Asia Pacific Paint and Coating Market Outlook 2012


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Asia Pacific Paint and Coating Market Outlook 2012

  1. 1. “ We Accelerate Growth” Asia Pacific Paint and Coating Market Outlook Chemicals, Materials & Food Practice Frost & Sullivan Sep 2012© 2012 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. Table of Contents 1 Macro Economic Outlook and Drivers 2 Paints and Coatings Industry Outlook 2
  3. 3. Macroeconomic Scenario- Asia still strong led by China, Indiaand ASEAN 5 and a rebound from Thailand and Japan Regional GDP Growth 15 World% 10 ChinaGDP Growth India 5 Asean-5 Africa 0 2007 2008 2009 2010 2011 2012 Europe -5 United States Source: IMF(World Economic Outlook, 2011)/ 2012  2011: Global World growth slowed down to 3.8% from 5.2% in 2010. Developing Asia also slowed to 7.9% from 9.5% in 2010. China and India key growth regions  2012 : Global World Growth estimated at 3.3%, ( 2.5% by world bank) Developing Asia : 7.3%. ASEAN 5 gaining importance along with China and India 3
  4. 4. Asia : One region, many countries , different growthrates……means different strategies for different markets GDP Growth of APAC Countries China Per capita paints India High Growth <5kg Indonesia Focus- Greater penetration Vietnam Malaysia Philippines 2012 Thailand Taiwan 2011 HK Per capita paints 2010 SKorea >13kg Singapore Focus- Greater push to high-end ANZ technologies Japan -5 0 5 10 15 20 GDP Growth % 4
  5. 5. Key Drivers of Growth in ASIA/ ASEAN Growth in Growing Construction, Middle Class/ Demographics Infrastructure Purchasing and power Manufacturing 5
  6. 6. Population favors Indonesia, Vietnam and Philippines Population of Top 20 Population Countries 2025 2010 Source: United Nation Populations Fund 6
  7. 7. GDP Per Capita expected to grow in line with economicgrowth GDP - POPULATION CHART 2010 - 2015 1,800 1,600 1,400 GDP (US$ Billion) Indonesia 1,200 1,000 Thailand 800 Malaysia 600 Vietnam 400 Philippines 200 - 0 50 100 150 200 250 300 POPULATION (million) 2010 2015 Size of bubble indicates per capita GDP Source: IMF, Analysis: Frost & Sullivan • Indonesia and Vietnam are predicted to be the fastest growing countries in next 5 years with increase in GDP per capita are likely to be 9% and above 7
  8. 8. Asia expected to receive high investments in infrastructureProjected Infrastructure Investment (Global), 2005-2030 Total Water $22,610bn Power $9,000bn Road & Rail $7,800bn North America Europe Air/Seaports $1,590bn 5,000 4,000 4,000 3,000 3,000 2,000 Middle East 2,000 1,000 400 0 300 1,000 0 200 100 0 Latin/South America Africa Asia/Oceania 6,000 800 10,000 600 8,000 4,000 400 6,000 2,000 200 4,000 2,000 0 0 0 Source: Morgan Stanley M65B-18 8
  9. 9. Indonesia 9
  10. 10. Individually none of the ASEAN countries figure in top 10 globally,but as a region ASEAN is likely to become 8th largest automotivemarket by 2018 after China, Japan, India. In 2010, ASEAN was 9th largest market 2015 it would become 8th largest market. Country Sales 2010 Sales 2015 Sales 2018 1 China 17,212,891 1 China 29,010,852 1 China 33,391,276 2 USA 11,562,701 2 USA 16,466,283 2 USA 16,970,585 3 Japan 4,891,452 3 India 5,788,462 3 India 9,039,806 4 Brazil 3,363,445 4 Brazil 5,364,935 4 Brazil 6,287,188 5 Germany 3,109,641 5 Japan 4,591,476 5 Japan 4,517,218 6 India 2,712,587 6 Germany 3,850,511 6 Russia 4,025,975 7 France 2,669,402 7 Russia 3,429,031 7 Germany 3,968,411 8 UK 2,260,881 8 ASEAN 3,140,684 8 ASEAN 3,634,697 9 ASEAN 2,226,965 9 France 2,704,451 9 UK 2,897,909 10 Italy 2,128,492 10 Italy 2,563,360 10 Italy 2,793,822 • AFTA (ASEAN Free Trade Agreement)- will encourage regional hubs for manufacture • Healthy rivalry among various countries to attract investments • Growth hungry Indian and Chinese companies vying for this market • ASEAN is a competitive production base, net exporter with strong competencies in certain product ranges. Rebound seen in Thailand after floods • Japan expected to see the highest growth in 2012 after 2011’s earthquake and tsunami 10
  11. 11. Table of Contents 1 Macro Economic Outlook and Drivers 2 Paints and Coatings Industry Outlook 11
