The Global Coatings Industry – On the Way to Recovery

By Cynthia Challener

The recent global recession from 2008-2010 heavily impacted the coatings industry. The significant declines in the housing and automotive markets, coupled with the rise in unemployment, led to drastic reductions in consumer and industrial spending, including purchases of paints and coat­ings. For approximately the last year, reports have been far more positive; the unemployment rate has fallen, the automo­tive industry has experienced record growth around the world -and in at least some parts of the United States-housing starts and existing home sales are on the rise. What does all this mean for the global coatings industry in terms of its recovery, and what might be expected in the coming months?

A LOOK AT THE NUMBERS:

The global coatings industry in 2014 is valued by market research firm Kusumgar, Nerlfi & Growney (KNG) at $125 bil­lion. The architectural and OEM segments each account for approximately 41% ($51 billion), with the remainder attributed to the special purpose segment. KNG pegs the total volume of global coating sales in 2014 at 86 billion wet formulated pounds, with the architectural, OEM, and special purpose sec­tors accounting for 58%, 29%, and 13%, respectively. In dollar terms, the Asia Pacific region accounts for 40% of the global coatings market, with sales rising at an annual rate of 8%.

China is the largest contributor in this region, according to principal consultant Steven Nerlfi. Europe, includ­ing both western and eastern countries and Turkey, is the second-largest market at 28% and is growing at 2% annually. North America accounts for 21% of global sales in dollar terms, and Nerlfi pegs the annual growth rate in this region at 1%. KNG attributes the remaining 11% of sales to South and Latin American countries, Russia, and several others, and estimates a 5% annual growth rate for these markets. When broken down by formulation type, solvent-based coatings take the largest share of global coatings sales in dollars at 48%.

Not surprisingly, however, they have the lowest annual growth rate at 4%. Water-based formulations come in second, with a 40% market share and a growth rate of 5% per year. Powder coatings and radiation-cured coatings are well behind at 9% and 2% of the market, respectively, but also have the highest growth rates at 8% and 7%. The remaining types of coatings, including 100% solid liquid coat­ings, account for the remaining 1% of global revenue and are growing at 55%, according to Nerlfi. “Globally, solvent-based coatings are still dominant because there are many places in the world where strict environmental regulations have not yet been put into place.

However, the trend towards more envi­ronmentally friendly technologies, including higher solids and waterborne formulations, continues,” Nerlfi observes. When questioned about expectations for continued growth, Nerlfi anticipates that the blockbuster levels of pro­duction seen before the recession will not return, and that the modest levels of growth experienced in 2014 will be the norm.