Tim Wright05.14.07
There are several factors contributing to the healthy growth of today's marine coatings market. For one, the demand for new ships continues strong. In particular, the demand for liquid natural gas (LNG) vessels continues to be very strong, according to sources Coatings World spoke with. In addition, the move to double-hull tankers has also had a positive impact on shipyards as has the demand for larger and more luxurious cruise ships. Also, the growth in global trade continues to have a positive impact on the market for big ships.
The strength of the global marine coatings market is due in part to new construction in the Far East, according to Linda E. Marquez, worldwide strategic marketing, PPG protective and marine coatings. "For 2007, we expect similar strong growth with China moving into an even more dominant position," she said.
With the higher levels of trade and construction activity worldwide, Hempel was able to increase its business to record levels. Overall, the company's marine segment benefited from continued higher worldwide growth rates in 2006 with a 12% increase in sales, according to its annual report. Across many vessel segments there was considerable demand throughout the year with order books full at yards across Asia and Europe, the company said. In 2006, Hempel launched new products in Globic NCT and Hempadur Fibre 4760.
Hempel's yacht segment saw steady but limited growth in 2006. During the year the yacht segment introduced two new high-end products-Glide Speed and Glide Cruise-in the key markets of Germany, Greece, Norway, Spain and the Middle East. At the end of the year a new distribution agreement in France was announced with the sister company of Hempel's German distributor.
In January 2007 Hempel acquired Merzig, Germany-based Lacor, a national and international supplier of protective coatings and industrial paints. Incorporated into Hempel Germany, Lacor will complement Hempel's geographical coverage of the Germany market, and will enable Hemple to enhance and expand its services globally.
Jotun's marine coatings business also fared well in 2006 in terms of number of ships coated and total value of contracts signed, according to the company's annual report. Most of Jotun's marine businesses reported significant growth, driven by maritime activity in Asia and China in particular.
While Jotun said it sees more consolidation in the marine coatings industry in the future and remains concerned about the costs of raw materials, its marine coatings business has been strengthened by the division's efforts to leverage its global reach. In 2006, Jotun assembled key account management teams responsible for providing its largest customers with improved and more responsive cross-border services and has sought to strengthen its relationships with shipyards and dry-dock facilities. The company has also launched Albatross, an information management system designed to provide a comprehensive overview of its performance in the marine segment.
Last year, Korea-based Chokwang Jotun Ltd. secured the supply of coatings to four 5100 TEU containerships at Hanjin Shipyard in Busan, Korea worth approximately $4 million. The containerships have been ordered by the ship owning company, Cosco Container Lines (COSCON) China and Chokwang Jotun was allocated the full supply. Steel cutting started in September last year and the last ship will be delivered this November. COSCON is the second largest group of shipping enterprises in the world with 640 modern merchant vessels.
While the marine coatings market is healthy, according to industry sources, every year the marine coatings market is challenging and 2006 was no exception. "While the market for new ships continued strong as order books were full and record tonnage was ordered for the coming years, the dramatic increase in copper prices the last two years has strongly impacted the paint companies' bottom line as they struggle to recover these increases," said Robert J. Martin, global business director, marine paints, Arch Chemicals, Inc. "This has placed increasing pressure on raw material suppliers as the paint companies seek to offset these increases.
"The dramatic growth that occurred from 2003-2005 as most of the global antifouling paint suppliers discontinued paint products containing tributyl tin (TBT) has slowed and market growth has leveled off," Martin added. "However the volumes of antifouling paint continue to grow due to the increased fleet size and the fact that larger ships are replacing smaller ships, thus requiring more paint. Overall the volume growth in the market was good in 2006, but profitability was challenged as recovering increased raw material costs was difficult for both paint companies and raw material suppliers."
While raw material costs are projected to eventually even out, the spike in the price of copper has affected antifouling coating selling prices, according to Marquez. "PPG was forced to make price adjustments to reflect current costs," she said. "Increased prices affect both the everyday boat owner and the larger fleet owners. However, large fleet owners have more market leverage, using their buying power to exert downward pressure on pricing due to the volume of business they control."
"For 2007 we expect a good year. The shipyards are still fully booked, so the new-build market will continue strong in 2007," Martin said. "We were hoping for copper prices to decline this year to help paint company profitability, but in the last two months copper prices have begun to increase again."
On the regulatory front, major trends currently unfolding in the marine coatings sector include the United Nations' International Maritime Organization's (IMO) TBT antifouling treaty, pending IMO actions on ballast tanks and tankers, and the Biocides Product Directive (BPD) for the EU, which will ultimately limit which biocides that can be used in commercial antifouling products sold globally.
