Paints and Coatings Poised for Sustained Uptake Worldwide
Every year, more than 40 MT paints and coatings are produced worldwide. There has been sustained demand for paints and coatings not only for enhanced aesthetics and improved durability but also for protection and endurance of an extensive range of natural and synthetic materials and products. Moreover, paints and coatings continue to be a preference for providing products, materials, and structures with a reliable a barrier against environmental conditions. This is expected to remain the key factor responsible for a stable growth outlook of global paints and coatings market. Asia Pacific was the leading paints and coatings market in 2018, accounting for more than half the global production. China held the highest share with growing demand from both architectural, and industrial applications, thereby pushing paints and coatings market in the region further.
With green technologies firming up across industries and regulations compelling manufacturing companies to strictly comply with concerned guidelines, the dynamics of paints and coatings market will continue to experience a change. Hundreds of smaller companies not operating their businesses in line with the government regulations retreated from the market in the last few years. Production-demand equations have been balanced in paints and coatings market has been a good balance of production and demand across the regions, with only minor quantities of high-value products being traded. The paints and coatings industry typically grows in tandem with economy of the country. In this light, paints and coatings market is poised for a sustained growth outlook is expected in developing economies over the coming years.
Industrial Application Areas Continue to Elevate Prospects of Paints and Coatings Market
Architecture is one of the leading end-use industries of paints and coatings that captured approximately 50% of the market value share in 2018. Rebound in construction activities, and exceptional progress of the residential sector are expected to primarily account for the escalating consumption of architectural coatings. New products are being developed by the companies to meet Leadership in Energy and Environmental Design (LEED) specifications, especially for residential and commercial structures. Industrial sector remains another major end user that generates notable demand for paints and coatings for protective, and decorative applications. Adoption of paints and coatings for preventing steel and concrete from corrosion is likely to uphold demand in future. Other industrial application areas include automotive, wood, industrial machinery/equipment, and metal containers, whereas some other miscellaneous end-use segments include marine, highway & traffic markings, and refinishing.
Inclination Toward Odour-free, and Eco-friendly Products Becomes Pivotal to Market
Paints and coatings are one of the most strictly regulated industries and have gone through lot of changes in the past few years. Consumer preference and pollution regulations from authorities will continue to be the driving force behind the market growth over the next few years. Several governments have been focusing on limiting hazardous air pollutants (HPA), and volatile organic compounds (VOC) in both architectural, and industrial areas. Rising solvent and raw material costs (50-60% of the total costs), and growing significance of energy conservation are also the key factors shaping up the paints and coatings industry. Transitional and emerging economies are especially projected to drive noteworthy demand for paints and coatings in future.
Surging consumer awareness and preference for odour-free, chemical-free, and lesser harmful paints have been directing manufacturing brands to adopt a shift to green technologies in both residential and commercial spaces. Furthermore, consumers are also looking for digital interfaces, thus expecting a major disruption in the flow of traditional distribution channels in the industry. Digital transformation is expected to open new revenue generation streams for companies in paints and coatings market. Furthermore, there is a growing trend of direct-to-consumer, and brands such as Clare and Backdrop are likely to pose a significant threat to traditionally operating companies. These brands are likely to make a substantial impact on slow growth categories to eventually capture the traditional consumer base.
Rising Raw Material Costs Curtail Profit Margins
COVID-19 crisis has largely disrupted the paints and coatings market across all the regions. China is one of the major suppliers of raw materials and restricted movement has dealt a huge blow on the manufacturing activities worldwide. Environmental and health concerns to reduce VOCs, and HPAs are forcing the manufactures to create more complex formulations to meet the legislative demand. Rising solvent and raw materials cost are also likely to hamper market growth, especially in slow growth categories. Raw material prices have been volatile earlier as well, which has severely affected the profitability. Price volatility has been subject to the two key factors, i.e., rising oil prices, and tight supply. Supply of TiO2, and resins has been tight in the recent past that continues to directly impact the final cost of the product.
Is Industry Going for More Consolidation?
After experiencing major consolidation between 2017 and 2018 such as The Sherwin-Williams acquisition of Valspar the one with highest magnitude, the odds of more synergies cannot be ruled out. A majority of leading players are operating in mature markets with insignificant underlying growth. M&A can offer significant synergies and can save raw material costs and operational expenses. Companies such AkzoNobel N.V, PPG, and The Sherwin-Williams continue to hold larger shares in paints and coatings market. Many have been restructuring their businesses. In 2018, AkzoNobel sold its speciality chemicals business to Carlyle to defend its commitment to its core paints and coatings business after rejecting the PPG takeover. A number of smaller firms in global paints and coatings market have strong regional presence but find it challenging to compete with globally leading brands due to lower profitability, and regulatory limitations.
The Global Paints And Coatings Market Is Segmented As Below:
By End-use Industry
Key Elements Included In The Study: Global Paints and Coatings Market
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