Coatings World - August 2011

number one market in terms of coatings volume. The position of Asia-Pacific and the leading countries in the region within the global marketplace is depicted in Chart 1: 2009 Global Coatings Industry Volume by End Use Segment.

Market overview

Similar to the geographic segmentation, the global market has been divided into ten end use segments for the IPPIC market report. Data in this article is based on the same ten market sectors listed in Table 2: Major Seg-ment/Component Sub-Segments.

Decorative coatings are the largest sub-segment of the Asia-Pacific coatings industry. In this region, however, decorative coatings make up a much smaller percentage of the overall market compared to other regions. Decorative coatings comprise approximately 35 percent of the market in Asia-Pacific compared to over 50 percent of the global market.

Unlike the decorative coatings markets in North America and Europe, this market sector has continued to grow in Asia-Pacific over the past several years. Within the region, decorative coatings growth has tended to follow overall market growth with China showing the greatest increase, followed by India.

In the industrial coatings market, and among the various industrial sub-segments, Asia-Pacific has outperformed the market and has experienced significantly higher growth rates than those seen in North America and Western Europe, as well. In particular, the general industrial, wood and coil coatings segments have grown at much higher rates than the overall market. Chart 2: Annual Volume Growth Rate by Segment 2004-2009 illustrates the growth in the Asia-Pacific industrial coatings sub-segments compared to the global market over the past five years.

Chart 1. Source: Orr & Boss, Inc. estimates

Economic influences Coatings demand is influenced by a wide array of economic factors. Demand for decorative coatings is affected by new construction,

housing activity and overall affluence. While housing and construction markets in North America and Europe have languished during the economic recession, activity has continued to flourish in China, India and other parts of developing Asia-Pacific. As an example, new construction spending in the United States declined by four percent from 2009 to 2010. Over this same period, construction spending in China increased by over 10 percent. This trend in construction disparity is projected to continue over the near term.

At the most basic level, industrial coatings demand is a function of the production of end-use OEM products such as cars, tractors, furniture, packaging, etc. Much has been made of the changes in the automobile market, with China supplanting the United States as the largest car producer in the world, but the transition in the automobile market is but a microcosm of the shifting manufacturing landscape.

Over the period 2000 to 2009, China grew its proportion of global manufacturing output from roughly eight percent of the total to nearly 21 percent of the global total. Meanwhile, the U.S. contribution to global manufacturing has fallen from over 26 percent of the global total to less than 19 percent. These divergent trends are directly related as goods once produced in the U.S. are now being produced in China. Asia-Pacific now represents over 40 percent of the world’s manufacturing output.