Coatings market South America: Back to the stage
South American coating businesses have been impacted in the past years by severe changes in the regional demand, mainly in the major markets such as Brazil, Argentina and Venezuela.
This will have an important impact in the regional more demanding middle class consumption profile and production capacity for the coming years mainly enhancing the transnational growth pattern enlarging its distribution and technology footprint. On the other hand, the coatings industry had experienced good progress in several others countries in the continent such as in Colombia, Peru, Paraguay and Chile in recent years, in a clear contrast with above mentioned markets.
Due to the impact of the major markets, the coatings market in South America had experienced a decline of some 4% in physical volume during 2016. Total volume of the Coatings Market in the region resulted in 3 billion liters, with a value (at industry prices) of EUR 7.24 billion (Fig. 1). The average prices in US-Dollar terms had shown increase due to some recuperation of local currencies exchanges rates during 2016.
South America coatings market – volume per country (in million litres)
The Automotive OEM market and related ones had experienced drops over 10% in 2016 in the region. On the other side, the Automotive Refinish market grew in the region, driven by continuous growth of the car fleet in the area, in spite of consumer purchase power reduction in the major countries. The driving force for the expansion of the car fleet in the region is the need for mobility in countries and still a very low rate of car possession index: less than one vehicle for each five inhabitants.
Architectural and Decorative coatings represent over 75% of the market
The breakdown of the market in South America, in the traditional Coatings segmentation indicates that Architectural & Decorative coatings still represents over 75% of market due to the construction industry importance and buildings maintenance, but the region is also demanding a broad range of performance coatings to automotive, electronics, aerospace, industrial heavy and light maintenance, powder coatings, and a variety of industrial coatings.
The economy slowdown in major countries markets affected almost all segments. The major impact in the relative volume reduction was the Automotive OEM and Automotive OEM related coatings market, which has been considered the highest volume reduction in the last years in the major automotive production country – Brazil.
Prospects for the region
Most of countries will target internal market recovery as unemployment reduction is forecasted but countries like Brazil, Argentina and Colombia will also target into their customers supply chain shifting into global or regional trade opportunities.
South America coatings market growth change certainly is part of global economy trade changes in coatings materials and coated finished goods.
The recuperation of Brazilian and Argentinian economies in progress, with consequent inventories replenishing and the growth consolidation of other countries such as Colombia, Peru, Chile, Paraguay, should result in growth over 2% in 2017 and around 4% thereafter, in the South American Coatings market. This will place South America back to stage of emerging markets.
Francisco Z. Rácz and Washington T. Yamaga, Rácz, Yamaga & Associates
This article is a shortened version. The original full length article was published in the European Coatings Journal 6/2017. The full length article can be found in our online-library.
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