asia pacific paint & coatings market feb09

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Asia Pacific Paint & Coatings Market What Lies Ahead! Sheila Senathirajah, Senior Industry Analyst Chemicals, Materials & Food Practise 17 th February 2009 “ We Accelerate Growth” © 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.

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Page 1: Asia Pacific Paint & Coatings Market   Feb09

Asia Pacific Paint & Coatings Market

What Lies Ahead!

Sheila Senathirajah, Senior Industry Analyst

Chemicals, Materials & Food Practise

17th February 2009

“ We Accelerate Growth”

© 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.

Page 2: Asia Pacific Paint & Coatings Market   Feb09

2February 2009

APAC Paint & Coatings Market

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

Page 3: Asia Pacific Paint & Coatings Market   Feb09

3February 2009

APAC Paint & Coatings Market

Table of Contents

4

5

3

1 ASIA PACIFIC ECONOMIC OUTLOOK 3

ASIA PACIFIC PAINT & COATINGS MARKET ANALYSIS 72

MARKET DRIVERS & RESTRAINTS 12

INDUSTRY FOCUS 18

INFLUENCING END-USER INDUSTRIES 15

6 ABOUT PAINT FROST 22

Slide No.

Page 4: Asia Pacific Paint & Coatings Market   Feb09

4February 2009

APAC Paint & Coatings Market

ASIA PACIFIC ECONOMIC OUTLOOK

Page 5: Asia Pacific Paint & Coatings Market   Feb09

5February 2009

APAC Paint & Coatings Market

The MarketRegions GDP (Annual Percent Change) for 2003-2013

Impact of crisis on APAC Paint & Coatings Market

• The credit crisis has contributed to a significant shift in the 2009 regional outlook.

• 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

Macroeconomic Scenario Asia Pacific Economic Outlook

Page 6: Asia Pacific Paint & Coatings Market   Feb09

6February 2009

APAC Paint & Coatings Market

The MarketRegions GDP (Annual Percent Change) for 2003-2013

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Wor ld

Eur opean

Union

Nor th

Amer ica

China

India

SEA

Source: http://www.imf.org

(World Economic Outlook, Oct 2008)

Macroeconomic Scenario Asia Pacific Economic Outlook

GD

P G

row

th

%

GDP Growth of Key Economies

•Growth is slowing down worldwide but nonetheless, China will remain an engine for East Asia and even for global growth.

Page 7: Asia Pacific Paint & Coatings Market   Feb09

7February 2009

APAC Paint & Coatings Market

Source:edition.cnn.com/2008

Macroeconomic Scenario Crude Oil Prices

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.

Crude oil prices 1998-2008 Crude oil prices Year 2008

Page 8: Asia Pacific Paint & Coatings Market   Feb09

8February 2009

APAC Paint & Coatings Market

ASIA PACIFIC

PAINT & COATINGS

MARKET ANALYSIS

Page 9: Asia Pacific Paint & Coatings Market   Feb09

9February 2009

APAC Paint & Coatings Market

Asia Pacific Market Size

APAC Paint & Coatings Market By Value

( 2003-2007 )

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.

US

D B

ill

19.521.6

24.6

29.7

35.2

0

5

10

15

20

25

30

35

40

2003 2004 2005 2006 2007 Source: Frost & Sullivan

The APAC paint

market makes up

approximately 30-

35% of the global

paint market !!

Page 10: Asia Pacific Paint & Coatings Market   Feb09

10February 2009

APAC Paint & Coatings Market

Asia PacificMarket Split By Country

China

46%

Thailand

2%

Phillipines

1%

India

9%

Taiwan

2%

New Zealand

1%

Vietnam

1%

Singapore

1%Hong Kong

1%

Australia

5%Malaysia

2%

Indonesia

3%

Japan

17%

Korea

9%

Source: Frost & Sullivan

Value Split By Country Overview

China- 2nd largest market in the world after US.

Paint production has tripled in last 5 years to

approximately 6Mtonnes

India- Growth market. Decorative : Industrial

paint ratio (value) stands at 70:30.

Asean 5 -Combined represent 10% of the total

APAC market. Much of the growth is seen

coming from Thailand, Indonesia and Vietnam.

Indonesia- is forecasted to be the fastest

growing paint market in Asia over the next 2-3

years and to be the 2nd largest growth market in

Asia volume wise.

Japan- Mature and experiencing minimal growth

Korea- mainly driven by decorative, automotive

and marine coatings (~50%of entire market)

Note: Asean 5 consists of Vietnam, Thailand, Indonesia, Singapore and Malaysia

Page 11: Asia Pacific Paint & Coatings Market   Feb09

11February 2009

APAC Paint & Coatings Market

• 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.

•Low paint consumption per capita in high growth market indicates there’s lots more to consume!!!