  12. 12. Asia’s share of paints and coatings has increased in linewith economic growth Europe: 2.6% CAGR Growth 34.6 % 27.6 % Middle East: 7.9% CAGR Growth Asia Pacific:America: 2.5% CAGR Growth 10% CAGR 1.6 2 % % Growth 32.9 % 25.9 % 40% 27% Africa: 6.9% CAGR Growth 3.9 4.5 2001 % % 2010 12
  13. 13. APAC market worth over $62 billion in 2011. Growth rate is12-15 % APAC Paint & Coatings Market Size ( 2011 ) Paint and Coatings Market: Percent of Paint and Coatings Market: Percent of Revenue by Segment Revenue by Country 1% 3% 13% 10% 5% 2% 4% 1% 1% 1% 0% 3% 1% 11% 1% 13% 2% 6% 24% 12% 0% 65% 14% 6% Automotive -OEM Decorative Protective Australia Indonesia Philippines Thailand Automotive - Refinish Marine Wood China Japan Singapore Vietnam Can Other Industrial Hong Kong Malaysia South Korea Coil Powder India New Zealand Taiwan 13
  14. 14. Japan most advanced market while China is the largest Developed Market Japan • Rapidly developing markets for paints. • A mix of high end and low cost coatings South Korea • Japanese market is mature and has become stagnant- some rebound Australia expected in 2012 • Manufacturers have resorted to eco- friendly coatings to boost profitability and to gain competitive advantage China • Focus on high end value paints Low-end Coatings India High-end Coatings Thailand Malaysia• Relatively more price-conscious consumers Indonesia• Low cost coatings • South Korea and Australia are maturing• Scope for improving quality markets, and moderate growth is Vietnam expected in the next two years • The growth of eco-friendly coatings, Myanmar though, is expected to outpace the Underdeveloped Market market *Note: Bubble size indicates size of the coatings market 14 14
  15. 15. High raw material costs puts pressure Key Market Drivers and Restraints, Asia Pacific, 2011-2012 Greater Economic Growth in APAC regionMarket Drivers Increase in Purchasing power- Rise in Middle Class Growth in end-use sectors- construction, automotive etc, increasing investment in Infrastructure Mergers & acquisitions and New technologies Slower adoption of technology than expectedMarket Restraints Local companies cannot compete on R&D, marketing, branding Reduced Export Demand from Western economies Escalating Prices of Raw Materials as a result of rising crude oil prices as well as developing markets increased consumption of these raw materials High Medium Low Source: Frost & Sullivan analysis. 15
  16. 16. Key Growth Segments- Construction and Infrastructure key growthindustries • Global construction spending to slow to < 5% p.a. Asia constn spending to increase by 9%p.a • Japan – rebuilding from earthquake. Thailand- rebuilding after floods • China- growth in west,/ interior regions as per 12th 5 yr plan . India rising middle class and urbanization drives housing • Singapore drop in construction sector, sustainability and productivity key • Indonesia spending on construction to increase in line • Korea- grew by 6% last year to become the largest in new orders- 52 billions$ but slow down expected in 2012 due to global crisis • Challenges also seen in China due to high costs of labor and raw materials and lack of competitive tech • Emerging opportunities in Vietnam and India • Industrial sector expected to grow at 6-8% in coming decade • Car sales and demand to slow in H-1 2012 and is expected to pick up later in ASEAN while China and India continue to drive demand • Thailand is expected to drive the demand through pent up demand after floods and disruptions in supply chain • Export market to slow • Japanese players to bounce back • China has the largest demand for car production. 16
  17. 17. Key Growth Segments- Decorative and Protective coatings expectedto see higher growth rates than other segments • 2011 Market Size: USD 15 Bn deco • Key countries: China and India, Indonesia • Market drivers: Growth in construction industry and ecofriendly coatings • Market restraints: Rising raw material prices, presence of numerous unqualified coating suppliers. • 2011 Market Size: USD 9-11 bill • Key countries for marine: Vietnam, Japan and South Korea, Protec China tive • Market drivers: Environmental drive to antifouling paints, and growth in the ship maintenance market, investment in marine industrial infrastructure deco • Market restraints: Rising crude oil prices, rise in metal prices, rising global crisis auto • 2011 Market Size: USD 6.3 Bn • Key countries: China, India, Thailand and Indonesia • Market drivers: Growth in production and domestic sales, pent up demand in Thailand • Market restraints: Rising raw material prices and competitive pricing in the automotive industry. 17
