www.american-coatings-show.com 22 ; ;
;
MARKET
vice president at the ChemQuest Group.
“The resulting decrease in raw material
prices derived from crude oil have been
beneficial, but the reduction in orders for
coatings associated with pipelines and
all other equipment associated with the
fracking process had a negative impact,”
he explains. Although there is general
agreement that the volatility created by
the oversupply of oil is a source of uncertainty, there are diverse opinions related
to the expected pricing and availability
of many oil-derived products.
INDUSTRY IS ABLE TO RESPOND TO
CHANGES
While many of these factors are beyond the control of formulators and raw
material suppliers, the industry’s ability
to rapidly respond to these changes with
innovative technologies and processes
may help mitigate potential negative
impacts and maximize the opportunities
they create in the coming year.
Uncertainties Ahead
HOW WILL MARKET TRENDS IMPACT THE COATINGS INDUSTRY IN 2016?
; In 2015, the overall global paint and
coatings market remained healthy, with
many regions of the world experiencing at least modest growth. However,
members of the industry supply chain
do face some uncertainties ahead with
such changing market conditions as the
slowdown of key emerging economies,
fluctuations in the U. S. dollar, the impact
of lower oil prices, the tenuous recovery
in Europe, automotive and construction
growth rates in the United States, and
global regulatory developments.
In the November/December issue of
CoatingsTech magazine, contributing
writer Cynthia Challener explored how
changing market conditions affected
paints and coatings in 2015, providing insight from industry experts on how these
factors are expected to impact growth in
2016. Here, we examine just one of those
factors.
EMERGING MARKET DYNAMICS
Regionally, there have been significant
differences in the performance of the
coatings industry in 2015, and the outlook is expected to remain variable into
2016. China’s growth rate has slowed,
but remains positive. Brazil’s economy
has also softened, affecting all segments of the coatings market, and a return to growth is not expected in the near
future, according to Michael T. Venturini,
global marketing manager for coatings
at Sun Chemical Performance Pigments.
In particular, there has been a signifi-
cant reduction in new vehicle demand in
both Brazil and Russia in 2015, and the
outlook continues to remain uncertain
in the near to medium term, according
to Rajeev Rao, vice president of strategy
and planning for Axalta Coating Systems.
CHINA: COMPLETE IMPLOSION IS
UNEXPECTED
“The health of the economies in Brazil
and China affect the demand for both
raw materials and finished products, and
the current situation in these two countries has created a level of uncertainty
that impacts the demand for product,
and ultimately, the share price of stocks
publically traded on the world stock exchanges,” notes Jeff Cayce, global market segment leader for Eastman.
While most analysts are not expecting
a complete implosion in China, what continues to take place there is more than a
traditional market adjustment, and a major slowdown of growth will impact commodity markets, according to Michael D.
Brown, president of StrategyMark. He
does expect a greater impact on domestic Chinese manufacturers, but that also
includes larger multinational firms with
investments in the country.
AUTOMOTIVE INDUSTRY CONTINUES TO
GROW IN CHINA
One such company is BASF. According
to Markus Kamieth, president of BASF
Coatings, “Despite the overall slowdown
of the Chinese economy, the automotive
industry continues to grow there, and
BASF’s coatings business benefits from
its support of its growing OEM custom-
ers in the region,” he says. At the same
time, BASF continues to monitor market
developments and economic conditions
in all regions, because they directly in-
fluence consumer behavior. “In South
America, for example, buying power is
decreasing, which not only affects the
automotive industry, but the decorative
paints market as well," Kamieth adds.
“Therefore, it is getting increasingly im-
portant to react quickly, be flexible, and
provide innovative solutions.”
It should be noted that although the
United States does not export signifi-
cant quantities of paint to the rest of the
world, and most of what it does goes to
Mexico and Canada, the ~$900 million
in sales to China may be affected by the
economic slowdown there, according to
Steven Nerlfi, a partner with Kusumgar,
Nerlfi, & Growney (KNG).
IMPACT OF CRUDE OIL PRICES
With respect to raw material prices,
Brown adds that non-oil-based chemicals should be affected less than petro-chemical-derived products, which are
also being buffeted by falling oil prices.
The significant decrease in crude oil
costs has both positive and negative
consequences for the paint and coatings industry. “The price of oil hit lows
in 2015 not seen since 2008, and before that, 2004,” notes George Pilcher,
While the overall global coatings market remained healthy in 2015, some uncertainties lie
ahead. Image: Andres Rodriguez/Fotolia
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