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Why PPG Industries Hiked Industrial Coating Prices

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PPG Industries increase industrial coatings prices

As of October 25, PPG Industries (PPG) announced that it would hike the prices of industrial coatings. On average, PPG plans to hike the prices of all the industrial coating products by 6%. The price hikes should affect the North American operating region effective November 1, 2017, or as per the contract.

PPG claimed the price increase is primarily due to an increase in raw material costs and labor costs. PPG’s action complements what it said along with its 3Q17 earnings, and it could improve PPG’s revenue in 4Q17, assuming that the volumes don’t fall.

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Kevin Braun, PPG’s vice president of Industrial Coatings, Americas, said, “While PPG continues to look for ways to respond to cost increases through more efficient operations, cost-control measures have not sufficiently offset rapidly rising costs in the supply chain.We remain committed to providing our customers with the latest coatings and innovative technologies while delivering best-in-class technical sales and service.”

PPG stock price

PPG stock rose 0.10% and closed at $117.93. PPG’s strong 3Q17 earnings resulted in the stock trading 8.40% above the 100-day moving average prices of $108.84, indicating an upward trend in the stock. On a year-to-date basis, the stock has returned 16.80%, but analysts foresee further upside in the stock and a target price of $121.70. However, PPG’s 14-day relative strength index of 74 indicates that the stock has moved into overbought position temporarily, which might result in some selling pressure on the stock.

Investors can indirectly hold PPG by investing in the Materials Select Sector SPDR Fund (XLB), which has invested 4.70% of its portfolio in PPG. The fund’s other holdings include Monsanto (MON), Praxair (PX), and Air Products and Chemicals (APD) with weights of 8.10%, 6.50%, and 5.40%, respectively, as of October 27.

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