International Coatings Scene
EUROPE
BY SEAN MILMO
EUROPEAN CORRESPONDENT
MILMOCW@RODPUB.COM
Eyeing the Middle East
The steep
rise in oil
prices has
created a
construction
boom in the
Middle East,
resulting in
the regions
increased
demand for
coatings.
While Western European paint producers struggle to make money
from sluggish demand in domestic
coatings sectors, they are fortunate to have
two rapidly expanding neighboring markets.
One of these is Eastern Europe where
sales have been increasing at double-digit
rates in some segments.
The other is the Middle East, which
accounts for only four percent of the world’s
coatings market by value, according to figures
from Akzo Nobel. But its paint consumption is
one of the fastest growing worldwide.
In some of the Middle East countries bordering the Mediterranean Sea imports of
coatings have more than doubled over the
last five years. The strongest rise in demand,
however, has been in the oil and gas producing countries of the Gulf area, where the
steep rise in oil prices has triggered an
unprecedented construction boom.
This year the total value of ongoing construction schemes in the six Arab countries in the
Gulf Co-operation Council (GCC)—Saudi
Arabia, United Arab Emirates (UAE), Kuwait,
Qatar, Bahrain and Oman—is expected to
exceed over one trillion U.S. dollars, an increase
of approximately 70% within 12 months.
Saudi Arabia and the UAE have between
them commissioned building projects worth
over $500 billion during the last two years.
In addition to large sums of money being
poured into new housing and office buildings, a lot is also being invested in new infrastructure and equipment and plants for the
oil, gas, refining and petrochemicals sectors.
Qatar, which has a population of only
approximately 700,000 but with the third
largest gas reserves in the world, is planning
to spend roughly $56 billion over the next
five years on energy and industrial projects.
The large protective coatings market being
created by the Gulf’s oil and gas industry is
particularly attractive to European, as well
as North American and Japanese, coatings
manufacturers because it requires global
technical standards. In fact its needs are
even tougher because of the region’s climate
which necessitate resistance against hot
temperatures, UV rays and potential abrasion from sand and dust.
In the architectural sector, Gulf countries
are applying safety and environmental standards similar to those in force in Europe and
North America. Reinforcement steel or rebars
in buildings have to be coated as a protection
against acid in cement, while intumescent fire-resistant coatings are needed in tall buildings.
Specialist paints which help property
developers in the Gulf comply with new
building regulations are commanding higher
margins than other paints. Problems stemming from defects in buildings following
their construction are occurring with “an
alarming frequency” in the area, said Robert
Jackson, senior board member of Bodycote
MTS Middle East, which runs a network of
materials testing laboratories in the region.
While multinational coatings companies
can use innovative technologies to establish
a powerful presence in certain Middle East
markets, they are increasingly facing competition from local producers as well paint
manufacturers from India, China and other
emerging Asian economies outside Japan.
For all paint companies the main target is
the architectural sector which constitutes
approximately 65-70% of coatings sales in the
Gulf. Because of the absence of any sizeable
industries outside of the oil, gas and related
sector, much of the remainder consists of protective coatings for infrastructure, pipelines,
refineries and petrochemical plants.
By far the biggest coatings market in the
Gulf is Saudi Arabia whose population of
approximately 25 million is considerably larger
than any of the other GCC states. In a recent
report on the coatings sectors of Saudi Arabia
