Argentina automotive boom boosts paints and coatings sector

15 September 2012 00:53  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--Argentina’s automotive boom during the past five years has fuelled the country’s paints and coatings market and is expected to continue its fast pace, consultancy firm Frost & Sullivan said on Friday.

From 2007-2011, automotive manufacturing in Argentina grew at a 12.1% compound annual growth rate (CAGR), Frost analyst Hernan Cavarra said.

This growth drove the paints and coatings market, which accounted for an 8.6% CAGR, he said.

According to Cavarra, automotive manufacturing in Argentina will continue to grow steadily and reach more than 900,000 units of vehicles produced by 2017.

The automotive paints and coatings sector is expected to grow to almost 30m litres in volume by 2017 and more than triple in terms of revenues, Cavarra said.

“The sector will grow at a higher rate than the OEM [original equipment manufacturers] sector, mainly due to car fleet continuous growth, increasing used car sales and high car insurance penetration,” Cavarra said.

“Argentine car owners tend to take more care of their cars than in other countries in the region,” he added.

Companies face a number of challenges including increasing raw material prices and domestic import restrictions, he said.

Manufacturers in Argentina currently look to China as a cheap source of titanium dioxide (TiO2), a key pigment used in automobile paint.

However, plans by DuPont plans to expand titanium dioxide (TiO2) production at the company's facilities in Mexico from 2015 should benefit Argentine manufacturers, Cavarra said.

“Dupont’s new facilities will be expected to supply to all of Latin America,” said Cavarra. “This should help to level prices at least.”

The biggest market participants are BASF, DuPont, PPG, Sherwin Williams and Akzo Nobel, Cavarra said.

By: Simon West

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