Paint and coatings binder market remains challenging
Rising logistics and energy costs are exacerbating the situation. A significant improvement is not in sight in the short term. For binder manufacturers, the issue of sustainability is becoming increasingly important. The Covid-19 outbreak caused disruptions in the supply chain. Prices and availability of raw materials came under pressure. For many binders, such as epoxy resins, prices exploded significantly. An increase in the high double-digit percentage range was no longer the exception. This development began in the last quarter of 2020 and continues today. Prices remain at a high level. There is no relief in sight, as other factors besides the pandemic are now affecting the market. According to the market research company Allied Market Research, for example, uncertain demand from sectors such as the automotive industry and construction led to an imbalance between supply and demand. Thus, the paints and coatings market experienced oversupply or shortage of supply. This is restraining the growth of the paint resins market.
“The Corona period was characterised by great demand and problems regarding availability. The renovation and construction boom declined significantly. Innovation projects could therefore only be implemented sluggishly, as customers had no laboratory capacities for this. Currently, we can talk more about innovations and new developments again,” says Lars Ossenschmidt from Worlée-Chemie. His colleague Dr Toine Biemans adds that many people painted their houses during the Corona period and less was built. The industrial sector also had to deal with declines. As a result, demand has gone down. Increased commodity prices and the Russia-Ukraine conflict are not contributing positively.
“Pressure on the supply chain due to the Corona pandemic and the Ukraine war is impacting security of supply and driving up costs in the paint binder industry. This highlights the industry’s dependence on fossil raw materials. Furthermore, the need for sustainable solutions has increased in urgency, in addition to the fundamental desire to reduce the carbon footprint along the value chain and improve industrial hygiene due to increasing regulation,” says Dickon Purvis of Covestro.
Oliver Kossanyi from Evonik also says that due to the current political situation, there is a certain tension, for example, with regard to the availability and supply of raw materials. This runs through the entire value chain. However, he also notes a high level of innovation: “Many product solutions – also downstream of the binder – are currently being introduced to the market – almost all of them are related to the topic of sustainability. Dr Ulrich Nauber of Dow also describes the current situation in the market for paint binders as tense with no optimistic forecast: “From both a macro- and micro-economic perspective, the market continues to face significant challenges. A significant improvement is not in sight in the short term.”
Challenges are manifold
From Ossenschmidt’s point of view, the high raw material prices are a burden on both binder manufacturers and their customers. In addition, the war will cause shifts in the markets for certain raw materials, such as some vegetable oils. “The demands regarding sustainable product development require a high commitment of resources in the innovation departments,” says Ossenschmidt. Nauber identifies volatile market developments as a challenge for binder manufacturers. “These are driven by sharply increased logistics and energy costs as well as fluctuating demand in the markets due to geopolitical tensions, inflation fears and so on. This is testing all partners in the value chain,” Nauber points out.
For Purvis, in terms of the current situation, there are currently three main challenges. “The most urgent of these is ensuring a stable supply of raw materials. However, it is a very dynamic situation that requires constant adjustment. Another issue that is developing rapidly is the regulation of industrial hygiene. The binder manufacturers must try to anticipate the regulations in their innovation processes in order to continue to guarantee their customers freedom of action after the introduction of new regulations. Last but not least, reducing the carbon footprint is an issue that cannot be addressed by a single manufacturer, but requires cooperation along the value chain. Fundamental issues within the value chain such as approaches, the type of evidence required and the transparency of the origin of sourced raw materials are constantly evolving.”
Kossanyi also talks about sustainability when it comes to the topic of challenges: “Binders should also make a contribution here. In the flexible packaging industry, for example, hot-seal lacquers for mono-PET packaging are currently in increasing demand. However, the sustainable product solution must also be verifiable here – be it through calculations of life cycle analyses for the assessment of the CO2 footprint or through external certifications.”
Demands of paint and coatings manufacturers on binder producers
Paint and coatings manufacturers always look to innovate, according to Purvis, but they are also driven by similar challenges as binder manufacturers: namely, stable supply, ensuring their freedom to operate and reducing their carbon footprint. “However, a common element in all these areas in recent years has been convenience. Drop-in solutions that offer the same or better performance than existing solutions but have a lower carbon footprint. Solutions that do not require additional measures for safe handling are attracting a lot of interest in the market,” says Purvis.
The availability of certain raw materials and especially high prices play a big role in many discussions with our customers, Ossenschmidt shares. “Binders determine the properties of coatings and paints to a very large extent. The quantity used is also relatively large compared to other raw materials for coatings. In the further development of coating systems towards more sustainable products, the focus is therefore also on this raw material. Due to the diversity of possible future requirements and the relatively long development and implementation times, a broad and wide view is required of the binder manufacturer.” Another requirement is bio-based and sustainable solutions with the same quality, adds Biemans. He does not talk about prices because raw material prices are so high. But this will certainly be decisive.
On the demands that paint and coatings manufacturers place on binder producers, Nauber sees security of supply as the order of the day. “In addition to a sustainable price development, the development of much more sustainable products is also one of the essential requirements”. In addition to the requirements for sustainable product solutions, there is also an increased requirement profile for product properties, Kossanyi emphasises. As an example, he cites heat-seal lacquers, which are also used for paper packaging and, in the best case, have barrier properties. Besides paper, many new substrates are coming onto the market, some of which still have to establish themselves. Here, too, it is important to ensure functionality with the appropriate binder.
R&D focused on sustainability
Allied Market Research expects demand for bio-based paints and coatings to increase in the coming years. This is due to the growing awareness on the part of end-users as well as stricter regulations regarding VOC content. This is expected to drive demand for paint resins that meet these requirements.
According to Kossanyi, research activities are clearly focused on the topic of sustainability. This includes short-term topics such as product modification, for example, to achieve a further improved CO2 balance for binders. But medium- and long-term research work also focuses on the development of sustainable product innovations.
“Over the years we have developed a broad technological toolkit that also includes aqueous and 100 % UV-curing solutions. Our key driver of innovation is to ensure that we have solutions that take into account a product’s carbon footprint at every stage of the product lifecycle, such as: sustainable, non-fossil raw materials; higher productivity and lower energy requirements in application; the use of lighter, more durable materials in use; and the ability to recycle products at the end of their life,” says Purvis.
At Worlée-Chemie, all current projects must consider at least one factor of sustainability, Ossenschmidt points out. According to Biemans, no projects are generally undertaken any more that do not somehow take a sustainability aspect into account. “The issue of sustainability concerns us at all levels. We will undertake a complete restructuring of our portfolio in the next few years. To speed up project work, we are preparing many technologies and topics and going to our customers with prototypes at an early stage. We have to be able to react agilely because of the short-term changes,” says Ossenschmidt.
Nauber agrees: “The topic of sustainability has long been a very important part of R&D and has now become an integral part of the development of any product group. New developments must make a clear contribution to the many issues of sustainability, such as circular economy/resource conservation and health/well-being.”