Coatings sector to continue consolidation trend

12 April 2007 19:56  [Source: ICIS news]

NEW YORK (ICIS news)--Consolidation in the paints and coatings sector will continue as producers seek to fight off volatile raw material costs and a weak housing market, industry sources said on Thursday.

Most recently, rumours have swirled around Akzo Nobel potentially acquiring Valspar or Imperial Chemical Industries (ICI).

“Consolidation has been a trend in the coatings industry for the past 20 years, so why would it be any different today?” said Luis Fernandez, group vice president, paint and coatings materials at Rohm and Haas. “This is a trend that we’ve been dealing with for quite some time.”

Coatings sector analysts said that consolidation is important for the industry, especially at a time when producers are facing tough market challenges.

“Nature has a way of cleaning things up in the springtime, combining and growing and eliminating the less efficient,” said Phil Phillips, managing partner of Southern Pine, North Carolina-based Chemark Consulting.
“As it is in nature, a market that has slow-growth, margin pressures at both ends of the value chain, and an overcapacity condition, is ripe for significant consolidation,” Phillips said.

Although coatings producers have faced a tough housing market and volatile raw material costs, industry sources said the end may be in sight.

“We’ve seen a bit more stability in raw material costs overall during the past nine months or so - but the volatility in these costs is greater today than it was 10 years ago,” Rohm and Haas’ Fernandez said. “It’s a concern, and something we have to manage, but is not a primary area of focus for us today.”

(Look for the full story on the coatings sector in the 16 April issue of ICIS Chemical Business Americas.)

By: Lindsey Blanchfield
+1 713 525 2653

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