MARKET REPORT
Douglas Bohn, Orr & Boss Consulting Incorporated, gives an update on the global coatings market for 2022
Global coatings market update
T
his year has been another up and
down year in the global coatings
industry. The year started off with
lots of optimism and then gradually
events started to weigh down the market.
Persistently high inflation, continued raw
material availability, rising interest rates
around the world, and the Covid lockdowns
have all hampered global growth. Despite
those challenges, the global coatings
market resilient and is still expected to grow
this year.
n BACKGROUND ON THE
GLOBAL MARKET
In 2022, Orr & Boss estimates that the
global market for paint & coatings will be
US$196bn and 47bn litres. As the graph
below shows, Asia is by far the largest
region in the world accounting for 45% of
the global demand for paint & coatings.
It is nearly double that of the next largest
region, Europe, which is 23% of the global
paint & coatings market.
2022 Global paint &coatings market by region
2022 Global paint &coatings market
by segment
ORR & BOSS Global report.indd 1
Decorative coatings is nearly half
the value of the global coatings market.
The next largest segments are General
Industrial, Protective, Powder, and Wood.
Combined these five segments account for
80% of the global coatings industry.
n RISING INFLATION
Persistently high inflation rates around
the world have reduced growth globally
in the coatings market. Inflation in the
general economy has meant that standard
goods and services have become
more expensive. This has resulted in
demand for paint falling, especially DIY
decorative paint and other products sold
to the consumer market. Consumers are
delaying paint projects and renovation
projects to focus on paying for the
everyday essentials like food and other
items. In other cases, consumers are
downgrading to lower costs paints to help
offset the inflationary effects. In either
case, it results in growth in the paint and
coatings market being reduced.
n RAW MATERIAL AVAILABILITY
Supply chain issues continue to impact
the market. Raw material prices on the
entire basket of raw materials that coatings
companies buy are up 10% since the start of
2022 and are up 40% since the start of 2021.
Inflation has not been that high in China and
a few other places, but it has been worse
in North America. Companies reduced
inventory levels during the first part of the
pandemic and demand returned sooner
than anticipated. Then logistics bottlenecks
caused by the need for continued social
distancing resulted in supply and logistic
bottlenecks. These bottlenecks have led to
tightness in the raw material and feedstock
markets which has driven the raw material
availability issues.
Availability of raw materials is improving
going forward but we are still not back to a
normal supply situation. Coatings companies
are slowly rebuilding their inventory positions
but the inventory data that Orr & Boss tracks
still show it to be 10% below pre-pandemic
levels. We think that it will be at least until
the middle of 2023 before the industry has a
normal level of raw material availability. One
key issue facing the industry is that there
may be an energy shortage in Europe which
could result in the curtailment of chemical
production in Europe. If this occurs, it will
likely have ripple effects around the world
and could lead to further raw material
availability issues.
n RISING INTEREST RATES
The United States Federal Reserve, the
European Central Bank, Bank of Japan,
Bank of England, and many other central
banks around the world have been
increasing interest rates in an effort to
reduce economic growth and thereby
reduce inflation. The rising interest rates
are starting to have their intended effect
as overall economic growth cools in North
America, Europe, and elsewhere. The
higher interest rates are increasing the
cost of borrowing and thus reducing the
demand for housing and the construction
market. This is reducing demand for
decorative coatings in both North America
and Europe. In North America we expect
volume of decorative paint to decline by 2%
this year and in Europe to decline by 5% as
the construction market cools off.
n CHINA COVID LOCKDOWNS
The Q2 lockdowns in China had a significant
impact on the Chinese coatings market.
Demand was significantly reduced in Q2.
Initially, we expected a strong rebound like
2020 but that has not yet occurred. The
rebound from the Q2 lockdowns has been
tepid. Also, the property market continues
to struggle in China. As a result, we have
reduced the paint & coatings growth rate
in China to 1.4% volume increase in 2022
and a 3.3% volume increase in 2023. Earlier
in the year, we had expected the Chinese
coatings market to grow at 4.6% volume
increase this year. The graph below shows
these growth rates.
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 MARKET REPORT

n 2022 AND 2023 FORECASTS and flat next year. Non-Decorative Industrial
coatings are estimated to be down 1.3% this
year and up just 0.25% next year.

Asia decorative and non-decorative coatings

Greater China decorative and non-decorative
coatings volume forecasts
Given all of the above issues facing the
global coatings industry, we have put
together forecasts for the market. Despite
the challenges that the market is facing that
were discussed in the previous section,
we still do see growth this year in the
market in most regions besides Europe.
Given the global political and economic
situation, forecasting 2023 growth values is
a challenge. Nonetheless, we are providing
our best estimates for next year.
If we start in North America, the graphs
below summarise our expectations for
this year and next year. We estimate that
Decorative Coatings will be down about 2%
in volume this year while non-decorative
coatings will be up about 2.7%. The decline
in decorative coatings is caused by the
increasing interest rates which is resulting
in significantly lower home sales. Home
sales have been trending downward for
most of this year. In August, existing home
sales were down 19% and housing starts
were down 2% versus August 2021 in North
America. We expect that for the rest of 2022
and 2023, the housing market will be down
on a yr-on-yr basis.
European decorative and non-decorative
coatings volume forecasts
Asia is expected to grow this year but
not as fast as we thought earlier in the year.
We currently think that Decorative Coatings
volume will increase by just over 4% this
year and next year and that Non-decorative
industrial coatings will grow by 1.5% this
year and 3.3% next year.
Within Asia, there is a divergence of
markets. As mentioned above, growth
in China has slowed down. Growth in
Southeast Asia has also slowed down due to
the slowdown in the global economy. We do
expect growth to return in both regions going
forward. One region that has not experienced
any slowdown is South Asia where the
growth has remained very strong. We expect
this trend to continue going forward. The
graphs below show the growth rates for both
volume forecasts
Decorative and Non-Decorative coatings in
each of the major sub-regions of Asia.
n CONCLUSIONS:
The global market for paint and coatings
continues to face challenges but despite
these challenges, it continues to grow. Given
the volatile nature of the global economic
and political situation, forecasting into the
future can be difficult. But we do expect
the global industry to continue to grow
going forward. Furthermore, there could
be some upside if interest rate increases
are successful in quickly reducing inflation
and there is no need for further widespread
Covid lockdowns, the coatings industry
could return to robust growth. PPCJ
Author: Doug Bohn, Orr & Boss
Email: dbohn@orrandboss.com
Website: www.orrandboss.com

North America decorative and non-

Asia decorative coatings volume forecasts
decorative coatings volume forecasts

In Europe, the impact of the Russia-

Ukraine war as well as the energy crisis is
resulting in a faster slowdown in the markets.
Concerns about the supply and pricing of
energy are creating concerns among both
consumers and business in Europe and these
concerns are slowing consumer expenditure
and business investment which is resulting in
slower economic growth in Europe. Growth
was reasonable in the first half of the year but
is declining faster than in other regions in the
second half of this year. We have downgraded
our European forecasts several times this
year. Our current estimate is that decorative
coatings will be down 5% in volume this year Asia non-decorative coatings volume forecasts

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