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Growth Seen for S. African Coatings Market

Thursday, July 22, 2010

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Rebounding construction activity, increasing infrastructure, and innovative product trends should drive growth in the South African paints and coatings market through 2016, a new analysis projects.

Recovery in the $603 million market comprised of South Africa, Namibia and Zambia should propel the industry to $765.3 million by 2016, according to Southern African Paints and Coatings Market, a new report by Frost & Sullivan, the London-based market research company.

The analysis covers decorative coatings, automotive and refinish coatings, industrial protective coatings and other coatings through 2016.

"There will be a continued demand in the end-user industries for paints and coatings," the report concludes.

Moreover, it adds, much of that growth will come in the short term, with construction currently on the rise in the region. Although decorative paints comprise more than half of the current market, most of those are made locally, as are automotive paints. Industrial paints and coatings are mostly imported because they are cheaper to produce, the report says.

"The industrial paints market is also set to increase due to foreign investments," according to the analysis. "This market is, however, limited and restricted to competitive entry."

The region's paints and coatings market is primarily driven by the construction sector, Frost & Sullivan says. The South African construction industry slowed down drastically during 2008 and 2009 due to the economic crisis, but started to recover gradually in the third quarter of 2009.

"During the economic crisis, the construction industry saw very few building projects being commissioned, while the automotive sector declined dramatically," the company reports. "However, Southern Africa has many infrastructural opportunities and governments have taken initiatives to provide enhanced and greater infrastructure by commissioning building projects themselves."

Overall, the report says, South Africa should see a Compound Annual Growth Rate (CAGR) of 3.5%; Namibia, 2.8%; and Zambia, 5.1 % through 2016.

"For local manufacturers, having to import large amounts of raw materials increases the manufacturing costs, making way for the import of cheaper paints and coatings, creating added competition and price sensitivity," notes says Frost & Sullivan Research Analyst Dilshaad Booley. "However, the starting capital to manufacture decorative paints is low, easing market entry and increasing competition among local manufacturers."

He adds: "In an attempt to widen the market demand, manufacturers and distributors should educate consumers about the benefits of purchasing superior quality paints. Although quality paints cost more, they save the consumer from having to recoat more often."

For more information or to purchase the report, visit http://www.frost.com.

   

Tagged categories: Economy; Market research

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