2020 is an unstable year for the global paint and coatings market, and the Asian coatings market is no exception. At the beginning of this year, the international consulting firm Orr&Boss believes that the global sales volume of the coatings market will increase by 2.8% and the value will increase by 4.4%. The Asian market will grow rapidly at a rate of 3.3% and a growth rate of 4.6%.
This modest growth situation is similar to the situation in 2019, when sales in the Asian coatings market increased by 2.4% and value increased by 3.3%. Now, the moderate growth scenario that Orr&Boss envisioned in early January has been greatly shaken.
In general, Orr&Boss expects that the Asian and global coatings industry’s shipments will decline this year, but the extent of the decline varies by country and region, because the global recession and recovery have been uneven, and some regions and market segments have performed relatively well. , While other regions and departments performed poorly.
2019 review:
Before discussing the market situation in 2020, Orr&Boss first reviewed the market data for 2019. Orr & Boss estimates that the global coatings market will be approximately US$155 billion in 2019, with sales of 41.5 million liters.
The Asia-Pacific region is currently the world's largest coatings market. It accounts for 46% of the global paint industry output value, almost twice that of Europe, the second largest region, which accounts for 25% of the global paint industry output value.
It is estimated that sales in the Asian coatings market increased by 2.4% in 2019, with a value growth rate of 3.3%. Both of these indicators are lower than the growth rate of previous years. The lower growth rate in 2019 is the result of slowing economic growth in most Asian countries (including China, India, and South Korea). Despite the low growth rate, Asia still accounts for most of the growth in the global coatings market.
Asia Pacific market:
Sometimes we view the Asia-Pacific coatings market as one market, but it is actually a merger of multiple markets. China is the largest part of the Asian market, accounting for nearly 60% of the total and value of the Asian market. The second largest market is India and Japan. These three markets accounted for 83% of total transaction volume and 79% of value.
Market performance in Asia varies from region to region. Generally, we divide Asia into five main subregions. These five regions have their own characteristics. these are:
China: This region includes China, Taiwan, Hong Kong and Macau. Mainland China is the largest part of this market. The Chinese region accounts for about 60% of the total market and value. As the largest market, China is the most diverse market in the Asian coatings market. This market not only includes the large-scale decorative coatings market, but also the larger industrial coatings market.
Japan and South Korea: These two countries account for 8.8% of the total coatings market in the Asia-Pacific region and 17% of the value. The value of this market is almost twice the trading volume. This is because the coatings market in these countries is the most expensive market. Generally speaking, the quality of paints and coatings sold in these markets is very high, so higher prices can be obtained.
South Asia: This region includes India, Bangladesh, Myanmar, Nepal and Bhutan. India is currently the largest market. Overall, this region accounts for 21% of the total transactions in the coatings market in the Asia-Pacific region and 13% of the value. In recent years, this region has become the fastest growing region in Asia. Although its paint market is much smaller than China, it is an interesting market because it is the fastest growing paint and coatings market in the Asia-Pacific region.
Southeast Asia: This region includes Indonesia, Vietnam, Thailand, Malaysia, Philippines, Singapore, Cambodia and Laos. These markets account for 10% of the Asia-Pacific coatings market and 11% of value. Similar to South Asia, these markets have good growth potential. The decorative coatings market of these countries occupies a relatively high proportion of the coatings market of these countries. In these countries, decorative coatings account for approximately 70% of the total paint and coatings market, while the entire Asia-Pacific region accounts for 50%.
Australia and New Zealand: These two countries and the island countries around the Pacific account for approximately 1% of transaction volume and 1.5% of value. This is the smallest partition. In many respects, the coating markets in these countries are similar to those in North America and Western Europe, but there are some regional differences.
Forecast for 2020:
The pandemic has had a major impact on the paint and coatings markets in all these countries. Overall, Orr&Boss predicts that the paint and coatings market in the Asia-Pacific region will drop by about 2% this year.
But this masks some considerable differences between the various market segments. Packaging coatings is a relatively small market segment that is expected to show strong growth, as consumers will not travel and have to stay at home during the quarantine period, which has led to significant growth in this market. It should be said that due to the continuous increase of middle-class consumers in these countries and the corresponding increase in demand for packaged consumer goods, these markets grew rapidly before the pandemic. Automotive OEM coatings are expected to experience the greatest decline, as Asian automotive production is expected to fall by about 20% this year. Industrial maintenance and protective coatings (IM&PC) are expected to decline this year, and low oil prices have led to reduced demand for these coatings in the oil and gas sector.
Overall, Orr&Boss expects these markets to rebound in 2021 as the economy recovers. But growth will be relatively modest, with an expected growth rate of 4%. Orr&Boss predicts that automotive OEM and other industrial coatings sectors will partially recover in 2021, but these markets will not make up for all losses in 2020. Other industrial markets are expected to recover their losses and increase in 2021. Orr&Boss has forecasted the growth rate of various market segments in Asia in 2020 and the market in 2021.
Not only are each market segment different, but the growth rate of each region is also different. Below is a short summary of each area.
