According to the latest report released by IHS Chemical, the relatively fragmented situation of the global paint and coatings industry will be changed by new trends such as surging large-scale mergers and acquisitions and sustainable development. In 2016, the total sales of the world’s top ten companies were US$66.4 billion, accounting for only 49% of the total market of US$135 billion; the remaining share was shared by more than 7,500 companies.
Large-scale mergers and acquisitions are surging
In this industry, leading companies continue to acquire small enterprises, and large -scale mergers and acquisitions are also conducting large companies.
Sherwin-Williams, which ranks third in the world in terms of sales, announced in May last year that it would acquire Valspar, which ranked fifth, and originally planned to complete it in April this year. Due to a longer-than-expected review by the U.S. Federal Trade Commission, completion of the transaction is expected to be delayed until June. After the acquisition is completed, it will create a new largest manufacturer in the coatings industry (total sales in 2016 were US$16.3 billion, accounting for 12.1% of the world market share).
At the same time, PPG, which currently ranks first in sales in the world, is trying to acquire Akzo Nobel, which ranks second. After AkzoNobel successively rejected PPG’s acquisition offer, PPG announced on April 24 that it had raised its offer for AkzoNobel by 8% to US$28.8 billion, putting further pressure on the company.
On the same day, AkzoNobel confirmed receipt of the third unilateral, conditional acquisition offer from PPG, and said that its board of directors and supervisory board will carefully review and consider it together. The acquisition offer. If this merger occurs, the combined company will have sales of US$29 billion in 2016 and will be the world’s largest coatings manufacturer by far, with a market share of 21.5%.
Michael McGarry, PPG chairman and CEO, noted: “The coatings industry will continue to consolidate, and our acquisitions will include various regions and various end markets. We will continue to make various High-quality M&A at scale.”
Henrik Andersen, president and CEO of Hempel, another large manufacturer, also believes that the integration of the coatings industry is the need to adapt to the global development of business.
Emerging markets lead growth
While the coatings industry in North America and Western Europe is undergoing strong consolidation, the rest of the world is still dominated by small and medium-sized enterprises. In the Asia-Pacific region, small and medium-sized manufacturers with annual sales of less than US$500 million account for about 60% of the coatings market. As the largest consumer market for coatings in the world, the Asia-Pacific region is expected to gradually change in the future as large companies acquire small businesses and industry giants deepen their implementation of globalization strategies.
According to data from IHS Chemical, global coating production exceeded 54 million in 2016, with a value of approximately US$135 billion. Demand for Asian paints is growing faster than other regions, with consumption in this region accounting for 50% to 55%. Eric Linak, senior analyst of chemistry at IHS, said that the average annual growth rate of coatings demand in the United States from 2016 to 2021 is expected to be 3%, Western Europe has an average annual growth rate of 2%, and the average annual growth rate of global demand is about 4%.
The demand for coatings in emerging market countries/regions is growing at a higher rate. The Chinese market has the best growth prospects. The recent average annual growth rate is expected to be 6% to 7%, and India is 6.6%. %, Iran is 4% to 5%, Poland is 4%, and Saudi Arabia is 3% to 4%.
Pay more attention to sustainable development
Like other industrial sectors, paint and coatings companies are promoting sustainability through innovative products or processes. Andersen said: “The application market is paying more attention to sustainable products than ever before. More and more countries such as China have formulated stricter regulations and urge customers to pay more attention to sustainable coating products.”
PPG stated that the focus of sustainable development is to reduce energy consumption and emissions in the coating production process without affecting the quality and final appearance of the coating, and to minimize energy consumption and emissions in the coating production process. Reduce waste��Water production and consumption. Claus Rettig, chairman of Evonik’s resource efficiency business unit, believes that the requirements for sustainable development are to pay attention to the development of bio-based raw materials, water-soluble or low-VOC formulas, etc.
IHS Chemistry said that in the next five years, air pollution regulations will continue to promote the development of new coating technologies. Although the overall demand for coatings is growing relatively slowly, water-soluble coatings, high-solid coatings, powder coatings, ultraviolet curing coatings, etc. will have good growth prospects in the future.
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