|Chennai||Rs. 24840.00 (-0.36%)|
|Mumbai||Rs. 25460.00 (-0.16%)|
|Delhi||Rs. 25450.00 (2.21%)|
|Kolkata||Rs. 25000.00 (0%)|
|Kerala||Rs. 24700.00 (0%)|
|Bangalore||Rs. 25050.00 (1.42%)|
|Hyderabad||Rs. 24930.00 (1.63%)|
Paint makers are turning to China for sourcing titanium dioxide, a key raw material for the industry. A major reason behind China emerging as an alternative market is that it provides cheaper titanuim dioxide, also known as synthetic rutile. Traditionally, companies have been sourcing rutile from the European market, now facing slowdown.
“Rutile (titanium dioxide) is the key component for making paint and stands for close to 30 per cent of the total cost of production. It’s cheaper by $300 (Rs 16,400) for each tonne, when sourced from China, compared to traditional markets. The import cost is also less so many MNCs (multi-national corporations) are looking at it as an alternative market,” said Ramakanth V Akula, president of the Indian Paints Association (IPA).
Akula, also the president (decorative) at Nippon Paint India, pointed out that due to the slow growth in the domestic market, this trend might become more visible next fiscal.
|PAINTING THE TOWN RED|
The cost of rutile at present is around $3,000 per tonne, which had breached the $4,000 mark last year. Decorative major Berger Paints has also started sourcing rutile from China to balance out the impact of a weak domestic currency.
“We have been importing titanium dioxide from China as the Indian produce of the raw material is not adequate to feed our needs,” said Abhijit Roy, managing director and chief executive of Berger Paints.
Echoing Berger’s Roy, M R Shankar, purchasing manager, decorative paints, Akzo Nobel India, said China figured as an important source of titanium dioxide given its capacity build-up, especially after the year 2010.
According to Shankar, this shift to the Chinese market would grow based on macroeconomic developments in the coming months. “The GDP (gross domestic product) movement and the global macroeconomics scenario have a great influence on the TiO2 (titanium dioxide) prices. Therefore, we can relate the pricing to the trends in macroeconomics.”
The IPA president later pointed out that due to the lack of demand, currency fluctuation and high duties, the benefit of sourcing raw material from China is getting hit. The current financial year for the paint industry is seen as one of the worst in the last three-four years. Value growth is estimated to be around 14 per cent in FY13, a dip of six per cent compared to FY'12.
“The industry, estimated to be over Rs 26,000 crore, will have a single-digit volume growth this year compared to previous fiscal's 14 per cent. If the macro economic scenario does not change then the next fiscal, too, will be tough to operate in,” added Akula.