International Resins Update – Manufacturers Struggle to Maintain Margins

By Cynthia Challener

The year 2006 should be a telling year for the resins market. After being forced to deal with significant increases in raw material and energy costs in 2005, resin producers hope to see margins return to an acceptable level this year. Other challenges that must be overcome include continued competi­tion from emerging regions, consolidation all along the paint and coatings value chain, and increasing regulatory burdens. Many of the larger, global players in the market, while concerned about these issues, remain optimistic about opportunities for growth. Smaller companies, however, will have a more difficult time surviving in these challenging market conditions.

The global resins market is valued at approximately $30 billion and totals 8 million metric tonnes, or 18 million pounds, according to Dan Murad, president and CEO of The ChemQuest Group, a management consulting firm located in Cincinnati, OH. The geographic breakdown follows the same breakdown as for the coatings market, with about one-third in North America, one-third in Europe, 20% in Asia, and the remainder scattered throughout the rest of the world. Growth rates for resins used in paints and coatings typically track with GDP. Therefore, in the U.S. the rate is about 2.5%, and in Western Europe it is 1-2%. China is the one region where de­mand is increasing significantly. The growth rate there is about 9-11%, ac­cording to ChemQuest.