Asia Pacific Paint & Coatings Market Feb09


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Asia Pacific Paint & Coatings Market Feb09

  1. 1. “ We Accelerate Growth” Asia Pacific Paint & Coatings Market What Lies Ahead! Sheila Senathirajah, Senior Industry Analyst Chemicals, Materials & Food Practise 17th February 2009 © 2009 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the prior written approval and consent of Frost & Sullivan.
  2. 2. Poll Question 1 During this economic downturn, do you anticipate the APAC Paint & Coatings industry to fair better than the Western region Paint & Coatings industry? • Yes • No February 2009 2 APAC Paint & Coatings Market
  4. 4. ASIA PACIFIC ECONOMIC OUTLOOK February 2009 4 APAC Paint & Coatings Market
  5. 5. Macroeconomic Scenario Asia Pacific Economic Outlook Impact of crisis on APAC Paint & Coatings Market The Market Regions GDP (Annual Percent Change) for 2003-2013 outlook. • The credit crisis has contributed to a significant shift in the 2009 regional • Frost and Sullivan anticipates that global economy will continue to deteriorate in the first half of 2009 • This will be followed by a slow recovery in 2H 2009 • The Paint & Coatings industry in Asia will be affected by the global slowdown although we forecast this will not hit the region as severely as in developed countries • In the midst of the crisis we forecast Asia will also benefit as coating companies in the US and EU come under significant cost pressures • This presentation will review the current crisis, its impact on the Paint & Coatings industry and the opportunities that will be created in 2009 February 2009 5 APAC Paint & Coatings Market
  6. 6. Macroeconomic Scenario Asia Pacific Economic Outlook GDP Growth of Key Economies 14 The Market Wor l d Regions GDP (Annual Percent Change) for 2003-2013 12 GDP Growth Eur opean 10 Uni on % Nor th 8 Amer i ca Chi na 6 Indi a 4 SEA 2 0 Source: 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (World Economic Outlook, Oct 2008) •Growth is slowing down worldwide but nonetheless, China will remain an engine for East Asia and even for global growth. February 2009 6 APAC Paint & Coatings Market
  7. 7. Macroeconomic Scenario Crude Oil Prices Crude oil prices 1998-2008 Crude oil prices Year 2008 Effect of crude oil prices on the Paint industry •Crude oil prices peaked in 2008 •More than 40% of the APAC paint industry is based on solvent based paints. •Price increases of paint products ranged from 10-20%, higher for solvent based paints.. •Oil prices have gone down this year and this is likely to soften the price impact. February 2009 7 APAC Paint & Coatings Market
  8. 8. ASIA PACIFIC PAINT & COATINGS MARKET ANALYSIS February 2009 8 APAC Paint & Coatings Market
  9. 9. Asia Pacific Market Size APAC Paint & Coatings Market By Value ( 2003-2007 ) 40 35.2 35 29.7 30 The APAC paint 24.6 USD Bill 25 market makes up 21.6 20 19.5 approximately 30- 35% of the global 15 paint market !! 10 5 0 2003 2004 2005 2006 2007 Source: Frost & Sullivan Market Situation • 2007 APAC paint market was valued at USD 35.2 Billion at 13.0 Million tonnes • CAGR for 2003-2007 = 15% • 2008- Slowdown began to be felt in 2H. Q4 negative growth. Overall growth rate at only 8-10%. • 2009- Continued slowdown. Overall estimated growth rate 5-6%. • 2010- Market to slowly recover. February 2009 9 APAC Paint & Coatings Market
  10. 10. Asia Pacific Market Split By Country Value Split By Country Overview China- 2nd largest market in the world after US. ThailandAustralia M alaysia 2% 5%N Zealand ew Paint production has tripled in last 5 years to 2% 1% approximately 6Mtonnes Korea Vietnam 9% India- Growth market. Decorative : Industrial Phillipines 1% 1% paint ratio (value) stands at 70:30. Asean 5 -Combined represent 10% of the total Japan APAC market. Much of the growth is seen 17% coming from Thailand, Indonesia and Vietnam. Indonesia- is forecasted to be the fastest China Taiwan 46% growing paint market in Asia over the next 2-3 2% years and to be the 2nd largest growth market in Indonesia Asia volume wise. 3% India 9% Japan- Mature and experiencing minimal growth Hong KongSingapore 1% 1% Korea- mainly driven by decorative, automotive and marine coatings (~50%of entire market) Source: Frost & Sullivan Note: Asean 5 consists of Vietnam, Thailand, Indonesia, Singapore and Malaysia February 2009 10 APAC Paint & Coatings Market