  18. 18. Key countries driving growth- China, India, Indonesia and Vietnam besides rebound seen in Japan and Thailand Growing segments: Industrial and China India  Growing segment: Decorative segment, Decorative coatings automotive and protective  Market Drivers: Growing middle class Market Drivers: High growth end-industry, population, increased sale of premium paints in China as hub for 3 C manufacture, urban areas. increasing commitment to green, growth in  Market Restraint: No mandatory standard for West China/ second tier cities regulating lead in paints or VOC emissions, so Growth : 10-15%p.a slow shift to green expected  Growth: 13-15%p.a ASEAN Vietnam Highlight - Growth in marine and wood coatings  Growth Regions: Vietnam and Indonesia - 70% of raw materials imported  Market drivers: High potential growth region driven by - Growth 10%p.a increasing spending power and continuous economic development, Increasing environmental awareness . Green labeling, worker safety on the rise in Singapore/ Malaysia. Indonesia Highlight Thailand on a rebound - Large population and potential to grow -  Market restraints: Rising raw material prices/ inflation is a mainly decorative and protective concern - Constn sector to increase to 9% of GDP - Growth of paints >8% p.a 18
  19. 19. Trends in Decorative Coating- Construction spending drivesdecorative. Low VOC, functional coatings the trend Decorative coating Overview and trends • Decorative coating market grows parallel with the activity in construction and renovation of commercial and residential .Countries such as China , India, Indonesia has a high demand for Decorative paints. Others 15% • Companies like Nippon and Akzo Nobel are very active in the Indonesia decorative coatings market with environment friendly paints (reduction 5% of voc) in paint • Major driver includes rising paint consumption per capita due to trends China in interior decoration and standard of living in Asia PacificAustralia 43% 6% • Development of green and sustainable building in Asia-Pacific region (for e.g. countries like Australia, Singapore, New Zealand) will be a driver for decorative coatings Japan • 3 tech trends: sustainable coatings (energy / fuel saving), functional/ 15% smart coatings ( e.g dirt resistance), ecofriendly ( low VOC, India 16% formaldehyde free, water borne) 19
  20. 20. Marine coating- Korea and China drive this market Marine Coatings Overview and trends • Marine coating is estimated at about 6% of coating business. • Ship Building moved to Asia- South Korea, China and Japan leading Ship building countries globally. They take up 80% share of ship Singapore Others building globally 3% 8% • New shipping hubs in Vietnam, Philippines and India. Thailand • In future high quality paint per litre value is expected to increase due 6% to rising cost of raw materials • Innovations in Copper and Tin free anti fouling system to increase. Glass flake epoxies for higher abrasion resistance to increase. China 46% Coatings focused on reducing drag and increasing fuel efficiency on Japan 18% the rise South Korea 19% 20
  21. 21. Protective coating – China drives this market. Japan and Thailandrebound. Increasing investment seen in Indonesia and India Protective coating Overview and trends • Protective coatings take up about 12-14 % of total paint and coating market share in Asia pacific Australia 2% Others • China leads the market for protective coatings. South Korea 6% • High growth of industrial sector like Energy and power sector, Oil and 3% gas units, Infrastructure Sector and manufacturing industries promotes India the usage of protective coating 5% Japan • Companies like AkzoNobel and PPG are very active in this segment 6% and they investing in R&D to develop new eco friendly products with better functionality and emphasis on environment friendly product such as low voc and water based China 78% 21
