Retail paint price increases and titanium dioxide cost link

An article in the Wall Street Journal (23 April 2011) describes a 16 % increase in retail price of paint.  The cause is an increased demand for titanium dioxide, a paint ingredient that is also used in toothpaste, paper and plastic, and increased demand from developing economies like India and China. At the same time, lack of investment by mining companies and shuttering of titanium dioxide plants have caused a increase in price for this ingredient.  While paint manufacturers work to decrease the use of this ingredient or adjust paint grades, manufacturers of titanium dioxide like DuPont have seen profit increases.  Will such spillover cost effects due to capacity shortages become the norm in a global supply chain ? How should consumer products companies plan their designs, pricing etc to compensate for such rapid commodity price swings ?

About aviyer2010

Professor
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