Industry Consolidation with Modest Growth is Key Theme

ChemQuest’s Equity Research

July 28, 2017 – Cincinnati, OH – The ChemQuest Group, Inc. is pleased to announce that its 37-page equity research report for Wells Fargo Securities, LLC is now available in a PDF format.

The report provides the state of the global paint, coatings and adhesives markets addressing topics of relevance to value chain participants.

ChemQuest’s equity research and analysis includes:

Paints and Coatings

  • 2016 Market Overview (plus 2017 and 2020 growth forecasts)
  • Leading Producers
  • Margins and Raw Materials
  • Architectural Coatings
  • Industrial OEM Coatings
  • Special Purpose Coatings

Adhesives and Sealants

  • 2016 Market Overview (plus 2017 and 2020 growth forecasts)
  • Industry Margin

Macroeconomic Backdrop

ChemQuest CEO, Dan Murad who – for the past 18 years – has been hosted by top investors to provide his well-researched insights into the paint, coatings and adhesives markets, outlined market conditions, and trends and drivers (together with ChemQuest’s 2017 and 2020 growth forecasts).  In 2016, the key theme of the $147 billion global coatings market is consolidation, as the result of a challenging environment for organic growth, due to secular and market trends.

Architectural coatings outperformed Industrial OEM and Special Purpose Coatings with 3.5% growth over 2015 (+3.4% in volume, +0.1% in price).  A shift toward formulations with lower VOC thresholds influenced architectural coatings demand last year, with contractor-applied paints outpacing other types (a positive trend for Sherwin-Williams, now the largest coatings company in the world following its completed acquisition of Valspar).  Faster drying paints and

2-in-1 paint and primer products popular among do-it-yourselfers (DIY) also performed well. An increase in U.S. residential construction square-footage in average single-home dwellings (up from 2,469 square feet in 2006 to 2,640 square feet a decade later) has offset a 25-year low in the rate of home ownership at 63.3% – and, by extension, has mitigated against lower demand for decorative paints. While spending among Millennials is expected to pick up by 2020 – younger households have been slow to initiate homeownership and remodeling projects compared to the previous generation.

A breakdown of the paints & coatings end market sales for 2016 is illustrated in Exhibit 5.

Adhesives and Sealants (A&S)

In 2016, the global A&S market size is $54.4 billion – split 87% and 13%, respectively.  Construction accounts for 42% of the adhesives and sealants market (with improved building standards among the demand drivers), followed by packaging at 22%, and transportation at 11%. Adhesives continue to displace mechanical fasteners partly due to the trend of lightweighting to meet fuel efficiency standards, while providing flexibility, ease of repair, and strength to joints in multiple applications.

End-market trends during 2016 were mostly positive in transportation, construction, consumer, and tapes, while packaging and product assembly were flat, as summarized in Exhibit 48.

To obtain a free copy of the 2017 Wells Fargo Equity Research Report, visit the ChemQuest Resource Center.


About The ChemQuest Group, Inc.

The ChemQuest Group Inc., a leading international business strategy firm in specialty chemicals, is widely recognized among raw material suppliers, formulators and financial investors for its experience and expertise. ChemQuest’s four service pillars include Business Strategy; Mergers, Acquisitions or Divestitures; Commercial & Operational Efficiencies; as well as Technology Planning & Development through the ChemQuest Technology Institute. ChemQuest services extend across twelve formulated product categories and over ten end-use markets within the specialty chemicals value chain. Our team includes senior technical managers, experienced Ph.D. chemists, senior managers from major manufacturers and business owners, with a minimum of 25 years of experience in specialty chemicals. For more information, visit www.chemquest.com.


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