Asia PacificPaint Consumption Per Capita

11.2

4.7

15.1

22.4

2.9

10.6

2.6

14.3

6.7 6.5

11.5

1.2

9.0

2.8

0

5

10

15

20

25Australia

Chin

a

Japan

Kore

a

Phillipin

es

Mala

ysia

Indonesia

Sin

gapore

Thailand

Hong K

ong

Taiw

an

India

New

Zeala

nd

Vie

tnam

Kg

pe

r P

ers

on

Source: Frost & Sullivan

Page 12: Asia Pacific Paint & Coatings Market   Feb09

12February 2009

APAC Paint & Coatings Market

Overview

Decorative coatings

•Largest individual segment

•CAGR for 2003-2007 = 10.53%

• Industrial Coatings

•Good growth in emerging markets in

Asia region

•Due to attractive labour rates & export

demand.

Asia PacificMarket Split By Application Segment

OEM

10%

Can

2%

Coil

3%

Other

Industrial

16%

Powder

9%

Refinish

4%Marine

5%

Protec

10%

Industrial

Wood

12%

Decorative

29%

Value Split By Segment

Source: Frost & Sullivan

Industrial Coatings likely to see better

growth compared to decorative coatings.

Page 13: Asia Pacific Paint & Coatings Market   Feb09

13February 2009

APAC Paint & Coatings Market

MARKET DRIVERS & RESTRAINTS

Page 14: Asia Pacific Paint & Coatings Market   Feb09

14February 2009

APAC Paint & Coatings Market

• Continued spending in

this area to bolster and

boost economy

• Move to urbanisation

• GHS and REACH

provide a more

standardized

approach to ensuring

chemical safety.

• Newer avenues of

manufacturing hubs

become attractive

• Examples: Vietnam &

Thailand.

Greater Greater

Economic Economic

Growth in Growth in

APAC APAC

regionregion

Increased Increased

Infrastructure Infrastructure

SpendingSpending

Market Drivers

MARKETDRIVERS

Shift to Shift to

Environmentally Environmentally

friendly & Safer friendly & Safer

coatingscoatings

� APAC is fairing better

than Western economies.

� Platform of growth for

world paint industry

ContinualContinual

Industrial Industrial

RelocationRelocation

Page 15: Asia Pacific Paint & Coatings Market   Feb09

15February 2009

APAC Paint & Coatings Market

• Continued uncertainties

affects investor and

consumer confidence alike.

• Lowered demand

from Western

economies.

• Drop in production growth

as of second half 2008

• To continue till late 2009

• Uncertainty leads to

fluctuating price hikes

• Raw materials make up

50-70% of paint product

costs depending on the

technology used.

Volatility in Volatility in

Crude Oil Crude Oil

PricesPrices

Poor Poor

Economic Economic

OutlookOutlook

MARKETRESTRAINTS

Market Restraints

Unstable Unstable

Political Political

ConditionsConditions

Reduced Reduced

Export Export

DemandDemand

Page 16: Asia Pacific Paint & Coatings Market   Feb09

16February 2009

APAC Paint & Coatings Market

INFLUENCING END-USER

INDUSTRIES

Page 17: Asia Pacific Paint & Coatings Market   Feb09

17February 2009

APAC Paint & Coatings Market

Decorative Coatings

Market trend:

• ‘Green Products’ featuring low VOC & low odour

• Growth of Tinting & DIY market. ( APAC = 18% DIY , Westernised countries = 25-50%)

5.5

4.5

5.5

6.9

9.3

%

2009 GDP Growth

CAGR (2005-2012)Thousand USD

Na

1.7

0.7

0.6

0.8

2009 Per Capita Personal Disposable Income

Na

1.59

3.46

3.81

4.94

Steel ConsumptionGrowth rate (%)

Thailand

Vietnam

Indonesia

India

China

Country

• 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.

Housing prices

dropped 8-10% in

2009 to boost real

estate market

Growth dampened

by poor global

economic outlook

and local political

tensions.

Growth Indicators

*IMF report as of Oct 08

Page 18: Asia Pacific Paint & Coatings Market   Feb09

18February 2009

APAC Paint & Coatings Market

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

Page 19: Asia Pacific Paint & Coatings Market   Feb09

19February 2009

APAC Paint & Coatings Market

INDUSTRY FOCUS

Page 20: Asia Pacific Paint & Coatings Market   Feb09

20February 2009

APAC Paint & Coatings Market

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)

Technology Trends & Key Legislation

Many countries in APAC are

on their way to

implementation.

Page 21: Asia Pacific Paint & Coatings Market   Feb09

21February 2009

APAC Paint & Coatings Market

Growth OpportunitiesFocus Countries

CHINA

THAILANDINDIA

INDONESIA VIETNAM

•Government to promote country

as a shipbuilding nation

•Growing popularity as a

manufacturing hub.

•Decorative market migrating from

low tier to mid and premium tier.

