Global Paints and Coatings Market
Paints and Coatings: A Finishing Touch to the Aesthetics
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Global Paints and Coatings Market: Industry Analysis (2017 – 2020), Growth Trends and Market Forecast (2021 – 2025)
Paints and coatings provide specific attributes to the product, thereby enhancing the aesthetics of the product along with improved durability. They are considered among enabling materials that add value to the manufactured product. Paints are used to decorate, protect and prolong the life of natural and synthetic materials, and acts as a barrier against environmental conditions.
Every year more than 40 million tons of paints and coatings are produced worldwide. Asia Pacific was the leading producer of paints and coatings, accounting for more than half of the global production in 2018. China held the highest share with growing demand for paints and coatings from both architectural and industrial applications. Green technologies in the architectural and industrial sector will offer international companies to strengthen their foothold in the country. Hundreds of smaller companies not operating their businesses in line with the government regulations retreated from the market in the last few years.
In paints and coatings industry, there is a good balance of production and demand across the regions, with only minor quantities of high value products being traded. Usually, paints and coatings industry grow in tandem with economy of the country. In this light, a sustained growth is expected in developing economies over the coming years.
Architecture is one of the leading end-users of paints and coatings holding approximately 50% of the share in 2018. Rebound in construction activities and increased number of residential apartments are the key factors behind the growth of architectural coatings. New products are being developed by the companies to meet LEED (Leadership in Energy and Environmental Design) specifications, especially for residential and commercial structures. Industrial is another major end-user wherein paints and coatings are used to protect and decorate industrial products. Corrosion control of steel and concrete is the key force governing demand in industrial uses. Industrial uses include automotive, wood, industrial machinery/equipment, and metal containers among others. Other miscellaneous end-uses include marine, highway & traffic markings, and refinishing.
Inclination Towards Odor-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.
Governments across all the regions are focusing on limiting hazardous air pollutants (HPA) and volatile organic compounds (VOC) in both architectural and industrial uses. Rising solvent & raw material costs (50%-60% of the total cost) and energy conservation are also key factors changing the shape of the paint and coatings industry. Transitional and emerging economies are projected to drive the demand for paints and coatings over the forecast period.
Consumer’s preferences for odor-free and less hazardous raw materials-based paints have forced companies to shift towards green technologies in both residential and commercial spaces. Furthermore, consumers are also looking for digital interfaces thus disrupting the flow of traditional distribution channels in the industry. Digital transformation is expected to open new revenue stream for the companies. Furthermore, there is also a growing trend of direct-to-consumer and brands such as Clare and Backdrop are likely to pose significant threat to traditional companies. These brands are likely to make substantial impact on slow growth categories and capture the traditional consumers.
Rising Raw Material Cost Curtailing 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 the market growth, especially in slow growth categories. Even in the past, the raw material prices have been volatile, which has severely affected the profitability. Price volatility has been subject to two factors: rising oil prices and supply tightness. The supply of TiO2 and resins globally has been very tight in the recent past and directly impacts the final cost of the product.
Is Industry Going for more Consolidation?
After experiencing major consolidation in 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. Majority of the big companies are operating in mature markets with insignificant underlying growth. Acquisition and merger can offer significant synergies and can save raw materials costs and operational expenses. Companies such AkzoNobel N.V, PPG, and The Sherwin-Williams holds the large percentage in the paints and coatings market. Companies are restructuring their business in order to focus on the core business activities. In 2018, AkzoNobel sold its specialty chemicals business to Carlyle to defend its commitment to its core paints and coatings business after they rejected PPG takeover. There are lots of smaller firms in the paints and coatings market with strong regional presence. Competing with global companies has been challenging for smaller firms due to low profitability and regulations; however, with innovation and novel technologies smaller companies can differentiate themselves, and can hold on to the customer bas