The Anti-Fouling Working Group of the International Paint and Printing Ink Council (IPPIC), for which the National Paint & Coatings Association (NPCA) serves as secretariat, issued a call earlier this year urging countries to ratify the IMO's International Convention on the Control of Harmful Anti-Fouling Systems on Ships.
The call was issued in response to the fact that many major flag states with significant shipping tonnage, including the U.S., have yet to ratify the treaty, which was adopted under the auspices of the IMO in Oct. 2001.
The treaty calls for the elimination of the application of organotin acting as biocides effective Jan. 1, 2003 and the presence of organotins on ships effective Jan. 1, 2008. The treaty was adopted because of the concern over the long-term environmental impact of organotin compounds in antifouling systems and the recognition that less toxic materials are now available to meet the same need. In addition to the ban on organotins, the treaty will establish a system for regulating antifouling systems that might be used on ships in the future.
The treaty will come into force when 25 countries with 25% of the world's tonnage ratify it. As of Feb. 1, 2007, 19 countries with approximately 16% of the shipping tonnage had ratified the treaty.
The industry's concern is heightened by the treaty's looming January 2008 deadline for the elimination of organotin compounds from ships' hulls or its effective containment on hulls, NPCA said. When the treaty is finally ratified, it becomes immediately effective. On that date all ships with uncontained organotin compounds on the hull will be banned from the waters of the ratifying countries.
To effectively meet the date, work on the ships should be under way now. The delay is causing confusion in a worldwide industry that has to apply coatings on large ships that are expected to last for three to five years, NPCA said.
Some countries and regions, including the EU and Australia, have enacted bans independent of the treaty. The EU, for example, has already enacted legislation in the form of the BPD to implement the terms of the treaty. Ships with uncontained organotin compounds on their hulls in January 2008 will be in violation of the EU requirements and could be denied entry to EU ports irrespective of the treaty's status.
"As a result of these regulatory developments, more ships will be brought into dry-dock that still have TBT on the hull and further stimulate the market," said Martin. "In addition, some reformulation will need to take place in the EU as products that were not supported under the BPD are phased out of antifouling paints."
In the years ahead regulation will continue to expand. "Japan is planning to register antifouling paints beginning in 2008, and pressure will increase to implement such systems in Korea, China and Singapore," Martin continued. "Biocides that are not supported with full data packages will find it increasingly difficult with this expansion of registration systems and the implementation of the IMO's antifouling systems treaty."
The longer copper prices remain high and stricter environmental regulations are enforced, the greater the search for alternative antifouling systems. "Whether these alternatives come in the form of non-stick coatings or copper-free biocide-based coatings, marine paint companies are trying to find economical and environmentally friendly alternatives," said Martin. "In particular, more ship owners are trying non-stick coatings as an alternative. However, these have to be scrubbed annually to remove algae and are still susceptible to damage. One positive attribute attributed to these coatings is improved surface smoothing, which reduces fuel consumption.
"On the other hand, recent studies indicate that a good biocidal, self-polishing coating can offer the same kind of savings because the self-polishing action improves the surface smoothness and scrubbing is not required between dry-dockings," Martin said. "So while we see the increasing use of non-stick products, until they further improve the performance, they will remain a niche product. The effort to find a good copper-free coating continues to be a high priority for the paint companies."
The two biggest challenges facing companies wanting to bring new products to the market are the long lead-time to prove a new product's efficacy and the high cost of toxicology and environmental fate data necessary to register the product. "Since the data necessary to register an antifouling biocide can cost over $5 million dollars, it is a big hurdle in trying to find and develop a new antifouling product," Martin said. "These barriers to the introduction of a new product are discouraging for any company, but no one in the industry wants another TBT."
Recognized for its technological advances in the marine coatings sector, International Paint's marine and protective coatings business unit was recently awarded the 2007 Queen's Award for Enterprise in the Innovation category.
The Award is for the development of Intersleek 700, a silicone-based foul release coating designed for use on the underwater hull of ships with in service speeds between 15 and 30 knots. Intersleek 700 does not use biocides to control fouling on the ship's hull, relying instead on a slippery, low friction surface onto which fouling organisms have difficulty settling. Any that do settle, normally do so only weakly and can usually be removed by wiping and washing or by the vessel moving through the water at speed, according to the company. Performance and environmental benefits include reduced fuel consumption, reduced carbon dioxide emissions, no leaching of biocides into the sea and reduced wash water treatment costs at drydock.
