SunSirs: Geopolitical Turmoil in the Middle East Reshapes the Coatings Supply Chain: Chinese Raw Material Exports Behind the 12% Hike by an Indian Giant

Recently, Asian Paints—India's largest coatings manufacturer—officially announced a price increase of approximately 12% across its entire product line. This move, marking the steepest price hike in the Indian coatings industry this year, was not merely a unilateral strategic adjustment; rather, it was a direct consequence of geopolitical conflicts impacting the global coatings supply chain, revealing the underlying dynamics of supply and demand for petroleum-based coating raw materials. Other Indian manufacturers have also raised prices this year. Cross-verification by authoritative media outlets such as Reuters and The Economic Timesindicates that the primary driver is the escalating situation in the Middle East. Rising shipping risks in the Strait of Hormuz and volatile, upward-trending international crude oil prices have directly inflated the costs of core production materials. Since the three essential components of coatings—resins, solvents, and additives—rely heavily on the petroleum refining and petrochemical derivative supply chain, fluctuations in crude oil prices cascade through the chain, ultimately resulting in higher prices for finished coating products. The significant price hikes in the Indian market serve as a prime example of global cost inflation for petrochemical raw materials. As a key global supplier of coating raw materials, China is deeply integrated into India's coatings supply chain. Despite India's massive domestic production capacity, it lacks self-sufficiency in core upstream raw materials and relies heavily on imports. Leveraging its robust petrochemical capacity, mature supply chain, and geographical proximity, China has long remained the primary source of raw material imports for India's coatings industry; the trade dynamics between the two nations are now exhibiting new characteristics amidst the current global volatility in raw material prices.

Regarding the structure of raw material trade between China and India, Chinese exports encompass the full spectrum of resins, solvents, and additives, serving as a crucial support for India in bridging domestic production gaps and mitigating cost pressures; furthermore, export volumes have steadily risen in recent years alongside increasing product specialization. In the resin sector, India—a major producer of coatings—consistently faces supply-demand gaps for alkyd, polyester, and specialty epoxy resins. Annual imports of short-oil alkyd resins range from 80,000 to 120,000 tons, with the vast majority sourced from China. China is also a key supplier of high-performance polyester resins and food-grade coating resins used in India’s high-end anti-corrosive and industrial paints, commanding over 65% of the market share for such high-end resin imports. Export data for TDI—a core raw material for polyurethane coatings—vividly illustrates the close trade ties between the two nations: China exported 31,100 tons of TDI to India in 2025, and in the first five months of 2026 alone, exports exceeded 19,100 tons—nearly 60% of the previous year's total. This surge is primarily driven by delays in restarting local Indian TDI plants and their prolonged operation at low capacity, forcing the market to rely entirely on Chinese supplies to bridge the gap. In the solvent sector, general-purpose coating solvents such as toluene, xylene, butyl glycol ether, and acetone are major export commodities from China to India. Exports of toluene surged by 111.7% year-on-year in 2025 and maintained strong growth in the first quarter of 2026, reflecting India's increasing reliance on Chinese solvents—a trend driven by China's comprehensive product range, ample spot market liquidity, and short shipping times. Regarding additives, Chinese-made auxiliary agents—such as rheology modifiers, wetting and dispersing agents, and defoamers—are exported to India in large volumes. This is particularly true for products that India traditionally imports, such as high-end fumed silica and high-molecular-weight dispersants; Chinese products offer a compelling price-performance ratio, making them a primary choice for small and medium-sized Indian coating enterprises looking to cut costs.

It is worth noting, however, that trade in coating raw materials between China and India is not entirely free-flowing. India has long employed tariff barriers and anti-dumping policies to counter China's production capacity advantages, resulting in a unique trade landscape characterized by a combination of essential import demand and restrictive policy measures. India currently maintains anti-dumping duties on Chinese raw materials such as phthalic anhydride and certain polyester resins, alongside a 12.5% ​​basic customs duty on related categories; for some products subject to these measures, anti-dumping duties approach RMB 1,000 per ton. In the first half of 2026, while trade barriers caused a slight 4% year-on-year decline in Chinese exports of certain conventional resin categories to India, the import volume of essential products did not shrink—instead, it grew against the trend. The primary reason is that India’s domestic petrochemical supply chain suffers from structural weaknesses that cannot be quickly remedied. Even with the added tariffs, Chinese raw materials retain irreplaceable advantages in terms of cost-performance, supply stability, and product compatibility—particularly regarding mid-range general-purpose resins and solvents, for which no other country possesses the capacity for mass substitution. Consequently, China continues to hold a pivotal position in India's imports of coating raw materials.