  11. 11. Asia Pacific Paint Consumption Per Capita •Low paint consumption per capita in high growth market indicates there’s lots more to consume!!! 25 22.4 20 Kg per Person 15.1 15 14.3 11.2 11.5 10.6 10 9.0 6.7 6.5 4.7 5 2.9 2.6 2.8 1.2 0 New Zealand Thailand Phillipines Indonesia Hong Kong Taiwan Vietnam Australia China alaysia India Japan Singapore Korea Source: Frost & Sullivan M • World Paint consumption per capita is approximately 6.6kg/person • NA and WE approximately 15-17kg/peron • Largely untapped markets in Asia region-particularly India with its large population and good paint market growth. February 2009 11 APAC Paint & Coatings Market
  12. 12. Asia Pacific Market Split By Application Segment Value Split By Segment Overview Decorative coatings Other Industrial •Largest individual segment 16% •CAGR for 2003-2007 = 10.53% Decorative Coil 29% 3% Can • Industrial Coatings 2% •Good growth in emerging markets in Industrial Asia region Wood •Due to attractive labour rates & export 12% demand. OEM 10% Protec 10% Refinish Marine Powder 4% 5% 9% Industrial Coatings likely to see better Source: Frost & Sullivan growth compared to decorative coatings. February 2009 12 APAC Paint & Coatings Market
  13. 13. MARKET DRIVERS & RESTRAINTS February 2009 13 APAC Paint & Coatings Market
  14. 14. Market Drivers Greater • GHS and REACH APAC is fairing better provide a more Economic than Western economies. standardized Growth in Platform of growth for APAC approach to ensuring world paint industry Shift to region chemical safety. Environmentally friendly & Safer coatings MARKET DRIVERS Continual Industrial Relocation Increased • Newer avenues of Infrastructure manufacturing hubs Spending • Continued spending in become attractive this area to bolster and • Examples: Vietnam & boost economy Thailand. • Move to urbanisation February 2009 14 APAC Paint & Coatings Market
  15. 15. Market Restraints • Drop in production growth • Lowered demand Poor from Western as of second half 2008 Economic economies. • To continue till late 2009 Outlook Reduced Export Demand MARKET RESTRAINTS Volatility in Crude Oil Prices • Uncertainty leads to Unstable fluctuating price hikes Political • Raw materials make up Conditions • Continued uncertainties 50-70% of paint product affects investor and costs depending on the consumer confidence alike. technology used. February 2009 15 APAC Paint & Coatings Market
  16. 16. INFLUENCING END-USER INDUSTRIES February 2009 16 APAC Paint & Coatings Market
  17. 17. Decorative Coatings • APAC region makes up approximately 30% of the global Decorative market! • Growth influenced by GDP growth, purchasing power, construction & refurbishment industry • Post 2007, the global market is estimated to fall by approximately 30%. Decline due to reduction in housing construction projects. Growth Indicators Country 2009 GDP Growth 2009 Per Capita Personal Steel Consumption *IMF report as of Oct 08 Disposable Income Growth rate (%) Housing prices % Thousand USD CAGR (2005-2012) dropped 8-10% in 2009 to boost real China 9.3 0.8 4.94 estate market India 6.9 0.6 3.81 Growth dampened Indonesia 5.5 0.7 3.46 by poor global Thailand 4.5 1.7 1.59 economic outlook and local political Vietnam 5.5 Na Na tensions. Market trend: • ‘Green Products’ featuring low VOC & low odour • Growth of Tinting & DIY market. ( APAC = 18% DIY , Westernised countries = 25-50%) February 2009 17 APAC Paint & Coatings Market
  18. 18. Industrial Coatings Protective sector to do relatively well followed by Marine segment. Demand from? •The rising oil prices over the last year have led many oil firms to invest in oil drilling platforms. •Also upcoming government driven infrastructure development projects. •Continued growth of shipbuilding industry as well as trade activities. I.e: In South Korea, due to back log of shipping orders signed in the earlier years, 2009 will show good projections. Impact only felt next year since shipping orders for this year has really slowed down. Automotive OEM coatings • Heavily impacted due to reduction in car production Industrial Wood Coatings • Highly export market • Sharp drop in demand from US and WE have reduced size of wood coatings market February 2009 18 APAC Paint & Coatings Market
