Growing Industrial Coatings Market: Uptrend in Q1 during Pandemic [5 Recent Developments]
How much could the second wave of the Covid-19 pandemic impact the paints and coatings market in affected countries?
How are the lower production and the disrupted supply chain of raw materials affecting the prices of paints and coatings products across different world regions?
We have crossed the first quarter (Q1) in 2021, and still, a new wave of Covid-19 is affecting millions of lives and the economy in many countries. There is a continuous fight against the Covid-19 virus and ongoing research, trials, and use of vaccination, whereas most businesses face disruptive challenges. However, there is a positive bounce back in maintaining the safe workspace, healthy changed lifestyle, and top & bottom line of the income statement from the last year to this year in the overall paints and coatings industry.
Top companies in this market reported growth in their Q1, 2021 financial results. PPG Industries reported an increase of about 15% in net sales compared to Q1 last year. Similarly, Sherwin Williams said 12.3% growth in net sales. Akzo Nobel, the third-largest player in the paints and coatings market, has reported a 10% up in net sales. The key reason for this growth is high demand from the end-user markets, primarily decorative paints followed by coil & packaging coatings and general industrial coatings. Favorable foreign currency translation has also been another significant factor in net sales change.
The industrial coatings market is estimated to account for about 54.4% of the total paints & coatings market by revenue in 2020. The market is estimated to have a CAGR of 5.39% during the forecast period 2020-2026 to reach the value of USD 100,799.72 million in 2026.
Key Driving Factors
Demand for selected types of coatings has increased in Q1 2021. Three such demand increase is highlighted below.
Automotive Paints and Coatings
The demand for automotive paints and coatings has increased in Q1 2021 by showing recovery in productions, particularly in China, the USA, etc. On 3rd March 2021, Axalta introduced its innovative waterborne technology, i.e., Spies Hecker® Waterborne Full System, for China's refinishing customers. It will promote the sustainable development goal and green technology in the auto-refinish coatings market in the country.
The demand for Epoxy-based coatings has also increased due to its many advantages over other resin types.
Epoxy coatings show high water resistance and resistance to corrosion contributors like abrasion, humidity, acid, alkali, and seawater.
It can be formulated as 100% solid and can be used as high-solid epoxy in hull coatings, yacht or boat repairs, floor coatings, etc.
High vehicle traffic areas also use Epoxy-based coatings.
It is additionally used as a corrosion protection coating for iron, steel pipes, and fitting in the sugar refineries, oil & gas industry, paper mills, and water transmission lines.
DIY coatings products
The pandemic has also shown higher demand for DIY coatings products where homeowners used the coating products for furniture, cabinets, hardwood floors, etc. The powder-based coatings technology demand was the highest in 2020, and it continues in Q1 2021, as the powder-based industrial coatings offer low VOC emission, high performance, and cost-efficient.
Key Growth Blockers
Disruption in the supply chain of raw materials for the paints and coatings sector had been a key blocker in growth. Five key reasons for this disruption are:
Limited Production & supply of Crude Oil resulting in increased prices of raw materials like resins, epoxies, etc.
Supply-demand gap & increased price of TiO2, the gap is shrinking now with increased production capacity and supply by Chinese and global suppliers.
Backlogs, shortage of container vessels in major seaports resulting in supply issues for new products
Lack of availability of critical raw materials, including pigment shortages (red & yellow iron oxide, TiO2, etc. ), Neopentyl glycol, methanol, etc.
Unexpected causes like the Texas energy crisis in Feb 2021 in the North American region.
Regional Market Analysis
By region, the Asia-Pacific is dominating the industrial coatings market with a global market share of about 50.49% in 2020. It is estimated to have the highest CAGR of 6.74% during the forecast period 2020-2026.
Being the manufacturing hub for various industries like automotive, aviation, shipbuilding, paper mills, sugar mills, food & beverage, and many more, China accounts for the largest share in Asia-Pacific. The country has significant raw materials production advantages and exports to other countries, supporting the paints & coatings supply chain. North America accounted for the second-largest market in industrial coatings in 2020, replacing Europe with a minimal gap. The USA and European countries support the strict regulations against the use of VOC and promote a high level of health and environmental measures. Such initiatives and safety regulations have driven green technology efforts and innovations in the industrial coatings market
For example, on 31st March 2021, AkzoNobel has announced that it has invested in Qlayers' coating technology. This sustainable and cost-effective solution can transform industrial coatings by offering a fully automated solution. This coating technology is safer, more consistent, and faster than the manual coating processes and is already used in storage tanks for anti-corrosion coatings.
End-Use Application Analysis
By end-user applications, General Industrials dominated the global industrial coatings market with a share of about 32.05% in 2020.
For the study, the key sectors included in the General Industrials are appliances, industrial machinery, electrical equipment, building materials, steel furniture, general finishing & industrial design, etc. Transportation coatings accounted for the second-largest share that includes automotive OEM, automotive refinish, Rail, aviation, marine, and other locomotives. Industrial coatings for transportation applications offer high quality, durability, weather resistance, increased efficiency, higher performance, low VOC, etc. In Q1 2021, the higher growth in industrial coatings is mainly because of growing demand in automotive, general industrials (agriculture machinery, building materials, etc.), and packaging coatings products.
Key Market Players
The industrial coatings market has very high competition with many international and local players in each region. The key players include PPG Industries, Inc., The Sherwin-Williams Company, Akzo Nobel N.V., Axalta Coating Systems, Jotun, Nippon Paint Holdings Co., Ltd., Hempel A/S, BASF, Kansai Paint Co., Ltd., KCC Corporation, RPM International, Wacker Chemie AG, Sika AG, Chugoku Marine Paints, Ltd, Beckers Group, DAW, Hexion, etc. Covid-19 has allowed big players to take advantage of strategies like M&A and collaboration to increase their presence in a new geographic region or expand their business segments to acquire more shares and provide innovative solutions for sustainable development.
Five Key Recent Developments
26th April 2021: Axalta signed a strategic cooperation agreement with JETOUR, a key automobile manufacturer in China, to partner on its Intelligent and Healthy Ecological Vehicle Project.
19th April 2021: PPG acquired Cetelon Lackfabrik GmbH, a manufacturer of coatings for automotive and light truck wheel applications. This strategic acquisition will expand the existing coatings product portfolio of PPG and their liquid and powder coating technologies and color matching capabilities.
1st April 2021: Covestro completed the acquisition of the Resins & Functional Materials business (RFM) from Royal DSM. This acquisition will add a complete range of water-based polyacrylate resins.
1st April 2021: Hempel officially acquired Wattyl Australia and New Zealand. This acquisition will increase the footprint of Hempel in the South and East-Asian region in decorative & industrial business segments.
23rd March 2021: Axalta launched Imron Industrial 2K polyurethane high-gloss clearcoat based on proprietary Axalta resin technology into its existing high-performance Imron Industrial portfolio in North America
Conclusion / 3 Takeaways
Even though the pandemic has affected businesses, most companies are adopting new strategies and investing in R&D for new green technologies.
The supply chain is disrupted and raw materials prices have increased. However, there was significant volume growth in the industrial coatings market in Q1 2021.
The aviation or aerospace coatings market, which was most affected in 2020, is still recovering at a moderate rate as there is still susceptibility in the second wave of covid 19.
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