In stark contrast to the Indian market—where raw material costs are steadily rising and end-product prices have surged—the prices of China's three core coating raw materials followed a divergent pattern in 2026: spiking in the first half of the year, retreating mid-year, and experiencing a structural recovery in July. Overall, the market exhibited a pattern of "rising external costs versus stable internal costs" and "tight external supply versus loose internal supply." The widening price gap between domestic and international raw materials created a profitable window for exporting Chinese materials to India. During the first half of the year, factors such as escalating tensions in the Middle East, volatile increases in international crude oil prices, and overseas plant maintenance kept domestic petroleum-based coating raw materials at high price levels, maintaining persistent cost pressure throughout the supply chain. In the resin sector, prices for epoxy and polyester resins surged significantly; solid epoxy resins saw substantial cumulative gains year-to-date, while the costs of key polyester resin monomers—such as neopentyl glycol, PTA, and isophthalic acid—rose sharply year-on-year, driving up polyester resin production costs by 15%–25%. Leading resin manufacturers raised ex-factory prices multiple times throughout the year, with auxiliary materials like curing agents and matting agents experiencing price hikes in the magnitude of RMB 10,000 per ton. In the solvent sector, driven by rising crude oil prices, basic aromatic solvents such as toluene, isopropanol, and xylene strengthened throughout the first quarter; ex-factory prices in major production regions rose steadily, while high-end solvents like ethylene glycol butyl ether remained firm at high price levels. The additives sector exhibited a trend where "high-end products outperformed general-purpose ones, and water-based products outperformed solvent-based ones"; materials with high import dependency, such as fumed silica and rheology modifiers, saw price increases of 15%–25%, reflecting continued high market prosperity.

By June 2026, the domestic market for coating raw materials underwent a periodic correction; categories that had previously experienced excessive price surges saw a collective decline, completely reversing the trend of unilateral price increases seen in the first half of the year. Driven by factors such as weak downstream demand for coatings, shrinking export orders, procurement based strictly on immediate needs, and low inventory levels, raw material prices plummeted. Notably, trimellitic anhydride (TMA) plunged by 41%, ethylene glycol butyl ether fell by 22.67% in a single month, and acetone dropped by nearly 20%; key raw materials for additives and curing agents—including TGIC, diethanolamine, and adipic acid—all saw declines exceeding 11%. Meanwhile, prices for general-purpose raw materials like alkyd resins remained under pressure and trended weakly due to ample domestic production capacity, high inventory levels, and stable export demand. The core logic behind the recent sharp market correction lies in a supply-demand mismatch within the domestic coatings industry chain. While upstream petrochemical raw material costs have risen due to geopolitical factors, demand in downstream sectors—such as real estate and industrial coating—remains sluggish. Consequently, companies have been unable to pass on cost pressures, forcing upstream raw material prices to retreat to more rational levels; this stands in stark contrast to overseas markets, where costs are rigidly rising amidst escalating geopolitical conflicts.

As July began, the domestic coatings raw material market entered a phase of structural recovery, characterized by a stabilization of prices and a modest rebound in specific segments—creating a significant price gap compared to the steadily rising cost curves in the Indian market. Multiple domestic refining and chemical enterprises raised ex-factory prices for basic solvents such as toluene, xylene, and isopropyl alcohol. Low-priced supplies of ether-based solvents dwindled while actual transaction volumes steadily recovered, and prices for products like ethylene glycol butyl ether saw slight daily increases. Meanwhile, the markets for resins and additives remained largely stable with narrowing declines, as the market gradually absorbed earlier bearish sentiment. Currently, domestic coatings raw material prices are in a phase of "moderate recovery following a high-level retreat." This contrasts sharply with the Indian market, where prices are surging due to the ongoing impact of the Middle East situation and rising raw material costs—leading to a 12% hike in end-product prices. In contrast, domestic raw material price levels remain significantly lower, the supply-demand balance is looser, inventory pressure is manageable, and cost pressures on downstream enterprises are easing.

Overall, the sharp price increases in the Asian coatings sector are an inevitable consequence of how geopolitical risks are priced into the global petroleum-based coatings raw material supply chain, highlighting the divergent dynamics between domestic and overseas markets. Overseas markets—particularly India—rely heavily on international crude oil trade channels and are directly impacted by Middle East geopolitical conflicts and rising international logistics costs; facing rigid cost structures, companies there have little choice but to raise end-product prices to hedge against risk. Conversely, China—leveraging its comprehensive petrochemical production capacity, abundant domestic supply, and vast internal market—possesses strong price-cushioning capabilities. It can effectively buffer the impact of crude oil price volatility, resulting in a unique pattern of "rising prices abroad but stability at home" and "tight supply abroad but loose supply at home." Meanwhile, the deep trade integration regarding coating raw materials between China and India implies that the wave of price hikes in the Indian market will continue to benefit Chinese raw material exports; the price differential between domestic and international markets will drive a steady flow of Chinese resins, solvents, and additives to India, helping to bridge the gap in its local production capacity. In the near term, geopolitical uncertainty in the Middle East will continue to dictate global price trends for petroleum-based raw materials, and the domestic coating raw material market is likely to experience structural volatility—with essential product categories seeing steady recovery and commodity-grade products maintaining stable performance. As a key global exporter of coating raw materials, China’s supply advantage in the Indian market will become increasingly pronounced, positioning it as a core, stable supplier amidst fluctuations in the global coating industry supply chain.

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