Demand for Paint and Coatings in China to Grow 8.2% through 2015   

By Corinne Gangloff, Freedonia Group  
Global demand for paint and coatings is forecast to rise 5.4% per year to 45.6 million tons in 2015. Advances will be driven by a strong acceleration in world building construction spending, particularly residential construction, which is expected to rebound in North America and Western Europe, a new study shown by the Freedonia Group, Inc., a Cleveland-based industry market research firm.   
   The Asia/Pacific region will remain the leading consumer of paint and coatings through 2015, and will also see the most rapid gains. Regional demand will be fueled by China and India, the two largest markets in Asia and two of the fastest-growing coatings markets in the world. Additionally, an improved outlook for coatings demand in Japan will bolster gains in the Asia/Pacific region. Above-average advances are also forecast for North America, rebounding strongly from the declining demand of the 2005-2010 period. Coatings demand in the region will benefit from a greatly improved outlook for building construction and manufacturing activity in the US. While paint and coatings demand in Western Europe will see a similar recovery from recent declines, the region will be the world's slowest-growing regional market.  
   Demand for paint and coatings in China is forecast to grow 8.2% per annum through 2015 to 12.8 million tons, valued at US$33.8 billion. Despite accounting for more than one-quarter of global demand, per capita paint usage in the country will remain well below that found in developed countries, signaling even further growth potential for paints and coatings. While coatings demand will slow considerably from the more than 16% annual growth experienced during the 2000-2010 decade, gains through 2015 will be the second-fastest of any major market, trailing only India. Advances will be fueled by continued rapid expansion of the Chinese economy, especially in coatings-related industries such as building construction, motor vehicles, furniture and appliances.
   Through 2015, virtually all coatings markets in China will see robust gains in demand, with architectural, manufacturing and specialty markets growing at a similar rate.  In the architectural paint segment, residential applications accounted for the majority of 2010 demand, although nonresidential markets are more prominent in China than in most other countries. The residential market will see the stronger gains through 2015, as rising per capita incomes in China will drive increased residential repainting activity. The architectural coatings market in China is notable in that it is dominated by professional painters rather than consumers. Cheap labor and historical cultural preferences have enabled the flourishing of the professional paint sector in China. However, the consumer/DIY sector is growing rapidly, aided by an increasing choice of retailers in urban areas and increasing efforts on the part of foreign manufacturers to provide easy access to product literature and painting methodology.
   Demand for paint and coatings in India is projected to increase 9.0% per year through 2015 to 2.8 million tons, valued at US$6.3 billion. Although slowing moderately from the double-digit gains of the 2000-2010 decade, advances will be the fastest of any major market in the world. Growth will be fueled by continued strong increases in both residential and nonresidential construction spending, as well as manufacturing output. Given the low level of current paint demand per capita in India, there exist ample opportunities for market growth as the country's economy continues to expend. Paint and coating prices in India are also among the lowest in the world, providing opportunities for value growth as well, as per capita income and consumer spending in India rise.
   Architectural markets in India accounted for three-quarters of paint and coatings demand in 2010, the highest level of any major market in the world. This is due primarily to India's immense population and relatively small manufacturing sector compared to other countries. However, India generates a great deal of demand from nonresidential markets as well, a sign of rapid economic and infrastructure development in the country. Repainting or remodeling activities account for about three-quarters of architectural paint demand in India. A majority of interior wall repainting is undertaken during the October-December period of festivities associated with religious events such as Diwali, Eid and Christmas, while exterior repainting is typically done right after the monsoon season each year. As in China, the vast majority of architectural paint demand in India is via the professional sector due to the availability of a large and low cost labor force.
   Demand for manufacturing coatings in India is limited, as the country is not a significant producer of many paint-consuming durable goods. However, India's motor vehicle industry is growing rapidly (the country was the seventh largest automotive producer in 2010), generating demand for coatings in OEM applications. Kansai Nerolac, a subsidiary of Japan-based Kansai Paints, is the leading supplier of OEM automotive coatings to the Indian market, as much of the country's motor vehicle production originates from Japanese automakers. Maintenance and specialty coatings demand is also relatively small in India, limited by the low level of motor vehicle ownership in the country. However, there is more significant demand for coatings used in industrial maintenance and transportation applications.