Market in transition: sustainability drives water-based coatings to record heights

In recent years, there has been an increasing focus on sustainability and environmental responsibility, leading to higher demand for water-based coatings. This trend is further supported by regulatory initiatives aimed at reducing VOC emissions and promoting eco-friendly alternatives.
The waterborne coatings market is projected to grow from EUR 92.0 billion in 2022 to EUR 125.0 billion by 2030, reflecting an annual growth rate of 3.9%. The water-based coatings industry continues to innovate, developing new formulations and technologies to enhance performance, durability, and application efficiency. As sustainability gains importance in consumer preferences and regulatory requirements, the water-based coatings market is expected to keep expanding.

In the emerging markets of the Asia-Pacific (APAC) region, there is high demand for water-based coatings due to varying stages of economic development and the wide range of industries. Economic growth is primarily driven by high growth rates and significant investments in industries such as automotive, consumer goods and appliances, construction, and furniture. This region is one of the fastest-growing areas for both production and demand for waterborne paints. The choice of polymer technology may vary depending on the end-use market segment and, to some extent, the country of application. However, it is evident that the Asia-Pacific region is gradually shifting from traditional solvent-based coatings to high-solids, water-based, powder coatings, and energy-curable systems.

Sustainable properties and growing demand in new markets create opportunities

Eco-friendly properties, durability, and improved aesthetics boost consumption across various applications. New construction activities, repainting, and growing investments in emerging markets are key factors providing growth opportunities for market participants. However, the introduction of new technologies and volatility in titanium dioxide prices present significant challenges.

Acrylic resin coatings (AR) are among the most commonly used coatings in today’s landscape. These coatings are single-component substances, particularly preformed acrylic polymers dissolved in solvents for surface application. Water-based acrylic resins offer eco-friendly alternatives, reducing odor and solvent usage during painting. While water-based binders are often used in decorative coatings, manufacturers have also developed waterborne emulsion and dispersion resins primarily intended for industries such as consumer electronics, automotive, and construction machinery. Acrylic is the most commonly used resin due to its strength, stiffness, excellent solvent resistance, flexibility, impact resistance, and hardness. It enhances surface properties such as appearance, adhesion, and wettability and offers corrosion and scratch resistance. Acrylic resins have leveraged their monomer integration to produce waterborne acrylic binders suitable for both indoor and outdoor applications. These binders are based on various technologies, including dispersion polymers, solution polymers, and post-emulsified polymers.

Acrylic Resins Evolve Rapidly

With increasing environmental laws and regulations, water-based acrylic resin has become a rapidly developing product with mature applications across all water-based coatings due to its excellent performance. To enhance the general properties of acrylic resin and expand its application range, various polymerization methods and advanced techniques for acrylate modification are used. These modifications aim to address specific challenges, promote the growth of waterborne acrylic resin products, and provide superior properties. Moving forward, there will be a continuous need to further develop water-based acrylic resin to achieve high performance, multifunctionality, and eco-friendly characteristics.

The coatings market in the Asia-Pacific region is experiencing high growth and is expected to continue expanding due to growth in the residential, non-residential, and industrial sectors. The Asia-Pacific region encompasses a wide range of economies at varying stages of economic development and multiple industries. This growth is primarily driven by the high economic growth rate. Key leading players are expanding their production of water-based coatings in Asia, particularly in China and India.

Shift in Production to Asian Countries

For example, global companies are shifting production to Asian countries due to high demand and lower production costs, which positively impact market growth. Leading manufacturers control a large portion of the global market. International brands like BASF, Axalta, and Akzo Nobel currently hold a significant share of the Chinese waterborne coatings market. Furthermore, these prominent global companies are actively expanding their waterborne coatings capacities in China to enhance their competitive edge. In June 2022, Akzo Nobel invested in a new production line in China to increase capacity for delivering sustainable products. The coatings industry in China is expected to expand due to increased focus on low-VOC products, energy savings, and emission reductions.

The Indian government has launched the “Make in India” initiative to promote the growth of its industry. This initiative focuses on 25 sectors, including automotive, aerospace, railways, chemicals, defense, manufacturing, and packaging. Growth in the automotive industry is supported by rapid urbanization and industrialization, increased purchasing power, and low labor costs. The expansion of major car manufacturers in the country and increased construction activities, including several highly capital-intensive projects, have led to rapid economic growth in recent years. The government is investing in infrastructure projects through foreign direct investment (FDI), which is expected to expand the waterborne paint industry.

The market continues to see strong demand for environmentally friendly coatings based on ecological raw materials. Waterborne coatings are gaining popularity due to the increased focus on sustainability and stricter VOC regulations. The introduction of new rules and stringent regulations, including initiatives such as the European Commission’s Eco-product Certification Scheme (ECS) and other government agencies, underscores the commitment to promoting a green and sustainable environment with minimal or no harmful VOC emissions. Government regulations in the United States and Western Europe, particularly those targeting air pollution, are expected to drive the continued adoption of new, low-emission coating technologies. In response to these trends, waterborne coatings have emerged as VOC- and lead-free solutions, especially in mature economies such as Western Europe and the U.S.

Essential Advancements Needed

Growing awareness of the benefits of these eco-friendly paints is driving demand in industrial, residential, and non-residential construction sectors. The need for improved performance and durability in waterborne coatings is driving further development of resin and additive technologies. Waterborne coatings protect and enhance the substrate, contributing to sustainability goals by reducing raw material consumption while preserving the substrate and creating new coatings. Although waterborne coatings are widely used, there are still technological issues to address, such as improving durability.

The waterborne coatings market remains highly competitive, with several strengths, challenges, and opportunities. Water-based films, due to the hydrophilic nature of the resins and dispersants used, struggle to form strong barriers and repel water. Additives, surfactants, and pigments can influence hydrophilicity. To reduce blistering and lower durability, controlling the hydrophilic properties of waterborne coatings is essential to prevent excessive water uptake by the “dry” film. On the other extreme, high heat and low humidity can lead to rapid water removal, particularly in low-VOC formulations, which impacts workability and coating quality.