Intersleek 700 has recently been complemented by the introduction of the next generation of foul release technology, Intersleek 900. Setting even higher performance standards with improved fuel efficiency and reduced emissions, Intersleek 900 is a patented fluoropolymer foul release coating which represents the company's latest advances in fouling control technology, improving upon the performance of Intersleek 700.
Intersleek 900 is smooth with low levels of average hull roughness, has excellent foul release capabilities and good resistance to mechanical damage. For the very first time all vessels above 10 knots, including scheduled ships, tankers, bulkers, general cargo ships and feeder containers can now benefit from foul release technology.
In terms of fuel efficiency and reduced emissions, Intersleek 900 offers predicted savings of two percent in comparison to Intersleek 700 and six percent in comparison to self-polishing copolymer (SPC) antifoulings. The potential exists for even greater savings in comparison to controlled depletion antifoulings. For a single VLCC currently coated with an SPC antifouling this could mean savings of over 4,500 tons of fuel, a reduction in carbon dioxide emissions of over 14,000 tons and $1.2 million over a five-year period, according to the company. Since its launch in February, Intersleek 900 has already built an impressive track record of 20 vessels.
For tank lining applications, Sherwin-Williams industrial and marine coatings business unit recently launched its Duraplate UHS Ultra High Solids Epoxy with fluorescing optically active pigments (OAP), allowing tank lining applicators to check the coating instantly for pinholes, holidays and other discontinuities and verify uniform coverage and proper film thickness.
The new formulation now is the only product of its type meeting the requirements of NSF Standard 61 for potable water tanks of at least 1,000 gallons, according to the company. The coating uses Duraplate UHS Epoxy as the vehicle to hold the pigment, and is available as a single- or multi-coat application.
A 'civilian' application developed from technology supplied to the U.S. Navy, the fluorescing technology has doubled the service life of marine ballast storage tank coatings by illuminating insufficient film thickness wherever it occurs. The result is that proper film thickness and uniform coverage can now be verified.
"For a potable water tank, the life expectancy of a two-coat epoxy system, if correctly applied, inspected and maintained, should be more than 40 years," said W. Doni Riddle, vice president, Sherwin-Williams industrial and marine coatings. "But in the field, owners and engineers have been tolerating early coating failures at 12-15 years of service. When existing specifications are upgraded to require fluorescing pigments, Duraplate UHS OAP can dramatically extend service life."
The strength of the global marine coatings market is due in part to new construction in the Far East, according to Linda E. Marquez, worldwide strategic marketing, PPG protective and marine coatings. "For 2007, we expect similar strong growth with China moving into an even more dominant position," she said.
With the higher levels of trade and construction activity worldwide, Hempel was able to increase its business to record levels. Overall, the company's marine segment benefited from continued higher worldwide growth rates in 2006 with a 12% increase in sales, according to its annual report. Across many vessel segments there was considerable demand throughout the year with order books full at yards across Asia and Europe, the company said. In 2006, Hempel launched new products in Globic NCT and Hempadur Fibre 4760.
Hempel's yacht segment saw steady but limited growth in 2006. During the year the yacht segment introduced two new high-end products-Glide Speed and Glide Cruise-in the key markets of Germany, Greece, Norway, Spain and the Middle East. At the end of the year a new distribution agreement in France was announced with the sister company of Hempel's German distributor.
In January 2007 Hempel acquired Merzig, Germany-based Lacor, a national and international supplier of protective coatings and industrial paints. Incorporated into Hempel Germany, Lacor will complement Hempel's geographical coverage of the Germany market, and will enable Hemple to enhance and expand its services globally.
Jotun's marine coatings business also fared well in 2006 in terms of number of ships coated and total value of contracts signed, according to the company's annual report. Most of Jotun's marine businesses reported significant growth, driven by maritime activity in Asia and China in particular.
While Jotun said it sees more consolidation in the marine coatings industry in the future and remains concerned about the costs of raw materials, its marine coatings business has been strengthened by the division's efforts to leverage its global reach. In 2006, Jotun assembled key account management teams responsible for providing its largest customers with improved and more responsive cross-border services and has sought to strengthen its relationships with shipyards and dry-dock facilities. The company has also launched Albatross, an information management system designed to provide a comprehensive overview of its performance in the marine segment.
