Global paint and coatings market

JCT Coatingstech Magazine

November/December 2007

Volume 4, No. 11

Market Update

Page 42-47

Excerpts from… “2008 - Will the Good Times Keep COATING?”

By Cynthia Challener, JCT Coatingstech Contributing Writer

The global paint and coatings market grew by 5.7% in 2006 to reach a value of $71.7 billion, according to a recent report by Datamonitor (Paints & Coatings: Global Industry Guide, August 2007). Global volume increased by 3.5% in 2006 to total 29.4 million tonnes. By 2011, Datamonitor predicts that the value of the global paint and coatings market will climb to $92.5 billion (29% increase), while the worldwide volume of sales will total 35.5 million tonnes (20.9% growth). Decorative paints generated the most income in 2006 at 45.9% of the market’s value. On a regional basis, the Americas contributed the largest percentage of value (37.7%).

In the U.S., the paint and coatings market was valued at $21 billion in 2006 by The ChemQuest Group, Inc., with architectural coatings accounting for 48% of the total value, followed by product OEM coatings at 32% and special purpose coatings at 20%. All three segments experienced strong growth during 2006 as the coatings industry increased in value by 8.4% and in volume by 2.2% versus 2005.

Raw material costs continued to remain at high levels during 2007, but despite this pricing pressure, margins have remained healthy. Coatings producers were, in general, able to pass higher energy and feedstock costs on to their customers. ChemQuest had predicted an overall 1% increase for its raw material index, but now expects the numbers to more likely be neutral or even slightly favorable. “Softer demand throughout the supply chain has been the key factor,” notes Dan Murad, president and CEO of ChemQuest.

Most of the large coatings manufacturers have been successful in passing price increases along and have thus taken in a lot of cash. “In general, larger companies are able to weather pricing pressures better than medium and small companies because they have more power to pass the increases on. As a result, they can quickly build up cash and be in a position of strength while smaller companies are still struggling,” Murad says. A flurry of merger and acquisition activity often results, and that is just what happened in 2007.

(To read the complete article…and more comments on “2008 Will the Good Times Keep COATING?”………see JCT Coatingstech Magazine – November/December 2007 issue... “ICE 2007 Wrap Up Issue”).