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December 2013 www.coatingsworld.com Coatings World | 23
Over the last 20 years the Middle East
Gulf, which comprises mainly the Arab
states of Saudi Arabia, Kuwait, Bahrain,
Qatar, Oman and the United Arab
Emirates (UAE) but also Iran, has shifted
from being predominantly an oil and gas
producer to also being manufacturers
of petrochemicals and base chemicals as
well as energy-intensive products such as
steel and aluminium.
Now they want to use these commodity chemicals and metals, which are currently mainly exported, as raw materials
for the manufacturing of added-value
products like consumer goods, automobiles, household appliances and electronic equipment.
These downstream products would be
sold not only in the domestic market of
The Gulf Co-operation Council (GCC), a
free trade area, comprising the six Arab
Gulf states, which has a population close
to 50 million. They could also be exported to the whole Middle East and North
Africa (MENA) region with a population
of 400 million.
The size of the potential export market could rise to more than one billion
with the addition of parts of east Africa
and central and southern Asia.
With a prospective regional market
of such a huge size, international coating
companies would have to consider establishing local production capacity.
The vision of being a large manufacturing hub will also prompt the creation
of a large indigenous coatings sector in
the Gulf. In Saudi Arabia, which accounts for approximately 60 percent of
the GCC’s population and more than 40
percent of its GDP, a $517 million plant
with an annual capacity of 340,000 metric tons a year of butanol is being built to
provide raw materials for the large scale
production of coatings in the country.
Even now after 40 years of virtually
continuous growth in construction in the
Arab Gulf of homes, offices, transportation networks and utilities, the major
suppliers of coatings are foreign-owned.
They will, initially at least, benefit
the most from a new phase of buoy-
ancy in the Gulf’s construction sector
whose annual growth dropped by two-
thirds in 2008-2011 to around 5 percent,
In the falls of 2012 and 2013 the
market for large infrastructure projects in
Oman, Qatar, Saudi Arabia and the UAE
rose by an average 27 percent, Conrad
Keijzer, executive committee member
responsible for performance coatings at
AkzoNobel, told a press conference in
Oman in October.
While the big rise in construction
activity will generate high demand for
decorative paints, sales of performance
coatings, like anti-corrosion and intumescent fire protection products, will grow
faster, the company predicts.
While the numbers of residential,
commercial and infrastructure projects
will increase, there will be continued rise
in oil, gas, refinery and petrochemical
chemical schemes. In 2012-2020 capacity for petrochemicals and other chemicals
in the Arab Gulf will rise by 50 percent,
according to the Gulf Petrochemicals &
Chemicals Association (GPCA)
However for many coatings companies the biggest interest will be in the
region’s long-term plans for new downstream manufacturing operations, particularly in Saudi Arabia.
The region’s largest country, which urgently needs to generate jobs for its predominantly young population, plans to
make 600,000 cars a year by 2025 with
locally produced components and materials for the domestic and export markets.
Saudi Arabia also aims to establish a
local household appliance industry with
an annual capacity for one million refrigerators, 800,000 washing machines,
250,000 dishwashers, 100,000 gas cookers and 1.5 million air-conditioning units.
The country is also planning to build
at cost of $400-500 billion up to six new
‘economic’ cities to provide an infrastructure for a range of downstream manufacturing clusters.
AkzoNobel has among the leading international coating companies been one of
the most active in responding to the new
prospects in the Gulf region, where it has
had a marketing presence for nearly 40
years. “We continue to look for effective
ways to unlock its potential,” said Keijzer.
The company acquired in October
a 50 percent share in Sadolin Paints of
Oman to help the business expand its
range of decorative paints, wood coatings
and fire protection and powder coatings.
AkzoNobel has also set up a marketing
outlet in Qatar to take advantage of projects like the World Cup and the country’s
large natural gas sector.
BASF Coatings has been enlarging its
Gulf business in car refinishing coatings
through its R-M brand. With its strategy
of providing complete solutions for car
makers in OEM and refinish coatings,
the company is well positioned to gain a
presence in Saudi Arabia’s fledgling automotive manufacturing segment.
Saudi Arabia and Jaquar Land Rover,
part of the Tata Group of India, reached a
deal late last year to set up a $1.2 billion
car assembly plant in Saudi Arabia. BASF
already has close ties with Tata, through
its operations in the UK.
BASF is already involved in the
coil coating market in the Middle East
through an alliance with the Turkish
producer Coat Coil. Turkey aims to be
a major exporter of coil coated and other
metal products to the Gulf.
However, the Arab Gulf already has
a relatively large coil coating sector able
to take advantage of GCC import duties.
One dilemma facing international coatings producers in the years ahead is how
much they will need to have a local production presence to benefit fully from a
fast growing regional market. CW
“The vision of
being a large
manufacturing hub
will also prompt the
creation of a large
indigenous coatings
sector in the Gulf.”