Last year, Korea-based Chokwang Jotun Ltd. secured the supply of coatings to four 5100 TEU containerships at Hanjin Shipyard in Busan, Korea worth approximately $4 million. The containerships have been ordered by the ship owning company, Cosco Container Lines (COSCON) China and Chokwang Jotun was allocated the full supply. Steel cutting started in September last year and the last ship will be delivered this November. COSCON is the second largest group of shipping enterprises in the world with 640 modern merchant vessels.
Coping With Copper Price Hikes
While the marine coatings market is healthy, according to industry sources, every year the marine coatings market is challenging and 2006 was no exception. "While the market for new ships continued strong as order books were full and record tonnage was ordered for the coming years, the dramatic increase in copper prices the last two years has strongly impacted the paint companies' bottom line as they struggle to recover these increases," said Robert J. Martin, global business director, marine paints, Arch Chemicals, Inc. "This has placed increasing pressure on raw material suppliers as the paint companies seek to offset these increases.
"The dramatic growth that occurred from 2003-2005 as most of the global antifouling paint suppliers discontinued paint products containing tributyl tin (TBT) has slowed and market growth has leveled off," Martin added. "However the volumes of antifouling paint continue to grow due to the increased fleet size and the fact that larger ships are replacing smaller ships, thus requiring more paint. Overall the volume growth in the market was good in 2006, but profitability was challenged as recovering increased raw material costs was difficult for both paint companies and raw material suppliers."
While raw material costs are projected to eventually even out, the spike in the price of copper has affected antifouling coating selling prices, according to Marquez. "PPG was forced to make price adjustments to reflect current costs," she said. "Increased prices affect both the everyday boat owner and the larger fleet owners. However, large fleet owners have more market leverage, using their buying power to exert downward pressure on pricing due to the volume of business they control."
"For 2007 we expect a good year. The shipyards are still fully booked, so the new-build market will continue strong in 2007," Martin said. "We were hoping for copper prices to decline this year to help paint company profitability, but in the last two months copper prices have begun to increase again."
Regulatory Legislation Guides Future Trends
On the regulatory front, major trends currently unfolding in the marine coatings sector include the United Nations' International Maritime Organization's (IMO) TBT antifouling treaty, pending IMO actions on ballast tanks and tankers, and the Biocides Product Directive (BPD) for the EU, which will ultimately limit which biocides that can be used in commercial antifouling products sold globally.
The Anti-Fouling Working Group of the International Paint and Printing Ink Council (IPPIC), for which the National Paint & Coatings Association (NPCA) serves as secretariat, issued a call earlier this year urging countries to ratify the IMO's International Convention on the Control of Harmful Anti-Fouling Systems on Ships.
The call was issued in response to the fact that many major flag states with significant shipping tonnage, including the U.S., have yet to ratify the treaty, which was adopted under the auspices of the IMO in Oct. 2001.
The treaty calls for the elimination of the application of organotin acting as biocides effective Jan. 1, 2003 and the presence of organotins on ships effective Jan. 1, 2008. The treaty was adopted because of the concern over the long-term environmental impact of organotin compounds in antifouling systems and the recognition that less toxic materials are now available to meet the same need. In addition to the ban on organotins, the treaty will establish a system for regulating antifouling systems that might be used on ships in the future.
The treaty will come into force when 25 countries with 25% of the world's tonnage ratify it. As of Feb. 1, 2007, 19 countries with approximately 16% of the shipping tonnage had ratified the treaty.
The industry's concern is heightened by the treaty's looming January 2008 deadline for the elimination of organotin compounds from ships' hulls or its effective containment on hulls, NPCA said. When the treaty is finally ratified, it becomes immediately effective. On that date all ships with uncontained organotin compounds on the hull will be banned from the waters of the ratifying countries.
To effectively meet the date, work on the ships should be under way now. The delay is causing confusion in a worldwide industry that has to apply coatings on large ships that are expected to last for three to five years, NPCA said.
Some countries and regions, including the EU and Australia, have enacted bans independent of the treaty. The EU, for example, has already enacted legislation in the form of the BPD to implement the terms of the treaty. Ships with uncontained organotin compounds on their hulls in January 2008 will be in violation of the EU requirements and could be denied entry to EU ports irrespective of the treaty's status.
"As a result of these regulatory developments, more ships will be brought into dry-dock that still have TBT on the hull and further stimulate the market," said Martin. "In addition, some reformulation will need to take place in the EU as products that were not supported under the BPD are phased out of antifouling paints."
In the years ahead regulation will continue to expand. "Japan is planning to register antifouling paints beginning in 2008, and pressure will increase to implement such systems in Korea, China and Singapore," Martin continued. "Biocides that are not supported with full data packages will find it increasingly difficult with this expansion of registration systems and the implementation of the IMO's antifouling systems treaty."
