Beating Powder Blues
The Western European market, which has been stable for some years now, is the most
mature market globally, with future growth at about 1.4% pa. Looking at Europe in a
global context with respect to powder coatings, there has been little growth in
comparison to Asia in the recent past, where in 2006, the market grew by some 14%,
leaving Western Europe behind with only 2% growth. This pushed Asian production to
account for 37% of the global powder coatings market, with Europe holding 36%.
However soaring production in Eastern Europe in recent years has helped the European
region as a whole to regain ground.
Italy remains the largest market in the region with production standing at over 100,000
tonnes per year and a domestic market being the largest in Western Europe at 85,000
tonnes. Here, trends such as the increasing popularity of metallic silver and gold powder
coatings are gaining ground in the white goods sector, along with increased use in the
finishing of Italian furniture. However, there is still some way to go in terms of
technology substitution in Italy as the majority of general industrial finishing is still
accomplished through liquid paints due to the traditionally aesthetically-led market
there. Reluctance to invest in powder technology rather than classic liquid finishes will
act as a brake on technology substitution in some countries.
Along with Italy, Germany and Spain are both over one million tonne paint markets, so it
is not surprising to see these two economies coming in at second and third place when it
comes to both powder coatings production and demand. Overcapacity in Germany has
led to a corresponding increase in their exports. Spain, along with the other top five
Western European economies is largely seen as mature. Here, production almost equals
demand for powder coatings, with imports and exports being fairly balanced.
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In Europe, the automotive sector looks set to drive an increase in the use of
clearcoats, but this is an opportunity which will be limited to countries with an
automotive industry.
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Hope is placed in UV-curable systems which offer durable, high-quality finishes
that are both energy-efficient and environmentally-friendly.
Refinement of
powder coatings based on non-hybrid chemistry is also expected.
Epoxy/polyester hybrids account for 47% of the powder coatings market of the ten
major Western the four major Eastern European economies covered in IRL’s recentlypublished report The Market for Powder Coatings in Europe, with pure polyesters
accounting for the second-largest market share (41%) as shown in the chart:
Investments look likely to hold the key to the future of the powder coatings sector in
Europe. These could extend to new techniques for coating a wider range of items,
establishment of new or more modern production facilities in Eastern Europe or
investments into further R&D in new technologies. Multinational resinmakers such as
DSM are apt to announce capacity expansions in multiple locations around the world at
the same time, for example DSM’s recent polyester powder coating resin capacity
expansions in Santa Margarida, Spain, and Schoonebeek in the Netherlands.
Simultaneously such companies continue to open R&D centres around the world in
pursuit of new technical developments.
Eastern Europe
Consolidation in Eastern Europe has been more prevalent in recent years as the region is
an attractive area for acquisitions for those in the west. The Czech Republic, Poland and
Russia have all seen powder coatings takeovers since 2006. Such examples include the
takeover of Balakom by AkzoNobel and the acquisition of Ekopowder by the
Protech/Oxyplast Group both in the Czech Republic. In the same year Tikkurila acquired
the Russian powder coatings producer Ohtinski zavod poroshkovyh krasok, and more
recently, Inver acquired Becker Powder Coatings’ operations in four European locations,
including Poland.
As a consequence, Eastern Europe becomes the single most important driver for growth
in the European region as a whole, and the market there looks set to grow at a rate
seven times greater than that of the Western Europe at 10% pa. The countries showing
greatest potential are Russia and Turkey with growth rates of 12% pa and 10% pa
respectively over the next five years.
Turkey is the largest powder coatings producer in Eastern Europe, producing them at a
level almost equal to that of Spain. Here, production is increasing steadily, with little
room for imports and emphasis being placed on exports instead. Strong growth
prospects are offered in white goods production, pipelines, aluminium profiles and
automotive applications.
Russia currently produces very little in comparison to Turkey, yet Russian demand is set
to grow at the highest rate seen in Europe. This significant growth is predicted as
indigenous producers will seek to compensate for substantial powder coatings imports
from other countries, such as Turkey. The fastest substitution of liquid for powder
coatings in Russia is currently occurring in architectural applications. However, some
gaps remain in powder coatings demand here as industrial production lines are not
always in constant use.
With much of the Western European powder coatings market being mature and
technology substitution generally reaching saturation point, future growth in the market
will come from Eastern European economies where investment and living standards are
both rising. If Western European producers want to remain competitive against both
Eastern Europe and Asia, they will need to continue to develop technologies and
applications to stay ahead of the game.
For more information please email Christopher Flanagan, Analyst at IRL and author of
the report, at the following address: cflanagan@brggroup.com