US paint demand won't recover until 2010 - Cytec

18 July 2008 18:17  [Source: ICIS news]

HOUSTON (ICIS news)--US demand for paints and coatings might not recover until 2010, an executive with Cytec Industries said on Friday.

Cytec's surface specialties segment makes liquid- and powder-coatings resins. The segment is contending with rising costs and falling demand, particularly in the US housing and automotive markets, said David Lilley, chief executive.

Regarding demand, recent industry statistics show that the US paint market has declined by 7-10%, Lilley said. Architectural coatings have fallen by 5%, and original equipment manufacturers (OEM) have fallen by more than 5%.

Cytec's customers do not expect any improvements until 2010, Lilley said.

At the same time, energy and freight costs have increased, he said. Also, raw material costs have increased, particularly for acrylic acid and other derivatives of propylene, Lilley said.

Cytec is raising prices to offset the higher costs, and it expects to lose volume as a result, he said.

Overall, Cytec expects its coatings segment to report flat volume sales growth for the year, he said. Previously, the company had expected 6% sales growth, with two-thirds coming from volume.

Cytec has lowered its expectations for the segment. It now expects 2008 operating earnings to be $90m-95m, (€57m-60m) down 5-10% when compared with 2007.

Before, it expected the segment's operating earnings to rise by 10-15%.

($1 = €0.63)

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By: Al Greenwood
+1 713 525 2653

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