Steel and Paint Suppliers Still Price Above Their Own Costs, Procurement Index Finds

Output prices at U.S. paint manufacturers and steel mills are still running above what those producers pay for inputs, years after the 2021-22 commodity shock, according to a new analysis from procurement software company WTP Buynamics. Paint and coating makers are pricing 16% above their input costs, a reversal from a 12% gap below cost in 2021. Steel mill output prices peaked at 74% above input costs in 2021 and remain 12% above them today.

The Procurement Inflation & Negotiation Index compares Bureau of Labor Statistics producer price indexes with input-cost and cost-structure data for nine U.S. manufacturing industries from 2020 through early 2026. In four of the nine, output prices held on to earlier gains after costs eased. Suppliers in several others are absorbing cost increases they have not passed through.

“Procurement teams have spent the last few years reacting to one shock after another, from port congestion to trucking shortages to tariff whiplash,” said Robert Driessen, founder and CEO of WTP Buynamics. “On the pricing side, the reaction hasn’t been uniform. Two categories can face similar cost changes and come out with completely different pricing behavior a year later. If you’re managing a supplier base across multiple categories, you can’t apply one inflation assumption across all of them.”

According to the report, paint and miscellaneous chemical manufacturers came through the feedstock shock on nearly identical input cost paths. Paint output prices rose 39% by late 2022 and have not come back down. In the chemical category, which includes food-grade additives, preservatives and flavor compounds, output climbed only 20% and now sits about 1.7% below input costs.

Plastic bottles show a similar pattern to paint. Resin accounts for 53% of the cost to make a bottle, and resin prices eased through 2025. Bottle output prices have still held about 7.3% above WTP’s commodity index for the category. The report puts that gap at roughly $3.65 million on a $50 million plastics packaging spend.

Confectionery made from purchased chocolate rose 42% from early 2024 to an October 2025 peak. It still runs 25 to 28 points above broader food manufacturing prices, even though cocoa has fallen by roughly two-thirds from its early-2025 high. The report notes that WTP’s own ingredient index for the category, which blends cocoa with sugar and dairy, is still climbing into 2026.

Other industries are moving the opposite way. Semiconductor output prices have run 12% to 14% below input costs since 2022, while WTP’s input index for chipmakers climbed 28%. Motor vehicle transmission and power train parts are priced 17% below input costs, and the report says that gap is widening. For those categories, WTP recommends buyers lock in current terms.

Pallets are the category most likely to reach logistics budgets next. A lumber shortage in 2021 pushed pallet makers’ output prices 14% to 18% above their input costs. By 2024 that had reversed, and output prices have been flat since. WTP’s wood commodity index now runs 19% above pallet output prices and is still rising, and the report expects flat pallet pricing to begin reversing within the next few quarters.

The report also tests the common supplier explanation of higher wages and electricity bills. WTP applied national figures, an 18% increase in production wages and a 34% increase in industrial electricity since 2020, to each industry’s cost structure. Combined, labor and energy add no more than 3.4 percentage points to any of the nine industries’ costs. Pallet makers carry the highest exposure, mainly because labor is 17% of their cost.

“Procurement teams need to know, category by category, whether this year’s price increase is backed by real cost or leftover margin,” Driessen said. “That’s the difference between renewing a contract on autopilot and walking in with a number of your own that you can defend based on facts.”