Polyurethane (PU) Coatings Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

 The Polyurethane (PU) Coatings Market was estimated at over USD 18 billion in 2020 and market is expected to register a CAGR of over 5% during the forecast period (2021-2026). The market was negatively impacted due to COVID-19 in 2020. Owing to pandemic scenario, several countries around the world went into lockdown, which halted all the manufacturing and construction activities, thus creating a negative impact on the demand for polyurethane coatings. However, the condition is expected to recover in 2021, thereby restoring the growth trajectory of the market studied.

Key Market Trends

Automotive Industry to Dominate the Market

- The automotive industry is the largest consumer of polyurethane coatings across the world. The majority of the primers used in automotive coatings utilize a cathodic electric deposit process which constitutes almost 90% cathode electrophoretic paint. Polyurethane electrophoretic paint plays an excellent role in the process.

- PU coatings are used for both OEM and refinish applications. Epoxy polyamide polyurethane and acrylic polyurethane coats are the commonly preferred coatings in the industry.

- Epoxy polyamide polyurethane coatings are widely used for cars whereas acrylic polyurethane coats can be widely used for all types of automobiles, such as buses, cars, and trucks.

- Despite an encouraging term of growth in the automotive sector during the past decade, the momentum slowed down in recent years. The sales and production of new vehicles are going down in various parts of the world, including Europe, Asia-Pacific, and the United States. This affected the previously growing automotive production in most nations. Business models, the markets, and the competitive landscape are undergoing changes.​​ This is slowing the demand for polyurethane coatings.

- According to the OICA data, the global automotive production declined by around 5% and reached 91.78 million in 2019. ​The car sales declined by more than 3 million in 2019. In the first six months of 2020, automobile production witnessed a huge downfall across the globe owing to the impact of COVID-19. According to OICA, in 2020, the global automotive production, in first quarter was about 17,860 thousand units, in second quarter was 31,133 thousand units and in third quarter was 52,009 thousand units, declining about 23.1%, 32.4% and 22.9% respectively, from the previous year at the same time.

- The car sales for the first ten months of 2020, in major global car markets of Europe, United States, Japan, Brazil, India, and China were down by 27.3%, 17%, 14.7%, 30.9%, 24.6%, 10%, respectively in comparison to the previous year.

- Asia, which is the largest automotive manufacturing hub, witnessed a decline of 6.4% in 2019. The major countries, like China, Japan, India, South Korea, Thailand, and Indonesia, registered negative growth in the production. This was majorly due to factors, like decline in domestic demand, increasing labor costs, and implementation of new vehicle norms (BS Stage 6 vehicles in India).

- However, with growing concerns related to environmental pollution from petrol and diesel-based vehicles, the production of electric vehicles is expected to pick up pace over the next five years. This is likely to drive the demand for polyurethane coatings over the forecast period.

China to Dominate the Market in Asia-Pacific Region

- In the Asia-Pacific region, China is the largest economy in terms of GDP. The country witnessed about 6.1% growth in its GDP during 2019, even after the trade disturbance caused due to its trade war with the United States. The economic growth rate of China in 2020 was initially expected to be moderate as compared to the previous year. However, due to the onset of COVID-19 in 2020, the economic growth of China is estimated to contract to 1.90% and is expected to witness recovery at a rate of 8.20% in 2021.

- With growing investments and the construction activities in the country, the demand for polyurethane coatings is projected to grow during the forecast period. According to the National Bureau of Statistics of China, the revenue generated by the Chinese construction industry has increased from CNY 17.67 trillion in 2014 to CNY 24.84 trillion in 2019.​

- Rising household income levels, combined with population migrating from rural to urban areas, are expected to continue to drive demand for the residential construction sector in the country. ​Increased focus on affordable housing by both the public and private sectors is also driving the growth in the residential construction sector.

- The country is investing USD 1.43 trillion in the next five year till 2025, in major construction projects. According to National Development and Reform Commission (NDRC), Shanghai plan includes the investment of USD 38.7 billion in next three years, whereas Guangzhou has signed 16 new infrastructure projects with and investment of USD 8.09 billion.

- The Chinese automotive manufacturing industry is the largest in the world, with a production share of just over 28% in 2019. The industry witnessed a slowdown in 2018, wherein the production and sales declined. A similar trend continued in 2019, with the production declined to 25.7 million vehicles by dropped by about 7.5% year-on-year.

- The number of passenger cars produced in November 2020 is about 2.33 million, which registered a staggering 11.8% month-on-month growth, while 518 thousand commercial vehicles were produced in November with a 10.6% M-o-M growth. The number of passenger cars produced from January to November is down by 8.1% year-on-year compared to the same period last year, while commercial vehicle production increased by 22.2%. The uncertainties in the automobile industry are expected to impact the market studied.

Competitive Landscape

The market for polyurethane coatings is a consolidated market, as there are very few players, who are able to control major market share. Key players in the market include Akzo Nobel N.V., Jotun, Axalta Coating Systems, PPG Industries, Inc., and The Sherwin-Williams Company, among others.

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