Russia-Ukraine War effect on the Indian Paint Industry Market – Crude Oil price turmoil, stick slump, and market sell-off

Russia-Ukraine War effect on the Indian Paint Industry Market – Crude Oil price turmoil, stick slump, and market sell-off

The effect of the Russia-Ukraine war may be felt away and extensive throughout sectors and asset classes. However, the main effect is at the charges of crude oil, which has to pertain to nearly the whole lot else.

Vladimir Putin of Russia announced a military operation against Ukraine. Aviation, tire, and paint stocks also saw a sell-off as oil surpassed $100 a barrel. Crude oil prices are a significant headwind for the paint and transportation industries.

Effect of the War situation on the Indian Paint Stocks

Shares of paint companies such as Nerolac Kansai Paints Ltd, Berger Paints India, and Indigo Paints Ltd are all down 4% from their last close. The Ukraine disaster has led to havoc on already pressurized margins in the paint sector.

Painting companies such as Nerolac Kansai Paints Ltd, Berger Paints India, and Indigo Paints Ltd are all down 4% from their last close. Nerolac Kansai P paint Ltd fell more than 4.7% to Rs 442.60 each in intraday trading, while Berger Paint and Indigo Paint hit intraday lows of Rs 700 and Rs 1,720, respectively.

Investors’ assets plummeted more than Rs 8 lakh in less than an hour of trading on Thursday, appalled by hostile acts in Russia. Deepak Jasani, HDFC Securities (head of retail research), said today’s market volatility was a response to Russian stocks, but the market priced in such a move. “However, the consequences of these actions on the impact on commodity prices, including crude oil, supply disruptions, and possible sanctions that Western countries impose, may remain uncertain and possible.” this leads to a next step towards the lows after a brief rally,” he added.

Brent futures, an international benchmark for crude oil charges, spiked to nearly $120 a barrel this week because the marketplace confined purchases of Russian crude oil and scrambled to supply different grades.

Crude oil price turmoil – an essential raw material for the paint industry

The Organization of Petroleum Exporting Countries, controlling the bulk of worldwide oil manufacturing, expressed unwillingness to ease the tight oil markets. It maintained its centered month-to-month manufacturing growth of 400,000 barrels/day for April even after the disruption to Russian supplies.

 Experts stated that the $125/barrel stage could be breached earlier than later. Some stated crude will quickly contact a brand new decadal high, with a telling effect on the worldwide economy.

“Easing of sanctions on Iran or a considerable similarly launch of emergency oil reserves via way of means of the IEA (International Energy Agency) is possible to be the simplest respite to expanded crude oil charges,” Kotak stated withinside the report.

 Sectors without delay depending on crude oil and its derivatives could be the most essential losers, and the paint enterprise is one in every one of them.

Asian Paints, India`s biggest paint company, had highlighted at some point of its 1/3 zone income name that the modern-day enter value inflation turned into unheard of in forty years. The modern-day disaster will similarly irritate the situation.

ICICI Securities, which currently had an interplay with paint sellers, stated, “The sellers indicated that sales increase has bogged down after Diwali and patron offtake has remained gentle even in Jan-Feb `22 because of the effect of fee hike, exam season and election in neighborhood markets.”

“Asian Paints and Berger Paints maintain to advantage marketplace proportion in putty and primers from smaller gamers because they deliver chain of large gamers is higher than smaller gamers,” ICICI Securities stated in a report.

Titanium Production

The world is not short of paint, but the country could soon face a shortage of titanium dioxide as Russia continues to wage war on Ukraine – perhaps a wake-up call to Australian manufacturers about the primary material used to make gouache in paint.

Titanium Production of Ukraine 2010-2016

 Although best known in the commodity world for a wide range of agricultural exports such as wheat and barley, Ukraine is also one of the top 10 titanium dioxide producers, ranking sixth last year in the market dominated by China, South Africa, and Australia.

Ukraine’s loss of annual production of 470,000 tons of titanium dioxide (about 5% of the world market) and 94,000 tons of zircon, a mineral commonly found in similar ore bodies, could be an exciting event for the ASX- listed companies exposed to both materials

Upcoming Indian Market Trends

Due to lockdowns and regulations in Q1 of FY21 and Q1 of FY22, the waterproofing marketplace turned into impact. It is anticipated to rebound withinside the subsequent zone earlier than the advent of the June-September monsoon.

“Strong authorities spending turned into now no longer good enough to catch up on softer prints in case of manufacturing, creation, and agriculture,” stated Siddhartha Sanyal, leader economist at Bandhan Bank. He expects the modern-day geopolitical state of affairs and growing commodity charges to create extra headwinds withinside the modern-day zone.

India`s GDP grew at a much less-than-anticipated 5.4 percent withinside the 1/3 zone (October-December), and the estimate for FY22 turned into revised downwards to 8-9 percent. The facts pondered a decrease-than-anticipated increase in intake and symptoms of a slowdown withinside the rural economy.

 Experts had been hoping for a revival within the painting phase in Q1 of FY23; however, with the modern-day state affairs and coming near fee hikes, that estimate may get driven similarly. The length of the war and the effect of sanctions on Russia and its crude oil delivery will play a vital position withinside the turnaround for the paint enterprise.

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