Executive Summary
Escalating Middle East tensions and disruptions to oil and gas shipping have pushed crude oil prices higher, sharply increasing costs across the petrochemical supply chain and placing significant pressure on the coatings industry. Key raw materials such as epoxy resin, TDI, and acrylic derivatives have surged, prompting more than 20 Chinese coatings companies to announce price hikes across architectural, industrial, and waterproofing products.
Key Takeaways
- Oil Price Surge Drives Cost Pressure: Surging crude oil prices have sharply increased costs for petroleum-derived inputs, including solvents, resins, and key chemical raw materials.
- Coatings Sector Faces Broad Price Adjustments: Over 20 Chinese coatings companies, spanning architectural, industrial, and waterproofing segments, have announced price hikes, with some firms implementing multiple rounds of increases.
- Raw Material Inflation Across the Board: Core materials such as epoxy resin, TDI, MDI, BA, 2-EHA, neopentyl glycol, and asphalt have experienced significant price surges, placing sustained pressure on manufacturing margins.
- Differentiation in Downstream Tolerance: Home decoration and automotive coatings sectors demonstrate higher tolerance for price increases, while traditional industrial applications remain price-sensitive, highlighting uneven market absorption.
- Strategic Inventory Management Buffers: Many listed coatings companies maintain one to two months of raw material inventory, providing short-term insulation from price volatility, though ongoing cost pressures are expected to sustain upward pricing trends.
Full Report
The ongoing oil crisis triggered by conflicts in the Middle East continues to disrupt industrial ecosystems worldwide. With crude oil accounting for over 40% of coating production costs, the surge in crude oil prices has driven sharp increases in petroleum-derived inputs, including solvents, resins, and additives.
In response to rising raw material costs, more than 20 major coatings companies in China have issued price adjustment notices, affecting a full spectrum of products, including architectural coatings, industrial anti-corrosion coatings, and waterproof coatings.
In a report released on March 24, SinoLink Securities said that the prolonged closure of the Strait of Hormuz has intensified a range of indirect impacts. “Downstream refining and chemical processing operations have begun adjusting production rates in response to unstable upstream supply and declining inventories, resulting in localized supply shortages or strategic production cuts. Globally priced petrochemical products, which initially benefited from inventory gains, are now facing significant cost-pass-through pressure as raw material prices surge.
The main cost components of coatings include film-forming materials (such as resins, emulsions, and asphalt), pigments and fillers, solvents, and additives. The recent surge in crude oil prices has affected nearly all key raw materials, with sharp increases reported for BA (butyl acrylate), 2-EHA (2-ethylhexyl acrylate), MDI (methylene diphenyl diisocyanate), TDI (toluene diisocyanate), neopentyl glycol, and epoxy resin.
According to China Post Securities, as of March 20, TDI prices had risen about 24% over the week and 52% over the month. According to state broadcaster CCTV, the price of epoxy resin — a key coating raw material — has climbed from 14 yuan to 20 yuan per kilogram, marking a significant 43% increase.
In the coatings market, some companies had already issued price adjustment notices as early as March to pass rising material costs downstream. For instance, on March 1 and 2, Beijing Oriental Yuhong Waterproof Technology and Keshun Waterproof Technologies, two listed firms in the waterproofing and coatings sector, announced price increases.
According to Keshun Waterproof Technologies’ notice, crude oil price increases and shifts in market supply and demand have driven rapid rises in asphalt, a key raw material for waterproofing products, with cumulative increases exceeding 10%. Starting March 15, prices for asphalt-based membranes and coatings will increase by 5% to 10%.
As raw material costs continued to climb, an increasing number of coatings companies announced price hikes by mid-to-late March, with some firms compelled to raise product prices multiple times.
In a price adjustment letter released on March 20, Shanghai 3Tree Waterproof Technology said that since the start of the year, prices of major raw materials, including asphalt, have risen sharply, and based on current trends, crude oil and related raw material costs are expected to continue increasing. “Although the company had raised prices by 5% – 15% on March 15, the latest surge in raw material costs has exceeded the capacity of the existing pricing system. To ensure product quality, maintain service stability, and safeguard long-term partnerships, the company has decided to further adjust prices for engineering waterproofing products. Starting April 1, 2026, prices will increase again by 5% to 12% on top of current levels.”
According to industry media and CCTV, more than 20 coating companies have announced price increases since March.
CCTV also reported that downstream tolerance for price hikes varies widely: sectors such as home decoration and automotive coatings exhibit relatively higher acceptance of rising prices, while traditional industrial sectors are more sensitive. Industry insiders noted that, in the short term, oil prices remain the primary factor driving coating price trends, and under sustained cost pressures, coating prices are more likely to rise than fall.
A board secretary of a listed company specializing in automotive coatings said that while some upstream raw materials have risen in price, the company currently has sufficient inventory and has not increased its product prices.
A representative from another listed automotive coatings company explained that listed firms typically maintain one to two months of raw material inventory, meaning short-term fluctuations in prices have little immediate impact on downstream product pricing, and any price adjustments are made in consideration of competitors’ actions. “Listed companies have built up extensive experience over the years, and our financial position is relatively strong. Decisions to raise prices depend on whether a company prioritizes profitability or market share — each firm follows its own strategy,” the representative said.
“We have been receiving ongoing price increase notices from upstream suppliers, mostly communicated informally and without specific product-level details, but overall prices remain relatively manageable for now,” the representative added.