The world coatings scenario

The total output of the world paints and coating manufacturing industry was valued at $54 billion in 1996. The industry supported some 12,250 active firms. This industry is forecast to expand 3.5 per cent annually to nearly 26 million tonnes by the year 2001. The valued would be $72 billion.

Tonnage gains in the industrial coatings segment will be constrained by a shift in trend towards higher solid coatings (such as powder coatings), which often weigh less per kilo than solvent-borne coatings, and generally require fewer, thinner coats. On the other hand, the architectural segment is seeing a continuing shift towards water-based paints, which weigh more than their solvent-borne counterparts, and will promote stronger tonnage gains. These trends are evident around the world but have had the most impact in more mature markets.

Most of the developed world has already effected such a switch to water-based formulations for most architectural applications. The developing world is also experiencing this trend -- India included.

The world paints and coatings industry is becoming increasingly dominated by a small group of highly focussed, globally positioned firms. For many of these companies (e.g., Sherwin Williams, Kansai Paint, Nippon Paint, and Asian Paints) coatings represent the primary line of business. In other cases (e.g., Akzo Nobel, ICI, BASF, Hoechst, Dupont & Courtalds), the firm’s strong position has arisen from involvement in various upstream petrochemical activities, including production of many of basic raw materials used in coatings production.

The most rapid gains in paints and coatings production will be registered in the developing regions of Latin-America and Asia-Pacific. Although the Asia-Pacific region holds excellent long term prospects as a market for paint and coatings, regional production has been lower, primarily due to the financial crisis that has hit this region. However, India was not severely affected by the crisis.

The wave of currency devaluations and a sharp rise in interest rates will seriously dampen spending in key paint sectors such as construction and durables in the short term, particularly in Indonesia, South Korea and Thailand. India, in an earlier budget, has announced a new housing policy, which should result in a boom for the construction sector, which will boost demand for architectural coatings