  19. 19. INDUSTRY FOCUS February 2009 19 APAC Paint & Coatings Market
  20. 20. Technology Trends & Key Legislation Technology Trends 1) Going Green • Restricting levels of VOC’s and Eliminating use of hazardous heavy metals (lead/chromate) • APAC ratio of solvent base and water base is 60:40 2) Smart Coatings • Increased development into functional paints that interact with the stimuli in the environment. • Generally requires the integration of nanotechnology. Key Legislations 1) GHS (Globally Harmonised System of Classification and Labelling of Chemicals). 2) REACH (Registration, Evaluation, Authorisation and Restrictions of Chemicals) Many countries in APAC are on their way to implementation. February 2009 20 APAC Paint & Coatings Market
  21. 21. Growth Opportunities Focus Countries •Focus on environmentally friendly products •Trend towards mergers and acquisitions and emergence of key local players •Nov 08- RMB4 trillion stimulus plan to consists of massive infrastructure construction and further financial policy adjustments. CHINA •New foreign investment (FDI) law •Government to promote country as a shipbuilding nation •Growth in infrastructure projects INDONESIA VIETNAM •Growingpopularity as a •Tagged to be the fastest growing manufacturing hub. paint market in Asia over the next APAC 2-3 years. •Decorative market migrating from FOCUS low tier to mid and premium tier. INDIA •Infrastructure Development to overhaul THAILAND •Key driver for paint industry growth standard of living •Greaterscope for paints usage •Regional centre for Japanese OEM’s given the huge population and •Technological trends towards ‘Green growing affluence of Middle Class products’. Thai government has Indians initiated the eco-car project. February 2009 21 APAC Paint & Coatings Market
  22. 22. CONCLUSION Summary Points Despite economic slowdown, growth in Asia is expected to remain resilient. Overall 2009 growth projected stands at only 5-6%. Growth of Industrial coatings is set to do better than Decorative coatings- mainly in protective coatings segment. Growth to come from domestic-oriented demand stemming mainly from infrastructure development projects set in place by local governments. Economic downturn tends to accelerate the elimination of small companies. Trend towards Mergers& Acquisitions as well as emergence of key local players (mainly China). Technology trends towards ‘Green Products’ and “Smart Coatings’ February 2009 22 APAC Paint & Coatings Market
  23. 23. Poll Question 2 How confident are you that the Paint & Coatings market in the APAC region will slowly start to recover by the second half of 2009? • Very confident • Somewhat confident • No confidence • Difficult to predict February 2009 23 APAC Paint & Coatings Market
  24. 24. ABOUT PAINT FROST (A Growth Partnership Service dedicated to the Paint & Coatings industry) February 2009 24 APAC Paint & Coatings Market
  25. 25. What is is a one-stop-solution to get key insights on the Asia Pacific paint & coatings market. This is a very user friendly, interactive web base service, specially designed to support your business and organizational decision-making activities. Most comprehensive updated coverage covering 14 countries, 10 paint segments and key metrics on market size, technology, market shares and more……. Accessible worldwide, 24/7 through a username and password Provides unbiased independent information supported by extensive primary research Provides history as well as future trends and forecasts for the APAC paint market Provides qualitative insights from paint experts who continuously track the market and provide segment summaries Easy to use report formats and data can be exported to Excel February 2009 25 APAC Paint & Coatings Market
  26. 26. Key Deliverables- Coverage REGION COVERAGE SEGMENTS -14 Countries -10 Paint Segments • Decorative Coatings • Automotive OEM Coatings Deliverables cover • Automotive Refinish 14 countries over 10 • Industrial Wood Coatings market segment per • Marine Coatings country • Protective Coatings • Powder Coatings • Coil Coatings • Can Coatings • Other Industrial Coatings February 2009 26 APAC Paint & Coatings Market
