PREVIEW: Sherwin-Williams, PPG Earnings Warnings Spotlight Uncooked Materials Challenges, Ida’s Impression on Coatings

NEW YORK (ICIS) – Revenue warnings from US-based coatings firms Sherwin-Williams and PPG shine the highlight on uncooked materials value inflation and provide chain challenges, specifically following the influence of Hurricane Ida.

Any hope of a return to regular seasonality by This autumn 2021 in lots of product chains has been dashed by extra provide constraints as firms wrestle to start out factories.

“The whole lot we have seen since winter storm Uri [in
mid-February] was a rush to replenish, and the consensus was that it will be over within the third or fourth quarter. Properly that is one other hit, so it will most likely be in 2022 earlier than issues begin to get again to regular, ”Kevin Swift, chief economist on the American Chemistry Council (ACC) mentioned in an announcement. press convention.
Podcast HERE

This may hit the coatings and different specialty chemical firms tougher as they supply many alternative uncooked supplies for the merchandise they formulate and promote in comparison with the essential chemical firms, which depend upon a couple of chosen uncooked supplies. .

“Though it has not but been totally quantified, we consider that Hurricane Ida has seemingly exacerbated a tough provide state of affairs – it seems that the petrochemical provide chain is just not very slack,” mentioned Laurence Alexander, analyst at Jefferies, following the PPG announcement.

“We consider firms akin to Avient, Axalta, BASF, DuPont, 3M, Quaker Chemical, Sherwin-Williams, Trinseo and Valvoline may even seemingly be constrained by comparable provide chain points,” he added.

Concerning the uncooked supplies of the coatings, as of September 8, there remained 58% of methylene diphenyl diisocyanate (MDI), 35% of isopropanol (IPA), 23% of n-butanol (NBA) and 23% of glycol ethers capability. within the USA. offline because of Ida, in accordance with ICIS Reside Disruptions Tracker.

Butanediol (BDO), which is used to make polyurethane floor coatings, amongst many different merchandise, additionally holds 57% of US offline capability.

Acrylic acid, the uncooked materials for key coatings, with 9% off-line capability, and titanium dioxide (TiO2) which was circuitously impacted by Ida, are much less impacted.

US Plant Standing Concerning Coatings as of September 8


To position

Some merchandise


Drive majeure


Geismar, Louisiana

BDO, HE, isocyanates, polyols

Scheduled restart


Geismar, Louisiana


Scheduled restart

Declare FM


Geismar, Louisiana

Isocyanates, polyols

Scheduled restart

Declare FM


Plaquemine, Louisiana

Ethylene, propylene, benzene, toluene, EO, glycol ethers, PE, PG, PO

Scheduled restart


Taft, Louisiana

Ethylene, propylene, acetic acid, acrylic acid, acrylates, ethanolamines, EO, glycol ethers, LLDPE, oxo-alcohols

To shut


Baton Rouge, Louisiana

Ethylene, Propylene, BD, Benzene, Toluene, IPA, PA, Plasticizers, PE, PP, Base Oils



Geismar, Louisiana

MDI, polyether polyols, aniline, nitrobenzene

To shut


Geismar, Louisiana

EO, EG, glycol ethers, linear alcohols, linear olefins

To shut

Whereas Ida’s uncooked materials provide constraints will restrict coatings manufacturing, demand is unlikely to say no and will even speed up within the brief time period on reconstruction efforts after the storm, which not solely hit Louisiana, however triggered injury all through its journey to the northeastern United States.

The climate forecast service AccuWeather estimates Ida’s injury and financial loss at $ 95 billion, barely lower than the $ 105 billion to $ 115 billion in injury brought on by Hurricane Rita in 2005. It will be the seventh. most expensive hurricane by way of financial influence.

Sherwin-Williams, the world’s largest coatings firm with over $ 18 billion in gross sales in 2020, September 8
decrease gross sales forecast for the third quarter
to be up or down by a decrease single digit proportion over the interval of final yr, in comparison with earlier forecast by a mid to excessive single digit proportion.

Sherwin-Williams CEO John Morikis mentioned “persistent industry-wide uncooked materials availability points” weren’t enhancing as anticipated, hampering the corporate’s means to reply. totally to the excessive demand for skilled architectural and industrial coatings.

The corporate expects the provision of uncooked supplies, together with as a result of influence of Ida, to negatively influence third-quarter gross sales in a single-digit proportion vary. This compares to earlier forecasts decrease than the damaging influence of three.5% recorded within the second quarter.

“On the identical time, our basket of whole prices, together with uncooked supplies, transportation and labor, continues to extend,” mentioned Morikis.

In response, the corporate introduced a 4% surtax in its Americas group, efficient September 20 till the tip of the yr, along with vital pricing measures already taken.

For these watching inflation metrics, Ida’s commodity chemical value will increase will clearly spill over into specialties and completed merchandise.

On September 7, PPG introduced that it expects third-quarter gross sales to be $ 225-275 million beneath expectations initially of the third quarter, citing rising disruptions in product provide. base, buyer manufacturing cuts on account of shortages of elements akin to semiconductors (affecting cars, family home equipment) and chronic logistics challenges all over the world.

As well as, commodity inflation is larger than anticipated, within the order of $ 60 million to $ 70 million. Ida might convey extra results to the provision chain, he famous.

PPG can be implementing value will increase to offset excessive uncooked materials prices and is in search of additional will increase. It’s experiencing total value will increase of round 5% within the third quarter. The corporate additionally withdrew its revenue steering for the third and fourth quarters.

Jefferies Alexander analyst lowered his 2021 earnings per share (EPS) estimate on PPG from $ 8.50 to $ 6.70, however famous that with “the underlying elementary demand developments seemingly intact and the continued value will increase, we count on a powerful restoration in revenue energy in 2022 “.

Preview article by Joseph chang

To study extra in regards to the influence of Hurricane Ida on chemical substances, go to our
Topic Web page

The thumbnail picture exhibits paint cans. Supply: imageBROKER / Shutterstock

About Edith J.

Check Also

A quiet comeback is starting in rising markets

The author, chief international strategist of Morgan Stanley Funding Administration, is the writer of “The …