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Forecast: Coatings’ Fortunes Mixed

Monday, December 19, 2011

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Inching its way back from the nosedive it took after 2006, the U.S. coatings market is still struggling in the architectural sector but faring better elsewhere, according to a first look at a new forecast.

Consumption of coating solids remains 18 percent down from its 2006 peak and has only partially recovered from the lows of 2008-09, according to a preliminary report from chemical industry analysts Kusumgar, Nerlfi & Growney Inc., of Elmwood Park, NJ.

Holding the Line

Sharply higher pricing in 2010 and 2011 has blunted some of the corresponding financial hit, with coating consumption in dollars off only 3 percent from 2006, KNG reports.

American Coatings Association

OEM coatings consumption has rebounded since the recession, while architectural demand remains depressed.

Still, coatings producers have passed along only some of their escalating raw material prices, “and margins have come under pressure,” the report says.

Slumps and Comebacks

Architectural coatings remain the largest segment, with some 3.9 billion pounds of solids worth $9.1 billion expected to be consumed in 2011.  However, new-home construction “remains at extremely depressed levels” and home sales have yet to recover to hoped-for levels.

Coating demand from original equipment manufacturers (OEM) in 2011 is projected at 1.98 billion pounds of solids, valued at nearly $8 billion.  OEM coatings have rebounded strongly since the recession, but many end uses are still down significantly from 2006, KNG says.

Consumption of special purpose coatings, including protective and marine, is expected to be 1.95 billion pounds of solids this year with a sales value of $6 billion.  Roofing, industrial maintenance, and traffic paint are the large volume outlets.

The decline in commercial construction and reduced spending by state and local governments remain drags on consumption.

Full Report

The U.S. Paint & Coatings Industry 2011-2016, KNG’s fourth 1,200-page analysis of the domestic coatings industry, will be published in a few months.

Over the past 17 years, KNG has produced 23 multi-client studies focused on low molecular weight applications for polymers, analyzing both technologies and raw materials for the coating, ink, adhesive, sealant, and paper coating industries.