  27. 27. Key Deliverables Key A) Interactive Reports Deliverables 1) Market Sizing & Forecasts • Volume, Value, CAGR) • Market Sizes are available for 4 yrs historical and 2 yr forecasts • Updated yearly by Qtr 2 through primary research with over 300 interviews 2) Technology Shares 3) Company Shares 4) Tier Shares (Decorative market only ) B) Segment Summary Reports- 10 application segments C) Company Profiles- 100 Regional & Local companies covered. Updated yearly Additional Growth Indicators-Economic and end-use trends. Include GDP growth rate, Deliverables population etc. Other industry trends including • Yearly Analyst Briefing on paint outlook provided in addition to the above. • Consulting hrs available on request February 2009 27 APAC Paint & Coatings Market
  28. 28. Deliverables- Interactive Reports Interactive Reports Choose how you wish to slice and dice the market data. February 2009 28 APAC Paint & Coatings Market
  29. 29. How Data is Presented-1/2 1. Market Size By Value and Volume 2. Competitor Split By Value Percent •4year historical and 2 year forecast data provided This is the type of data and how it is 3. Technology Split By Volume Percent 4. Split By Tiers Volume& Value presented *Data can also be exported to excel. *applicable for decorative market only currently February 2009 29 APAC Paint & Coatings Market
  30. 30. How Data is Presented-2/2 2. Also provides a bar 1. Shows you an chart representation overview of the of how big each entire APAC country is in relation market in terms of to one another. volume and value & CAGR. 3. Per Capita Paint Usage is also presented. This indicates the potential of the market in relation to paint sales Ideal for presentation at company meetings-especially regional based companies February 2009 30 APAC Paint & Coatings Market
  31. 31. Deliverables- Segment Summaries Market Summaries- are paint segment overview reports provided in a pdf format. They cover & review the entire application segment in terms of market drivers, restraints, competitive landscape, regional outlook and technology trends. These summaries can be downloaded and are typically 7-9 pages long February 2009 31 APAC Paint & Coatings Market
  32. 32. Deliverables- Company Profiles Company Profiles are overviews of an individual company provided in a pdf word format. It details out an individual company’s financials, business activities market share, manufacturing and R&D locations and strengths & weaknesses. These profiles can be downloaded and are typically 7-9 pages long There are 100 profiles altogether including key companies from China. Companies listed are MNC’s as well as local players February 2009 32 APAC Paint & Coatings Market
  33. 33. Next Steps Interested in the above deliverable and want to know more? Please log on to the Paint Frost website at Click on the ‘Contact Us’ button and leave us your details Additionally you can also register for the following: Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities ( Frost & Sullivan’s next Chairman’s Series on Growth: ( February 2009 33 APAC Paint & Coatings Market
  34. 34. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? •Growth Forecasts? •Competitive Structure? •Emerging Trends? •Strategic Recommendations? •Others? Please inform us by taking our survey. February 2009 34 APAC Paint & Coatings Market
  35. 35. Q&A Session February 2009 35 APAC Paint & Coatings Market
  36. 36. For Additional Information Steve Lee Strategic Account Manager Chemicals, Materials and Food, Asia Pacific (65) 6890 0914 February 2009 36 APAC Paint & Coatings Market
  37. 37. Disclaimer Frost & Sullivan takes no responsibility for any incorrect information supplied to us by end-users or suppliers. Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. This report contains valuable and confidential market information for the use by Frost & Sullivan only hence it is for internal use and not for general publication or disclosure to third parties. No part of this report may be given, lent, resold, or disclosed without written permission to Frost & Sullivan. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the permission of Frost & Sullivan. For information regarding permission please write to: Frost & Sullivan Chemicals, Materials and Food Practice 100, Beach Road, #13-04/ 13, Shaw Tower, Singapore 189702 February 2009 37 APAC Paint & Coatings Market