European Coil Coatings Market

The European sector for coil coatings  and other prepainted metals is battling against a new surge in imports, triggered by overcapacity in China’s steel and aluminium industries.
So far, however, the European  coil coatings segment has been doing well in resisting an overall steep rise in imports into Europe of steel and aluminium.  Last year  steel imports into the European Union went up by 22 percent, while in the fourth quarter they soared  by nearly 50 percent.

Rising imports has driven down prices with the global price of Chinese steel almost two thirds lower than it was four years ago.  World prices of aluminium plummeted by 30 percent last year.

Prepainted metals suppliers in Europe have been helped by the EU’s imposition of antidumping duties  on Chinese coated exports but exporters elsewhere in Asia,  as well as in Latin America and Russia and Ukraine, have also been targeting the EU market.

Traditionally Europe has lead the world in coil coatings in terms of  consumption and development of technologies. It continues to grow despite the EU’s stagnant economy so it has been an attractive market for the world’s leading  coil coatings producers like AkzoNobel, BASF, Valspar,  PPG and Beckers.

It is also benefitting from a long-term strategy in the steel and aluminium to move away from commodity-grade products into added-value ones.

European shipments of organic coatings, mainly coil coatings, have doubled since the early 1990s, according to figures from the Brussels-based  European Coil Coatings Association (ECCA).  Now organic  coatings consumption in the steel and aluminium markets in Europe  has returned to its pre-2008 levels, while shipments of all steel and aluminium products  remain below the amounts before the  financial crisis.

In addition to a big increase in sales of coil and other prepainted coatings, there has been an expansion and strengthening of a  whole supply chain covering coating operators and equipment, as well as products such as pre-treatment chemicals.

The strength of this supply chain, backed  by high quality product and manufacturing standards, has proved to be a tough barrier  for importers to overcome.

In 2010-11, just as the European coatings sector was struggling to recover from the 2008 catastrophe, imports of  coated steel sheets  went up by 29 percent but then plummeted by 33 percent in 2012. 

Since then they have started to increase again but now are showing signs of levelling out. Meanwhile output of steel sheets with metal anti-corrosion coatings  in Europe has been going up by about 6 percent annually  and  of sheets with organic coatings by around 2 percent annually.  The share of imports in the European coated steel coated sheets sector seems to be softening.

A major reason for the easing pressure from imports in the domestic sector for coil and other prepainted metal products has been the mounting concerns about the low quality of  the imports among both  producers and  customers.

In response to these worries ECCA launched last year a quality label scheme called ECCA Premium which covers aspects of  steel and aluminium products such as color durability, corrosion resistance and suitability for creative design.

The sector already has a quality label called Qualicoat, which was introduced  around 30 years ago to deal initially with the quality of post-painted aluminium and later steel.  ECCA reckons its label is more suited to prepainted products because  it is broader in scope and more comprehensive.

ECCA Premium aims to embrace within a  single label  all relevant existing European and international standards applying to not just product quality  but also manufacturing and environmental standards. 

It endeavors to tackle the apparent aberration under which the provisions of  REACH, the EU’s strict  legislation for the application of environmental, health and safety standards to chemicals  are not being enforced with imported coil coatings.   ECCA Premium  does not certify coil and prepainted products which  chemicals in their coating  on the REACH list of substances of very high concern (SVHC) such as carcinogens.

“We know there are a lot imported prepainted materials coming into Europe which do not meet quality specifications,” said Yvonne Barcelona, ECCA managing director. “Chinese imports are less of a problem now after the imposition of EU anti-dumping  duties.  But they are coming in from other countries, such as India.”

“Our quality label scheme is helping to curb low quality imports  and to reduce the share of  low standard  imports in the European market,” she added.

Qualicoat, which is operated through national trade associations, the vast majority of them in Europe, has been extending its coverage along supply chains.  Its branch in UK and Ireland has, for example, just drawn up guidelines for storage conditions for powder coatings with ‘best before’ dates on the grounds that those kept for long periods can cross-link and semi-cure before application.

“We are  finding that customers are now insisting on products having  quality labels,” said  Josef  Schoppig, managing director of Qualicoat, whose international headquarters are in Zurich, Switzerland.  “It is very difficult now  to gain a contract for architectural applications, for example, in the Spanish public sector without a quality label.”

The building sector has become by far the biggest market in Europe for the coil coatings sector accounting for 72 percent of sales, with automotive and domestic appliances being the next two largest segments with shares of 7 percent and 6 percent respectively, according to ECCA figures.

“Prepainted metal (now) has numerous applications in construction, thanks to its aesthetic and technical characteristics,”said  Mario Palermo, president of ECCA’s French group. “(It) has become a favorite  among many architects and contracting authorities.”

Importers of coated products face a stiff challenge gaining entry into the Europe architectural market because of the priority being given by the sector to proven quality.

However steel and aluminium producers in emerging economies like China, India and Brazil are beginning to move into the  upper end of the market.  Non-European companies are entitled to the ECCA Premium certification. Associations in China, Middle East and Russia have joined the Qualicoat  scheme.

Since the European quality label schemes are being applied to supply chains rather than just products, it may be a while before large numbers of  potential exporters into Europe can meet its quality standards.