  22. 22. Automotive Coating- Besides China and India, pent updemand from Thailand and Japan drive growth Automotive coating Overview and trends • Automotive coating market grows parallel with the production and car sales in Asia pacific ,Countries such as China ,Japan and India has a Thailand high demand for Automotive paints. Pent up demand from Thailand is 2% Others expected to increase in 2012 4% India • Rebound expected from Japanese players like Honda, Toyota in 2012 South 6% • Japanese companies like Nippon and Kansai are very active in this Korea market followed by BASF and PPG. 7% • Auto companies are generally more environmentally conscious and demanding ecofriendly materials which will drive coatings like Waterborne & UV curable coating China 56% Japan 25% 22
  23. 23. Major companies are multinational or regional in operations……smallcountry centric companies may lose out with global tradeKey Takeaway: Nippon Paint and Akzo Nobel have a wide presence in the Asia Pacific coatings market, further reinforcing their market revenue. Key Participants, Asia Pacific, 2011 India South Korea Asian Paint KCC Berger Samhwa Kansai DPI / Nooro Thailand Japan TOA Nippon Paint AkzoNobel Kansai Nippon Paint SKK Malaysia Taiwan Nippon Paint Yungchi AkzoNobel AkzoNobel Jotun Kansai Indonesia China AkzoNobel Nippon Paint Nippon Paint AkzoNobel Mowilex Valspar Philippines Singapore Vietnam Hong Kong Australia & New Zealand Boysen Nippon Paint AkzoNobel AkzoNobel Dulux Charter Chemical Valspar AkzoNobel 4 Oranges Nippon Paint Dutch Boy Jotun Nippon Paint Camel Paint 23
  24. 24. Industry dynamics differ by segment: Decorative paints is highvolume business relying on channel push and advertising pull.Industrial coatings rely on technology and service Architecture  Presence of MNC’s growing in the region with greater investments and commitment – e.g Akzo, Nippon, KCC  Local companies under pressure to grow through tie-ups with MNC’s or expanding to new markets- e.g Asian Paints, TOA, Yung Chi  Continued investment in Branding, distribution network, new product introductions Industrial  Key Players include Jotun, Nippon, KCC, PPG  Players need to drive eco friendly practices and coatings  Technology, service and reliability of company is important  As Asian end users expand globally, Asia paint companies like KCC, Nooru, will expand outside Asia Automotive  Industry very price sensitive and pro environment  Key paint companies continue to focus on developing eco friendly process and key account relationships  Strong presence of Japanese paint companies like Kansai and Nippon 24
  25. 25. Last Word  In Rapidly developing markets such as China and India, we note that market leaders are dominating by focusing on volume sales at affordable prices. This helps build brand awareness and gain popularity and recognition amongst the masses. Nevertheless, premium products are also sold to boost profitability. Focus on second tier cities/ cities in the West or interior regions in China  Much of the focus is now also shifting towards emerging markets mainly Vietnam and Indonesia. Volume is the name of the game in these markets. Domestic suppliers resort to competitiveMajor I are multinational or regional in operations……small country pricing as the sole competitive strategy. Established paint manufacturers are leading throughcentric companies may lose ensure they have a reasonably wide product range to cater product offering and quality but also out with global trade to low to high price needs. Increase in competition and expansion expected as many companies are eyeing these markets  In mature markets such as Australia and Singapore, we note that manufacturers focus more on product differentiation to standout against the competition. Focus is on eco friendly, sustainable coatings or higher functionality products. Quality and innovation are also key drivers in these markets  Sustainability and green initiatives will continue. Growth in point of sales tinting seen in countries such as Malaysia. Mid tier expected to grow as companies push to offer more choices in this space 25
  26. 26. For Additional Information Donna Jeremiah Carrie Low Corporate Communications Corporate Communications Asia Pacific Asia Pacific +61 (0) 8247 8927 +603 6204 5910 Jessie Loh Corporate Communications Please log on to our Paint Frost Asia Pacific website at +65 6890 0942 for more info. 26