triggered by the Russia-Ukraine conflict.

“It is a supply problem and as a result we have been compelled to pass on those logistical costs to our consumers by 8 percent, which will rise to 10 percent depending on how the situation is managed,” said Rao in a telephone interview.

Prices of crude oil has a bearing on almost everything including the paint, coating and adhesive manufacturing industry which has been rising disturbingly since the war broke almost two months ago.

Brent futures, which is a global benchmark for crude oil prices, spiked to USD120 a barrel just last week as global market restricted purchases of Russian crude oil and scrambled to source other grades.

Closer home, the impact of the conflict is fast taking a toll on Kenyans daily lives with a growing number of gas stations or petrol stations running empty, while cost of living has stretched millions of households who are now disenchanted.

The fuel shortage has however, been blamed on oil marketers hoarding the precious commodity following failure of the state to compensate them for the rising costs of importing oil products through a subsidy scheme.

In its defense over the weekend, the Kenya Pipeline Company (KPC) confirmed there was sufficient fuel stocks in all its depots across the country.

“Kenya Pipeline Company would like to confirm ample stocks of petroleum products in our system throughout the country to meet demand,” said KPC’s managing director Macharia Irungu in a statement issued on Saturday.

The paint industry uses crude oil derivatives such as titanium dioxide, zinc oxide, solvents like mineral turpentine and resins and additives as raw materials, which account for more than 50 per cent of a company’s total expense.

The stock for such materials coupled with higher crude prices has rallied to low levels since the war broke, just after the global economy was beginning to heal from Coronavirus nightmares.

“We are just coming from the Covid-19 pandemic whose impact led to the rise in the cost of shipping raw materials and this war has only escalated the condition. We also have elections coming, so all those concerns put together is a worry,” offered Rao who confirmed the company would however push on with its 2022/23 expansion bids in the face of the roadblocks.

The NSE –listed company will press on with plans to open a new Nairobi plant and has earmarked March 2023 for its launch, according to Rao, even though he admitted that the costlier raw materials will likely put pressure on the firm’s margins.