INSIGHT: Coatings season demand pattern says more about winter than summer

Source: ICIS News


LONDON (ICIS)--As one watches the snow – currently termed the 'beast from the east' - sweeping around in the February sky, warm days spent painting outdoors could seem some way off still, but that season will soon be upon us and it is that window which players are watching more closely.

But, does the onset of the upcoming coatings season mean the same thing for the petrochemical industry that it once did and, if not, why not?

The European coatings season usually runs from April to September, or from March to October, and demand from the paints sector typically reaches its peak in the second-quarter months as construction activity ramps up in the spring.

For anyone in these industries, it is this period that has historically been the demand zenith – in stark contrast to the lull of the autumn and winter months.

This is still expected to be the case, but only to some extent as it seems that that demand pattern, which had previously shown distinct highs and lows, is now smoothing out.

The reason for this is partly attributed to there now being less of a lull during winter, healthier year-on-year demand, and gradually warming temperatures, which mean that consumption is more spread out.

The lack of a winter lull is evident in fewer companies decreasing their stock levels at the year end to the degree that they used to; and, it seems too, that production output is more stable overall with producers not excessively destocking in November and December or restocking in January and February as in previous years.

We have been seeing this pattern emerge for around five years, but it is a change that the sector is still adapting to after many more years of the traditional undulation, one that saw demand ebb and flow. It was typified by a strong pick up in consumption in April that largely increased in summer, and tapered off around the middle of autumn, along with temperatures.

Demand for products such as acrylate esters is still growing globally by a few percentage points each year and, depending on the application, that demand could be seen outside of the spring and summer months – thereby strengthening consumption in the colder months, while making the warmer months look less pronounced in comparison.

Indeed, much of the change to the demand pattern in spring and summer has a lot to do with the change in winter demand.

Winters in recent years have tended to be milder, enabling an extended or early start to the coatings season and resulting in the summer peak getting flattened out somewhat. Meanwhile, some newer applications can withstand colder temperatures.

In addition, widespread construction initiatives across Europe have resulted in determined attempts to complete projects earlier and well before the spring and summer.

Temperatures in Europe at the moment are pretty low and the start to first quarter acrylate esters demand has been slow.

Acrylate esters are used to make paints, coatings, textiles, adhesives, polishes and plastics.

We are also likely to wait longer for the spring pick-up as easterly winds from Russia/Siberia have brought exceptionally cold air across much of the continent.

Whether we refer to the current difficult weather conditions as the ‘beast from the east’, the ‘Siberian bear’ or the ‘snow cannon,’ sub-zero temperatures are complicating logistics and delaying truck deliveries.

Expectations for this year are that the peak will be seen, but that it initially will not be particularly pronounced. Some are attributing this to not much of a positive start for the automotive industry. There is a chance, however,  that construction and decorative applications will be strong enough to compensate for the softer automotive sector.

“In the past you really saw the seasons,” a buyer of acrylate esters said. “But somehow that has changed slightly, so is the market actually changing, is it more of a flat demand during the year instead of the peaks and drops? People are spending more on redecoration and rebuilding so what I personally think is that in the normal coatings season you will have the outside painting, and in the low season you see more and more painters working indoors.

Previously that big demand was only for outdoors, but now in winter they are painting more indoors. That has shifted as well. Painters have no low season anymore, they are continuously busy.”

So, perhaps it is less about what has changed in the months between March and October, and more about warmer weather in winter that is altering the peak demand season.

The buyer went on to explain, “I think the peak will still be there, but the low is not as low. You will not have a deep dive into the low season anymore. Demand in the low season will be much higher than [in] the years before.”

Acrylate esters include methyl acrylate (methyl-A), ethyl acrylate (ethyl-A), butyl acrylate (butyl-A) and 2-ethylhexyl acrylate (2-EHA).

By Helena Strathearn

Photo: Hampstead Heath, London 28 February 2018. James Gourley/REX/Shutterstock