China: Total coatings dropped by 30% in the first quarter. Orr&Boss believes that it has partially recovered in the second quarter and dropped to a range of 5-10% in the second quarter. Orr&Boss expects that in the second half of the year, economic growth will be strong, and the market will resume losing ground this year.
Japan and South Korea: Orr&Boss predicts that the Japanese and South Korean markets will drop by 0 to 5% this year. In Japan, sales of coatings in the first quarter fell by 5% to 6% from 2019. As the Japanese government declared a state of emergency, GDP fell by 23% in April and May. Coatings shipments fell by 20% in the second quarter. Orr&Boss expects that the market will partially recover in the second half of the year. Orr&Boss also expects that the Japanese market will partially recover next year, while the Korean market will fully make up for this year's losses from 2021.
Southeast Asia: Orr&Boss predicts that the coatings market in Southeast Asia will drop by 0 to 5% this year. Next year, Orr&Boss expects that the market will resume strong growth, ranging from 5% to 10%.
South Asia: Orr&Boss expects this market to drop by 5% to 10% this year. In India, Orr&Boss believes that the Indian decorative coatings market fell by 50% in the second quarter. Orr&Boss expects that the third quarter will be the same as the third quarter of 2019, with some growth in the fourth quarter. For the industrial coatings market, Orr&Boss expects this segment to fall by 50-80% in the second quarter. Orr&Boss expects an increase of about 10% in the third quarter, and an increase of about 10-20% in the third and fourth quarters of 2019. For the entire Indian coatings market (including decoration and industrial), Orr&Boss expects a decline of 5-10% this year. Orr&Boss expects other South Asian countries (Sri Lanka, Bangladesh, Nepal and Pakistan) to have similar performance.
Australia and New Zealand: Orr&Boss believes that the Australian and New Zealand market fell by about 15% in the second quarter. As consumers who stay at home are doing home renovation projects, decorative coatings in these countries grew strongly in the second quarter. Orr&Boss has also seen this situation in North America and Europe. For Australia and New Zealand's industrial coatings market, Orr & Boss believes that the second quarter dropped by 30-40%. Orr&Boss predicts that the ANZ coatings market will recover in the second half of the year and will drop to between 0 and 5% in the second half of this year. The decorative coatings will be the same as in 2019, and the industrial coatings market will drop by about 10%. Orr&Boss predicts that by 2021, the ANZ market will almost completely recover its lost ground.
The above prediction assumes that large-scale locking is not required, but only partial locking is performed. If we need to restore a large-scale or nationwide blockade, the above estimates may be too optimistic. Orr&Boss expects the overall economy to recover this year, and follows the following forecasts issued by the International Monetary Fund.
The future of the coatings market:
The pandemic may have a long-term impact on the Asian coatings market. Some changes in the market may be:
Integration:
The Asian paint market is more fragmented than the North American or European paint market. This is especially true in China and Southeast Asia and other parts of Asia. Before the global economic recession, Orr&Boss believes that the Asian coatings market has matured. The global economic downturn may accelerate this process. Will the global recession lead to the acquisition of many small and medium-sized paint companies? Some of these SMEs may not be able to cope with the financial pressure brought about by the economic downturn. If your company is interested in expanding in Asia and has longer-term interests, now may be a good time to start making acquisitions in Asia.
DIY:
The DIY market in the Asian market is much smaller than in North America or Europe. This is especially true for China, Southeast Asia and India. Will the pandemic change people's behavior? In other words, do consumers in these countries still want paint contractors to enter their houses to paint their houses? Or, through educational activities, can the coating industry make any progress in the DIY market in these countries? Orr&Boss does not know the answers to these questions, but Orr&Boss believes that this may be an opportunity to increase the DIY market.
Raw material price:
Oil prices have fallen sharply this year. Although they have rebounded recently. However, the average oil price in 2020 is still 37% lower than in 2019. In the past, when we saw oil prices drop to this level, after about 6-12 months, we saw raw material prices drop by 10-15%. Orr&Boss expects something similar to happen this time.
Anti-virus and anti-bacterial coatings:
This year, people's interest in anti-virus and antibacterial coatings has grown significantly. Orr&Boss expects that in the rest of 2020 and 2021, interest in these products will continue to grow.
infrastructure:
Coatings related to infrastructure may perform well in 2020 and 2021. The governments of China and other countries are considering large investments in infrastructure to stimulate the economy. This may lead to increased demand for infrastructure-related coatings.
summary
So far, it has been a difficult year for the Asia-Pacific coatings market. But the worst has passed, and the economy and coatings market will gradually begin to recover. Orr&Boss believes that by 2021, the Asia-Pacific coatings market will return to close to the 4% growth level before the pandemic. On the positive side, Orr&Boss also believes that low oil prices will lead to lower raw material prices, and believes that the antiviral and antibacterial and infrastructure coatings market will have growth opportunities.
Orr&Boss also believes that this epidemic may have a significant impact on the future Asia-Pacific coatings market. As the economic recession has a greater impact on small and medium-sized paint companies, the integration trend may accelerate. At the same time, because consumers are unwilling to allow contractors to enter their homes, the Asian market may have an opportunity to expand the scale of the DIY coating market.
