Robust economic growth in the Asia Pacific region will boost recovery of the paint and coatings market worldwide, but challenges remain in North American and elsewhere, an industry analyst predicts.
The region’s paint and coatings market was valued at $40.1 billion in 2008, with a volume of 13.6 million tons (about 11 billion liters)—about 30-35% of the global paint industry.
The region’s paint market enjoyed a compounded annual growth rate of about 15% in the last five years, slumping in the second half of 2008 and into the first half of 2009, but slightly rebounding in late 2009.
That is the perspective of Sheila Senathirajah, program manager of Chemicals, Material and Food Practice for market research group Frost & Sullivan. Senathirajah offered analysis on the Asia-Pacific market in comments issued by the company.
The market appeared to record only marginal growth overall in 2009, the company reported. Positive growth in China and India buffered the slump seen in most countries. Industry players are confident about seeing better numbers in 2010 and 2011, Senathirajah says.
The two key hot-spot markets are currently Vietnam and Indonesia, which have not been hit as hard as other ASEAN countries, says Senathirajah.
“The growths of Vietnam and Indonesia are expected to remain positive over the coming two years,” she said. “These countries have begun to show high growth potential, with double-digit growth rates and equally low domestic consumption. There is much opportunity in terms of volume sales in these countries.”
Japan and Korea, on the other hand, have not fared well during the economic crisis, set back severely by their extensive global financial links. These are mature markets registering minimal growth; the same is true of Australia. That is unlikely to change before late 2010.
“Areas of opportunities in these countries lie in the form of high-value coatings exhibiting higher-performance attributes or to be used in niche applications,” says Senathirajah.
The Asia-Pacific market has been heavily impacted by the reduction in export demand from the West, which has particularly affected coatings serving the automotive, industrial-furniture and white-goods production industries. Stimulus packages have been crucial to boost domestic demand, along with mergers and acquisitions within the industry that have helped sustain company growth.
“New coating technology entering the market is also expected to play a positive role in driving the industry,” Senathirajah continues. “The terms ‘green chemistry,’ ‘nanotechnology’ and ‘smart coatings’ are the current buzz words, and formulators are finding ways to couple these three technologies together to produce coatings that are not just environmentally friendly but also able to enhance sustainability.”
She continues, “The industry will face some challenges with the rising prices of raw materials as well as fiercer competition from small, back-end players in Asia that operate at lower costs, placing much pressure on industry players in terms of margin squeeze. In the long run, competition from coating substitutes such as glass and steel is also expected to negatively impact the market.”
Industry players in Asia-Pacific will need to focus on branding, innovation and the regulatory environment in order to succeed, she advises.