A mixed picture for architectural coatings
IRL completed its annual architectural coatings reports programme in May 2022. From IRL research we estimated the global architectural coatings market at 33.4 million metric tonnes sold in 2021 and a market value of EUR 67.4 billion which assumes a global average price of EUR 2.02/kg.
The Asia-Pacific region has the largest demand for architectural coatings in the world. The main markets that contribute to Asia’s leading position in the architectural coatings industry are China and India. More than half of the total global population lives in Asia, amounting to over 4 billion people living in the region. The large population in China and India, which is continually rising, coupled with the fast economic growth of these countries (notably, the Chinese economy started experiencing a general slowdown during the period from 2012), underpins the rapid rise in the demand for architectural paints in the Asia-Pacific region since the early 2000’s.
The Americas is the second biggest region in terms of demand for architectural coatings across the world. The leading market in the Americas region is the US, which represents more than half of the total Americas architectural coatings market, followed by Brazil, which also accounts for a large share of the Americas market.
The European architectural coatings market is dominated by sales in the Western European region, accounting for the majority of the overall sales in the continent. Over the last few years modest growth has been observed in the industry, and there are no current signs to indicate that growth amongst all European regions will change significantly in the near future. The architectural coatings market in the less developed Eastern and Central European countries possesses the potential for further growth. However, countries from Eastern Europe are at a greater risk of suffering from social and political instabilities than Western countries, which could affect the levels of private and public investments along with consumer demand.
The Middle East & Africa region represents the smallest market for architectural coatings worldwide. In Africa, the region consists of a large number of countries with small market sizes; the biggest and most influential markets in the region is Egypt, followed by South Africa. On the other hand, in the Middle East the leading architectural coatings market – by far – is Saudi Arabia.
Water-based products hold a share of 83 % in the global market
The increase in environmental awareness and promotion of the low-VOC concept at the national levels has resulted in water-based products occupying the dominant share with almost 83 % of the total market in 2021. Furthermore, there is a growing consumer trend towards more efficient and sustainable coatings. The term ‘green coatings’ is driving the industry to invest in, and innovate with, technology.
More than half of the global market consists of styrene-acrylic, vinyl and vinyl acetate technologies, having gained their position by low costs. Moreover, these paints possess good pigment binding properties which make them well suitable for interior and exterior walls. They are also durable, and resistant to many impacts of the external environment.
In 2020 the global architectural coatings market experienced some growth although the performance was very different from region to region. North America and Western Europe enjoyed increasing sales as the lockdowns led to many consumers refurbishing their homes. On the other hand, sales in the Middle East and Africa region declined strongly. In 2021, as restrictions remained in place the increase in DIY works from homeowners, first seen in North America and Western Europe extended to all regions and a positive performance in architectural coatings sales was registered in almost all markets.
In Europe, Spain and Italy were some of the best performing markets in 2021, whereas countries like Germany saw declining sales as a result of having a record year for sales in 2020. The United Kingdom had another year of solid growth in sales in 2021 after having a record year for sales in 2020. In the Americas, the US and Brazil experienced fast growth in 2021 driven by a good performance of the DIY market as well and increasing new residential construction. In the Asia-Pacific region, India sales bounced back strongly in 2021 after having declined in 2020. Sales in China continued to grow in 2021 although at a lower level than in previous years. In the Middle East and Africa region, the UAE had increasing sales in 2021 following a decline in 2020. South Africa also saw a growing market in 2021.
Combined with a healthy growth in sales volume, the global sales value increased substantially with a rise from EUR 59.0 billion in 2020 to EUR 67.4 billion in 2021. Price increases started in the last quarter of 2020 with consumer demand outpacing supply. Bottlenecks in supply chains increased production costs which led to an overall average global price increase of 8 % (when measured in Euros). Price increases continued throughout 2022 although a slowdown is expected for 2023.
Inflation expected to cool down housing market
In terms of forecast, a decline was expected for 2022 for the Americas and Europe regions as the fast growth in 2020 and 2021 should have led to a slowdown in the growth of refurbishment activities. The high inflation and increasing exchange rates are expected to cool down the housing market over the coming years in many countries and negatively affect architectural coatings sales. On the other hand, sales in the Asia-Pacific and Middle East & Africa regions are expected to show solid growth from 2022 onwards as these regions remain less impacted by the rising cost of energy or the war in Ukraine and geopolitical tensions, helped by growing demographics.
The Asia-Pacific region is forecast to be the fastest growing region and to account for 47.9 % of the total sales volume by 2026, from 44.5 % in 2021. Europe is expected to show the slowest growth and account for just 18.5 % of the architectural coatings market volume by 2026, from 21.3 % in 2021.
IRL’s new 2023 architectural coatings reports will be available in May with 2022 base year and revised forecasts up to 2027.