The consumption of architectural coatings will hike around the globe. Growth forecasts vary from region to region,
according to market researchers. By Damir Gagro.
In certain regions solvent-based systems still hold a high market share. However, a shift towards water-based alternatives is expected.
Market research company Kusumgar, Nerfli & Growney (KNG) estimated global architectural coating consumption at 23.2 million tons in 2015, worth EUR 47 billion. According to the researchers, market growth is forecast at 4% through 2020. The industry continues to consolidate. Six companies sold 81% of the house paints in 2015 (excluding the potential acquisition of Valspar). In 2006 the top sixcompanies captured 60% of the sales value.
Asia-Pacific was by far the largest region. Consumption reached more than 40% of the total global volume (10.1 million tonnes). Europe was trailing behind with a volume of only 5.3 million tonnes. North America ranked third with 3.8 million tonnes followed by Central and South America (2.1 million tonnes). For the rest of the world KNG estimated a consumption volume of 1.9 million tonnes. U.S architectural coating consumption was 3.17 million tonnes worth EUR 9.1 billion in 2015. Volume has recovered from the 2009 recession but is still off about 15% from the pre-recession high. Architectural paints are a mature market in the U.S. with long term growth placed at 1%/yr. Growth can fluctuate from year to year and is largely dependent on the health of the overall economy and the housing market.
GROWING MARKET IS EXPECTED
According to a coatings consultancy PRA, the global demand for architectural coatings is estimated to reach almost 32 million tonne with a value of EUR 66.6 billion in 2017, and is expected to grow at a CAGR of between 3.8% and 4.4% over the period to 2020. The Asia Pacific region is expected to be the main driver of future coatings demand to 2020, albeit at a more modest CAGR of between 5.5% and 6% up to 2020. The share of the region, in terms of the global volume, will account for 38%. The Americas will rank second with a share of 28%, followed by Europe (20%). Middle East and Africa will remain the smallest region in regard to consumption, holding only 14% of the share.
SHARE OF WATER-BASED SYSTEMS TO INCREASE
Water-borne coatings are the most common overall technology for architectural coatings The findings of KNG state that the water-based share of the volume was 79% and continues to gain. The VOC content of water-based coatings continues to fall. Solvent-based types are slowly being replaced with water-based. The VOC content of the remaining solvent-based coatings continues to decline. All materials in architectural coatings are under scrutiny for their environmental impact. However, the shares of water-based systems differ in the various regions. Water-based coatings are now 88% of the U.S. architectural paint volume (Table 1). This is the highest number in the world. Water-based technology continues to capture share in house paints owing to VOC regulations and increased “green” awareness among consumers and those who specify paints. Water-based paints are forecast to grow at 2%/yr while solvent-based paints will decline at -2%/yr. All materials in architectural coatings are under scrutiny for their environmental impact. The VOC content of architectural coatings continues to drop. In 2006 there was 0.24 pounds (0.11kg) of solvent consumed for every pound (0.45kg) of house paints solids consumed while today it stands at only 0.12 pounds per pound of paint solids, a 50% reduction. The VOC content of water-based paints has declined significantly in recent years. A big winner lately is newer water-based alkyd technology. In Europe, some 85% of the 5.3 million tonnes of architectural paints were water-based systems. Central and South America is slightly trailing behind with 84%. A different picture shows the largest market for architectural paints. With 73% consumption of water-based systems is below the global average – and worldwide the lowest figure.
LARGEST SEGMENT IS INTERIOR WALL COATINGS
According to PRA, interior wall and ceiling coatings make up the largest share of the architectural coatings market, with over 50% of global demand (Figure 1). Many parts of the world still use low quality products to provide a basic wall covering, but increasing affluence in growing economies in Asia and South America is awakening a demand for improved lifestyles and an awareness of interior design, increasing demand for higher quality coatings. PRA expects the following development in the specific segments: Demand for interior wall coatings in the Asia Pacific region is driven by India, China, Indonesia, the Philippines, and South Korea. In many countries in the region, homeowners do not paint their houses themselves due to the ready availability of inexpensive local labour. As a result, the DIY share of the interior wall coatings sector in this region is small. Exterior wall coatings for masonry substrates is the second largest global market segment, with a share of nearly 25%. Growth in the demand for these coatings in China, India and the Middle East has been largely driven by the boom in new construction in these regions. However, with a growing building stock of properties built more than twenty years ago, demand for coatings for refurbishment of existing buildings is becoming more important. The demand for exterior wall coatings in North America is declining due to an increase in the use of external wall construction materials which do not require coating, such as for example, brick, stone, and metal or vinyl siding. The majority of exterior wall coatings is applied by professional decorators, while the demand within the DIY sector is very small. Coatings used on wood represent 15% of the global demand. Timber has traditionally been more widely used for exterior cladding and flooring in those regions with local forestry resources particularly in North America, Northern Europe, Japan and the southern parts of South America. In contrast, the timber content of housing in many other parts of the world such as China, India, Middle East and Africa and the northern and central parts of South America is low. New construction methods being used in some parts of the world will have a negative effect on market for architectural wood coatings. These include; a greater use of factory-finished architectural wood trim, window frames, doors and flooring; and competition from PVCu and metal exterior cladding panels, window frames and doors due to their lower cost and ease of maintenance. The market for liquid applied floor coatings for concrete flooring and car park decks represents one the largest growth opportunities in the architectural coatings market, expected to grow at a CAGR of between 4.5 and 5% up to 2020. Main area of growth will be in the industrial sector, for new industrial premises and the continuing maintenance of production areas in industries such as food and drink and pharmaceutical. The demand for liquid waterproof membranes is principally driven by new construction activity in both in the non-residential and residential markets, and by the roof refurbishment market, which is dependent on household disposable income, and government and commercial maintenance budgets. There is a growing trend in the Americas and some European countries towards the development of green roofs or roofs bearing photovoltaic or solar panel installations, particularly on commercial buildings. This trend will likely encourage the building of premises with flat roofs, and in turn will increase the market for liquid waterproofing membranes, particularly for green roofs. Cool and green roof technologies are still in their infancy in Asia Pacific overall, with the exception of Japan.
THE ARTICLE WAS ORIGINALLY PUBLISHED IN THE EUROPEAN COATINGS JOURNEL 01 – 2017
USING DATA FROM THE STUDIES:
„Irfab Global Architectural Coatings Market Study“ by PRA
„Global Paint and Coatings“ by Kusumgar, Nerlfi, & Growney (KNG)