Asia Pacific Report

August 10, 2016

Key findings indicate that the market for paint and coatings in the Asia Pacific region is poised for more growth.

The Asia-Pacific region is rapidly expanding, fueled by a growing economy and emerging middle class. This growth is driving demand for many building and industrial materials, including paints and coatings. According to market research firm IRL’s report “A Profile of the Asia-Pacific Paint Industry,” the total market for paints and coatings was 21.4 million tons in 2013, and is forecast by IRL to increase to 29.2 million tons by 2018; this is equivalent to an average annual growth rate of 6.4 perecent in the medium term.

Other Key Finding from the Report

China is by far the largest national market for paints and coatings in the Asia-Pacific region, followed at some considerable distance by India and Japan. The smallest markets are those of New Zealand and Singapore. While medium-term growth is forecast to be low in the more developed and mature markets such as Australia, New Zealand and Japan, the developing market of India is predicted to demonstrate growth of over 10 percent per annum over the next five years.  India still offers significant potential for paints and coatings market growth, as per capita consumption remains very low.

The Chinese market is still offering good medium-term growth of around 6.5 percent per annum for paints and coatings suppliers, driven by growth in downstream industries such as automotive, construction, shipbuilding, petrochemicals and civil engineering. However, this forecast growth is lower than in previous years as the country is experiencing slower economic growth, caused by rising costs of labor, land and raw materials,and increasing taxes.

The third tier of growth markets comprises the Southeast Asian economies of Thailand, Vietnam, Indonesia, the Philippines and Malaysia. These countries are experiencing rising incomes, improving standards of living and increasing domestic demand, while labor and production costs remain relatively low.

Overall in Asia-Pacific, architectural coatings account for just less than 50 percent of the total paints and coatings market, although this figure varies considerably from country to country. India’s high share of the architectural segment, at over 80 percent, reflects the very underdeveloped nature of much of the country’s industrial infrastructure.

Protective coatings and general industrial coatings (including can and coil coatings) are the second and third largest end-use segments, respectively. New Zealand and Singapore are the only two countries with no consumption of automotive OEM coatings, since they do not possess any automotive production facilities. Australia’s consumption of automotive OEM coatings is expected to fall to zero by 2018 as the country loses its vehicle manufacturing capabilities.

The relative importance of the protective coatings segment is underpinned by the considerable activities in terms of oil and gas production, energy generation and mining that take place in many of the Asia-Pacific countries. Protective coatings have a particularly large share of the market in China due to the fast growth of sectors such as civil engineering, marine engineering and container manufacturing.

Marine coatings have a very high share of the national paints and coatings market in Singapore, reflecting that country’s importance as a regional hub for maritime transportation, and also in South Korea, which remains a key shipbuilding nation despite losing some business in recent years to China and other low-cost countries such as Indonesia.

Industrial wood coatings are an especially dominant end-use segment in Vietnam, thanks to the importance of the wood processing industry and the strong demand for Vietnamese-made furniture from export markets around the world.

Although the market for plastic coatings is relatively small in all countries covered in this report, it is of greater relative importance in Japan and Taiwan, since those countries are key manufacturers of electrical and electronic goods.

Highlights from Frost and Sullivan Report:

Market research firm Frost and Sullivan’s data on the coatings industry in Asia Pacific report that the  coatings industry is sensitive to the growth of gross domestic product (GDP), and tends to grow at 1.5 to 2 times that of Southeast Asia’s GDP.

• In 2014, the member economies of Southeast Asia (ASEAN-6) experienced decelerating growth; 4 of the 6 recorded slowdowns that edged the subregional average down to 4.5 percent in 2014. Indonesia and Thailand were both among those decelerating in 2014.

• Southeast Asia is poised for a growth rebound in 2015. Aggregate growth is to rebound to 4.9% in 2015 and 2016, as recovery in Indonesia and Thailand leads the way and most of the subregion trends up and benefits from rising exports and lower inflation.

• The coatings market in Southeast Asia is expected to fare well due to impressive growth in the construction industry, a result of the development of residential & commercial buildings as well as infrastructure. The optimistic economic conditions anticipated in most Southeast Asia countries, especially Indonesia and Thailand, is expected to cause these segments to witness buoyant growth, thereby influencing the coatings market.

• The SEA coatings market was worth $6.68 billion in 2014 and is projected to reach $9.93 billion by 2019, fueled by economic growth and rising urbanization.

• In 2014, the decorative coatings segment was the largest application area, accounting for approximately 55.7 percent of the total market, followed by wood, protective, and automotive OEM coatings.

• Indonesia accounted for the largest share—25 percent—with a revenue of $1.7 billion in 2014, followed by Thailand, Vietnam, and the Philippines.

• Much of the focus is now shifting towards emerging markets—mainly Indonesia, Vietnam and the Philippines—as volume is the name of the game; these countries host large population of 251 million, 91 million and 99 million, respectively.