Macroeconomic Trends

in the Coatings Industry

and the Importance of Sustainability

Kristin Johansson

Editor of PCI Magazine

Shanghai, November 22, 2013

Global coatings consumption

Global consumption of coatings projected

to be 67 billion lbs. in 2012 – worth U.S. $120 billion

Data courtesy of Kusumgar, Nerlfi & Growney

Region 2009 2012 (est.) % AGR

Asia Pacific 23.3 28.5 7

Europe 17.2 18.5 3

North America 12.3 13.6 4

South/Central America

4.4 5.1 5

Rest of World 1.5 1.7 5

TOTAL 58.7 67.4 5

Coating volume up

15% since the 2009

global recession

Asia-Pacific leading

the way

Growth slowed in 2012

due to global and local

economic uncertainties

Data courtesy of Kusumgar, Nerlfi & Growney

Global coatings volume

Increased vehicle production

Growth in construction spending

Increasing urbanization

Growing global economy

Factors contributing to growth

Global pigments market value/volume

Revenues expected to reach $14.7 billion in 2018

Growing at a CAGR of 4.5% from 2013-2018

Pigment volume is expected to reach 4.4 million tons by 2018

The coatings industry accounts for 38.5% of overall end users

Inorganic pigments account for over 51% of global demand

The specialty pigments market is growing at a CAGR of 5.4%

Asia Pacific accounts for 40.7% of global demand in 2011

TiO2 industry down in profitability in 2012. Manufacturing costs are likely to

remain elevated during the next two to three years. TiO2 demand in China

growing at 7-8% per year

Pigments (Organic, Inorganic & Specialty) Market Global Industry Analysis, Size, Share, Trends,

Growth and Forecast, 2012 – 2018, Transparency Market Research

The global pigments market

Global megatrends

Urbanization Globalization Social trends Energy trends

E-Mobility Health/Wellness Sustainability

Increased use of renewable materials

Due to rapidly depleting fossil fuels, escalating energy consumption,

growing global population and rising environmental awareness

Market to reach $66.1 billion by 2018

Europe represents the largest regional market

Asia-Pacific represents the fastest-growing market

“Renewable Chemicals: A Global Strategic Business Report”, Global Industry Analysts Inc.

Green industrial coating Asia

Other global trends

Government regulations and market demands are driving coatings

formulators to develop:

Low-VOC waterborne coatings

High-solids solventborne coatings

UV-cured coatings

Coatings that will save energy once applied to a surface

Trends in the pigments arena

Pigments that are: Easily

dispersible

IR reflecting

High Performance More lightfast

Better hiding

Industry challenges

Fluctuating and volatile prices of key raw materials and crude oil

Supply shortages/finite amount of natural resources/growing population

Increasingly stringent regulatory environment

Developing water-based coatings that have the same performance

properties as their solventborne counterparts

Buzz words

Green

Smart

Nano

Sustainability – more than a buzz word

Evolution of ‘Sustainability’

Article headlines in 2000

Sustainability used in a business sense

Gaining Sustainable Advantage in the

Coatings and Resins Industries

How to Retain Customers in a Slowing

Economy

ICI Sets Sights on Stronger Growth,

‘Sustainable Development' Objectives

Article headlines from 2002-2008

Articles refer to sustainability in terms of “green” technology

Green Solutions for Substrate Wetting and

Defoaming

A Green Tool for Selective Oxidation

Reactions

Green Coatings Truths and Myths

How to Formulate "Eco-Friendly"

Anticorrosive Coatings

Evolution of ‘Sustainability’

Article headlines in 2008

Sustainability explodes

Sustainability The New Nano

RadTech Offers Sustainable Manufacturing

Webinar

DuPont Facilities Help Chinese

Automakers Meet Sustainability Goals

B.L. Downey Co. LLC Reduces Carbon

Footprint With Lighting Retrofit

Evolution of ‘Sustainability’

Article headlines today

Sustainability is everywhere

Bio-Compatibility Products For Use in Sustainable Construction

Cognis Launches New Sustainability Internet Portal

Sustainability Secrets of Material Safety Data Sheets

New Paint Company Offers Biodegradable, Vegan and 100% VOC-Free Products

Coatings That Change Color and Eat Pollution

Efficiency and Sustainability Hot Topics at ACS

Sustainability Emerges as Key Focus in Architectural Coatings Market

Evolution of ‘Sustainability’

How do we define sustainability?

Fewer coats necessary

Longer service life

Fewer raw materials needed

Shorter processing time

Less energy/time required

Saves energy

Two products in one

Reduces fuel consumption

Reduces waste

Recyclable

Questions are now being asked

How do we measure and define sustainability?

Is our product really sustainable?

Will a competitor challenge our claim of sustainability?

How important is sustainability?

63% Important

27% Indispensible

80% In favor of developing a methodology to define and measure it

Data from 2013 European Coatings Congress

The sustainability consortium

Mission: to design and implement

credible, transparent and scalable

science-based measurement and

reporting systems

Driven by consumer market, but the

chemical industry, and specifically

paint, is now getting involved

Beginning a 3-year pilot phase as part

of its Product Environmental Footprint

(PEF) program – decorative paints

has been accepted as a pilot

http://ec.europa.eu/environment/eussd/smgp/product_footprint.htm

Journey to sustainability blog by Tony Mash

www.pcimag.com

Next steps?

References

1. “Global Paint & Coatings 2013-2018”, Kusumgar, Nerlfi, & Growney.

2. “Pigments (Organic, Inorganic & Specialty) Market Global Industry Analysis, Size,

Share, Trends, Growth and Forecast, 2012 – 2018”, Transparency Market Research.

3. “Renewable Chemicals: A Global Strategic Business Report”, Global Industry Analysts

Inc.

4. “Global TiO2 Pigment Producers Comparative Cost and Profitability Study, 9th Edition”,

TZ Minerals International.

5. Green Conference Asia, September 24-25, 2013, Shanghai, China.

6. The European Coatings Congress opening session, March 18, 2013.

7. The Sustainability Consortium, www.sustainabilityconsortium.org/.

8. European Commission, www.sustainabilityconsortium.org/.

Thank you!

Kristin Johansson

Editor

Paint & Coatings Industry Magazine

E-mail: kristin@pcimag.com

www.pcimag.com