Coatings World presents an overview of South Korea’s paints and coatings market in this article.
Overview of the South Korea Paint Industry
Five major producers dominate the South Korea paints and coating market with a cumulative share of approximately 75 percent of the domestic market. Leading building materials company and one of the country’s largest business conglomerates, KCC is the market leader with a market share of approximately 40 percent. The company has its presence in all the sub-segments of the industry.
Samhwa Paints, Kangnam Jevisco (formerly Kunsul Chemical Industrial Company, popularly known as KCI), Noroo Paints and Chokwang Paints are the other leading forces in the country’s paints and coating industry.
Modest Growth in Architectural segment
The South Korea construction industry has made muted progress in last few years, despite the government’s focus on housing and infrastructure development. Lower than expected growth in the most important segment has deprived the country’s paints and coating producers from healthy growth as the architectural segment accounts for approximately 28 percent of the total value of the industry.
It is noteworthy that the share of the architectural segment in the South Korea paints and coating industry at 28 percent is far below most of the other countries in Asia, where it ranges from 52-74 percent of the total paint and coating industry.
Automotive Paints Drives Growth
Steady growth in the South Korea automotive industry has led to vibrant growth of high quality automotive paints in the country. According to data from OICA (The International Organization of Motor Vehicle Manufacturers), South Korea produced more than 4.2 million auto vehicles in 2016, including approximately 3.9 million units of passenger cars and 0.37 million units of commercial vehicles. The total auto production makes South Korea the world’s sixth largest automotive manufacturing countries in 2016.
Although the automotive paint sub-segment has enjoyed steady growth in recent years, over the last few years it has also suffered some declines as the country’s automotive exports have registered a decline in the last few years. After reaching its peak in 2012 with outbound shipments of 3.17 million vehicles that year, the number of exports of made-in-Korea vehicles declined to 2.62 million in 2016, dragging Korea down from the world’s third-largest car exporter in 2012 to the fifth-largest in 2016.
Marine Paints One of the Largest Markets
South Korea has been one of the largest markets for marine coatings for a number of years on the strength of the country’s ship building industry. Although in the last few years Chinese companies have been able to take away significant business from the Korean ship building industry, but the country still remains a force to reckon with in the global shipbuilding industry. South Korean shipbuilders have been under severe financial stress for the past several years in an industry swamped by overcapacity since the 2008 global financial crisis. They posted a combined operating loss of Won8.5tn ($7.6 billion) in 2015 following a failed foray into costly offshore energy projects.
Growing demand for large-size container ships is welcome news for beleaguered South Korean shipbuilders, with orders for oil tankers and natural gas carriers finally coming in. According to the provisional figures, the four major South Korean shipbuilders — Samsung Heavy, Daewoo Shipbuilding, Hyundai Heavy Industries and Hyundai Mipo Dockyard – are believed to have won $16.8 billion of orders in 2017. South Korea’s four major shipbuilders won a combined $6.8 billion in orders in 2016, compared with $20 billion in 2015.
Current year and 2019 are expected to bring a huge demand of marine coatings as the country’s shipbuilders would be delivering a number of prestigious projects.
Leading Paints & Coating Producers in South Korea KCC
With a total revenue of 1.513 trillion Korean Wons ($1.413 billion) in 2016, Korea Chemical Company Limited (KCC Corp.) is the largest paint producer in South Korea with a market share of 37 percent by volume. The company is involved in the production of automotive, marine, industrial and architectural paints.
The company’s vessel antifouling/anticorrosive paint was selected by the Korea Trade-Investment Promotion Agency, Ministry of Industry and Commerce as a World’s Best Product for eight consecutive years.
Noroo Paints & Coatings
Noroo Paints & Coating operates two paint production facilities in South Korea. Chilseo facility, which the company acquired from DPM Company in 2007 is located in Haman (Gyeongsangnam-do Province) produces architectural and industrial coatings. The other production facility, located at Poseung has an installed capacity to produce 10,000 tons of automotive paints per annum.
Moderate growth rates in the domestic paint and coatings market has prompted South Korean producers to look to overseas markets in recent years. Recently, there has been an increased focus on setting up manufacturing plants in Vietnam by the major South Korean paint and coating producers.
The country’s largest paints and coating producer KCC entered into Vietnam by establishing a sales office in 2007. Two years later, the company started commercial production at its manufacturing plant based in Ho Chi Minh City, the economic hub of Vietnam. The company’s Vietnamese subsidiary, KCV produces architectural, automotive, coil and industrial coatings at this plant for Vietnamese market.
Another leading South Korean paint producer, Samhwa Paint Industrial Co. opened a new paint production plant in northern Vietnam in November 2017. The new plant is part of Samhwa Paints Vina Co., the company’s Vietnamese subsidiary. It opened up in Bac Ninh industrial zone, about one hour’s drive north of Hanoi, Vietnam’s capital.