Alternative Antifouling Systems
The longer copper prices remain high and stricter environmental regulations are enforced, the greater the search for alternative antifouling systems. "Whether these alternatives come in the form of non-stick coatings or copper-free biocide-based coatings, marine paint companies are trying to find economical and environmentally friendly alternatives," said Martin. "In particular, more ship owners are trying non-stick coatings as an alternative. However, these have to be scrubbed annually to remove algae and are still susceptible to damage. One positive attribute attributed to these coatings is improved surface smoothing, which reduces fuel consumption.
"On the other hand, recent studies indicate that a good biocidal, self-polishing coating can offer the same kind of savings because the self-polishing action improves the surface smoothness and scrubbing is not required between dry-dockings," Martin said. "So while we see the increasing use of non-stick products, until they further improve the performance, they will remain a niche product. The effort to find a good copper-free coating continues to be a high priority for the paint companies."
The two biggest challenges facing companies wanting to bring new products to the market are the long lead-time to prove a new product's efficacy and the high cost of toxicology and environmental fate data necessary to register the product. "Since the data necessary to register an antifouling biocide can cost over $5 million dollars, it is a big hurdle in trying to find and develop a new antifouling product," Martin said. "These barriers to the introduction of a new product are discouraging for any company, but no one in the industry wants another TBT."
Recognized for its technological advances in the marine coatings sector, International Paint's marine and protective coatings business unit was recently awarded the 2007 Queen's Award for Enterprise in the Innovation category.
The Award is for the development of Intersleek 700, a silicone-based foul release coating designed for use on the underwater hull of ships with in service speeds between 15 and 30 knots. Intersleek 700 does not use biocides to control fouling on the ship's hull, relying instead on a slippery, low friction surface onto which fouling organisms have difficulty settling. Any that do settle, normally do so only weakly and can usually be removed by wiping and washing or by the vessel moving through the water at speed, according to the company. Performance and environmental benefits include reduced fuel consumption, reduced carbon dioxide emissions, no leaching of biocides into the sea and reduced wash water treatment costs at drydock.
Intersleek 700 has recently been complemented by the introduction of the next generation of foul release technology, Intersleek 900. Setting even higher performance standards with improved fuel efficiency and reduced emissions, Intersleek 900 is a patented fluoropolymer foul release coating which represents the company's latest advances in fouling control technology, improving upon the performance of Intersleek 700.
Intersleek 900 is smooth with low levels of average hull roughness, has excellent foul release capabilities and good resistance to mechanical damage. For the very first time all vessels above 10 knots, including scheduled ships, tankers, bulkers, general cargo ships and feeder containers can now benefit from foul release technology.
In terms of fuel efficiency and reduced emissions, Intersleek 900 offers predicted savings of two percent in comparison to Intersleek 700 and six percent in comparison to self-polishing copolymer (SPC) antifoulings. The potential exists for even greater savings in comparison to controlled depletion antifoulings. For a single VLCC currently coated with an SPC antifouling this could mean savings of over 4,500 tons of fuel, a reduction in carbon dioxide emissions of over 14,000 tons and $1.2 million over a five-year period, according to the company. Since its launch in February, Intersleek 900 has already built an impressive track record of 20 vessels.
For tank lining applications, Sherwin-Williams industrial and marine coatings business unit recently launched its Duraplate UHS Ultra High Solids Epoxy with fluorescing optically active pigments (OAP), allowing tank lining applicators to check the coating instantly for pinholes, holidays and other discontinuities and verify uniform coverage and proper film thickness.
The new formulation now is the only product of its type meeting the requirements of NSF Standard 61 for potable water tanks of at least 1,000 gallons, according to the company. The coating uses Duraplate UHS Epoxy as the vehicle to hold the pigment, and is available as a single- or multi-coat application.
A 'civilian' application developed from technology supplied to the U.S. Navy, the fluorescing technology has doubled the service life of marine ballast storage tank coatings by illuminating insufficient film thickness wherever it occurs. The result is that proper film thickness and uniform coverage can now be verified.
"For a potable water tank, the life expectancy of a two-coat epoxy system, if correctly applied, inspected and maintained, should be more than 40 years," said W. Doni Riddle, vice president, Sherwin-Williams industrial and marine coatings. "But in the field, owners and engineers have been tolerating early coating failures at 12-15 years of service. When existing specifications are upgraded to require fluorescing pigments, Duraplate UHS OAP can dramatically extend service life."
