We have discussed in several recent reports the very mixed fortunes in the intermediate and specialty chemical sector related to whether companies have been able to move prices fast enough to cover costs. The two large blue bars in the AkzoNobel chart below show that Akzo was close, but did not make it. We expect other examples like this over the coming weeks but we also expect some companies to have done better – some of this depends on mix and contract terms, but a lot has to do with how early you acted on the rising cost trend and how aggressive you were willing to be with customers. Dow is another example of a company struggling to get pricing high enough to cover cost increases, although Dow and others have aggressive price increase announcements in the market for polyethylene for April and May that would make a significant difference to US margins if successful.
Akzo Nobel is somewhat unusual among the more specialty chemical (in this case paint) producers, as the company has managed to raise prices fast enough to offset costs and produced strong positive results for 4Q 2021. Not having auto OEM exposure will have helped Akzo and the company is well-positioned to manage pricing through its stores in many cases. It is a relatively safe environment to push up paint prices as all of the competitors have the same cost pressure and need to do the same, and demand remains strong – consumers are buying paint.