•Infrastructure Development to overhaul

standard of living

•Regional centre for Japanese OEM’s

•Technological trends towards ‘Green

products’. Thai government has

initiated the eco-car project.

APAC

FOCUS

•Key driver for paint industry growth

•Greater scope for paints usage

given the huge population and

growing affluence of Middle Class

Indians

•New foreign investment (FDI) law

•Growth in infrastructure projects

•Tagged to be the fastest growing

paint market in Asia over the next

2-3 years.

•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.

Page 22: Asia Pacific Paint & Coatings Market   Feb09

22February 2009

APAC Paint & Coatings Market

� 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’

CONCLUSION

Summary Points

Page 23: Asia Pacific Paint & Coatings Market   Feb09

23February 2009

APAC Paint & Coatings Market

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

Page 24: Asia Pacific Paint & Coatings Market   Feb09

24February 2009

APAC Paint & Coatings Market

ABOUT PAINT FROST

(A Growth Partnership Service dedicated

to the Paint & Coatings industry)

Page 25: Asia Pacific Paint & Coatings Market   Feb09

25February 2009

APAC Paint & Coatings Market

� www.PaintFrost.com 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

What is www.PaintFrost.com

Page 26: Asia Pacific Paint & Coatings Market   Feb09

26February 2009

APAC Paint & Coatings Market

REGION COVERAGE-14 Countries

SEGMENTS

-10 Paint Segments

• Decorative Coatings

• Automotive OEM Coatings

• Automotive Refinish

• Industrial Wood Coatings

• Marine Coatings

• Protective Coatings

• Powder Coatings

• Coil Coatings

• Can Coatings

• Other Industrial Coatings

Deliverables cover

14 countries over 10

market segment per

country

Key Deliverables- Coverage

Page 27: Asia Pacific Paint & Coatings Market   Feb09

27February 2009

APAC Paint & Coatings Market

Key Deliverables

• Yearly Analyst Briefing on paint outlook provided in addition to the above.

• Consulting hrs available on request

Additional

Deliverables

Key

DeliverablesA) Interactive Reports

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

Growth Indicators-Economic and end-use trends. Include GDP growth rate,

population etc. Other industry trends including

Page 28: Asia Pacific Paint & Coatings Market   Feb09

28February 2009

APAC Paint & Coatings Market

Deliverables- Interactive Reports

Interactive Reports

Choose how you wish to

slice and dice the

market data.

Page 29: Asia Pacific Paint & Coatings Market   Feb09

29February 2009

APAC Paint & Coatings Market

This is the

type of data

and how it is

presented

How Data is Presented-1/2

3. Technology Split By Volume Percent

2. Competitor Split By Value Percent

4. Split By Tiers Volume& Value

*applicable for decorative market only currently

1. Market Size By Value and Volume

•4 year historical and 2 year forecast

data provided

*Data can also be exported to excel.

Page 30: Asia Pacific Paint & Coatings Market   Feb09

30February 2009

APAC Paint & Coatings Market

1. Shows you an

overview of the

entire APAC

market in terms of

volume and value &

CAGR.

How Data is Presented-2/2

Ideal for presentation at company meetings-especially regional based companies

2. Also provides a bar

chart representation

of how big each

country is in relation

to one another.

3. Per Capita

Paint Usage is

also presented.

This indicates

the potential of

the market in

relation to paint

sales

Page 31: Asia Pacific Paint & Coatings Market   Feb09

31February 2009

APAC Paint & Coatings Market

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

Page 32: Asia Pacific Paint & Coatings Market   Feb09

32February 2009

APAC Paint & Coatings Market

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

Page 33: Asia Pacific Paint & Coatings Market   Feb09

33February 2009

APAC Paint & Coatings Market

Next Steps

Interested in the above deliverable and want to know more?

Please log on to the Paint Frost website at

� www.paintfrost.com

� 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 (www.frost.com/news)

�Frost & Sullivan’s next Chairman’s Series on Growth:

(http://www.frost.com/growthapac)

Page 34: Asia Pacific Paint & Coatings Market   Feb09

34February 2009

APAC Paint & Coatings Market

Your Feedback is Important to Us

•Growth Forecasts?

•Competitive Structure?

•Emerging Trends?

•Strategic Recommendations?

•Others?

Please inform us by taking our survey.

What would you like to see from Frost & Sullivan?

Page 35: Asia Pacific Paint & Coatings Market   Feb09

35February 2009

APAC Paint & Coatings Market

Q&A

Session

Page 36: Asia Pacific Paint & Coatings Market   Feb09

36February 2009

APAC Paint & Coatings Market

For Additional Information

Steve LeeStrategic Account ManagerChemicals, Materials and Food, Asia Pacific(65) 6890 [email protected]

Page 37: Asia Pacific Paint & Coatings Market   Feb09

37February 2009

APAC Paint & Coatings Market

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