Paint and Coatings Industry Overview
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Published: October 2013
The value of the global production of paints and coatings was about 13% higher in 2012 than in 2010. Demand in Asia continues to rise faster than elsewhere in the world, and that region now accounts for nearly 50% of global consumption.
Paints and coatings, which provide two primary functions—decoration and protection—are of considerable economic importance. About 45% of the coatings produced worldwide are used to decorate and protect new construction as well as to maintain existing structures, including residential homes and apartments, public buildings, and plants and factories (referred to as architectural or decorative coatings or simply, "paints"). Another 40% of the coatings are used to decorate and/or protect industrial products (called product finishes). Without coatings, product lives might be shortened drastically and many products would not even be marketable. Most of the remaining coatings, called special purpose, are used for miscellaneous applications such as traffic paints, vehicle refinishing, high-performance coatings for industrial plants and equipment, and protection of marine structures and vessels. These are usually applied outdoors in ambient conditions.
Generally, industrial coatings are more costly than architectural coatings. In the developed world, the average cost of an industrial coating was over $5 per liter in 2012, while the average cost of an architectural coating was around $3.50 per liter. In the lesser-developed world, architectural coatings may sell for considerably less due to a large market for "budget" coatings. In Brazil, the average unit production values of architectural coatings have historically been around $2.50 per liter, while automotive and other industrial coatings are usually valued at over $5 per liter.
The following pie chart shows world consumption of paints and coatings by technology:
The major change that has taken place in the coatings industry during the last forty years has been the adoption of new coating technologies. Until the early 1970s, most of the coatings were conventional low-solids, solvent-based formulations; waterborne (latex) paints, used in architectural applications, accounted for 30–35% of the total. In the late 1970s, however, impending government regulations on air pollution control focusing on industrial coating operations stimulated the development of low-solvent and solventless coatings that could reduce the emission of volatile organic compounds (VOCs). Energy conservation and rising solvent costs were also contributing factors. These new coating technologies include waterborne (thermosetting emulsion, colloidal dispersion, water-soluble) coatings, high-solids coatings, two-component systems, powder coatings and radiation-curable coatings.
The major issues facing the coatings industry during 2010–2011 were increased raw material costs in commodities (solvents, resins and others), which were driven by higher hydrocarbon costs. A key raw material, the white pigment titanium dioxide, increased in price by about 10% in 2010 and by another 30–40% in 2011, which placed considerable pressure on sales margins. However, by mid-2012, commodity prices had largely stabilized and TiO2 prices started declining to more normal levels. Most coatings companies reported raw material costs were increasing at about 3–4% annually in 2012–2013.
The paints and coatings industry in the United States, Western Europe and Japan is mature and generally correlates with the health of the economy, especially housing, construction and transportation. Overall demand from 2012 to 2018 will increase at average annual rates of 2–3% in the United States and 1.5–2.5% in Western Europe. In Japan, however, consumption of paints and coatings will experience relatively slow growth during this period (0.5%), as a result of no growth in major markets such as automotive OEM, machinery and appliances.
In the emergent countries of the world, coatings are growing at a much faster rate. The best prospects for growth are in Asia Pacific (6% growth per year in the near future), Eastern Europe (6%) and Latin America (8%). Total global growth should be about 6% per year. Growth of coatings is expected to continue at 8% per year in China, 12% in India and 6% in Indonesia. Growth in value terms will be even higher because of the increased production of relatively higher-valued coatings. Multinational producers will likely gain even more presence in the developing world as living standards increase and per capita consumption of coatings rises.
Through the next five years, air pollution regulations will continue to be a driving force behind the adoption of new coating technologies. Despite the relatively slow growth in demand anticipated for coatings overall, waterborne and high-solids coatings, powders, UV curables and two-component systems appear to have good growth prospects.