Coatings turn to new products

The global coatings market is a major consumer of industrial minerals and its ebbs and flows are watched with keen interest by producers of mineral sands, mica, talc and calcium carbonate, amongst others. 

Encompassing everything from interior design paints to specially engineered coatings for aircraft, the coatings industry’s performance is closely correlated with various downstream sectors including housing, construction, automotive, furniture and packaging, which in turn tend to follow broader economic trends such as GDP. 

The paints and coatings industry can be categorised into three markets: architectural and decorative; industrial original equipment manufacture (OEM); and special purpose coatings. Architectural coating is the largest segment, followed by industrial coatings and special purpose coatings. 

Although the overall coatings market experienced healthy growth in 2013 as building projects and industrial production in Asia continued to boom, by 2014, the industry had started to lose its lustre – as the full year earnings of many coatings and associated mineral companies illustrate.

US-based titanium dioxide (TiO₂) producer Huntsman Corp. made a net loss of $38m in fourth quarter 2014, down from a profit of $31m a year earlier, which it attributed to lower earnings from pigments and additives. 

Dutch paints manufacturer AkzoNobel, which makes the well-known decorative paint brand Dulux as well as the paint for McLaren’s Formula 1 racing cars, meanwhile saw its revenue drop 2% in 2014 to €14.3bn ($16.2bn*), compared with €14.6bn in 2013 in what it described as a challenging year for the company.

Others, such as UK-listed Elementis Plc and China’s Henan Billions Chemicals Co., fared better over the course of last year. Elementis recorded a 4% rise in pre-tax profit to $141.9m, up from $136m in 2013, and highlighted its performance in the North American coatings additives market, where the company expanded its business by 7%. 

Henan Billions has said that China’s pigments market is performing strongly, contrary to conditions in the wider global market. The TiO₂ manufacturer announced a 168% rise in net profit for 2014, to Chinese renminbi (Rmb) 63.1m ($10m).

Elementis was aided by a favourable product mix, while Henan Billions has been able to profit from the low price of TiO₂ feedstock minerals – ilmenite and rutile – cheap manufacturing costs in China and the strong US dollar to realise gains in export markets.

These companies’ less well-performing rivals, on the other hand, were hampered by their reliance on demand for architectural coatings in stagnant markets as well as low selling prices for their products, thanks to weak demand.

Reacting to changes in the market

The divergences in fortune of some of the top coatings companies and the mineral producers that supply them can partly be explained by factors such as their sector and geographically-defined customer bases, their corporate structure and their approach to maintaining or growing their market share.

The worldwide coatings market is a highly competitive one and is sensitive to both cost and performance, with different emphasis allocated to these respective categories, depending on the sector.

According to Sweden-headquartered LKAB Minerals, which supplies specially engineered mineral products for applications ranging from flame resistance coatings to decorative paints and printing inks, its coatings customers are increasingly having to meet tougher regulations on product performance, particularly in fire safety, meaning that performance is given a high weighting.

"Customers from the coating industry are, in line with the more stringent legislation, looking for sustainable solutions in fire retardancy, requiring halogen-free solutions primarily and secondly low-toxicity and low-smoke coatings," the company told IM. 

Companies like US-based Albemarle Corp. and Chemtura Corp. which produce flame retardants based on bromine – a halogen – have recently been stung by a consumer and regulatory backlash against certain types of brominated chemicals, forcing them to invest in new formulations that meet strict toxicity standards. 

Other companies make a selling point out of their compliance with health and safety rules, although few can help changes in regulation that re-classify products once considered safe as potentially harmful to human health or the environment.

LKAB stands by its assurance that only sells natural minerals that it says can be classified as environmentally friendly.

"Our R&D team is working closely together with our partners and customers in the coatings industry (…)  focusing on fire retardancy with our unique UltraCarb products – based on huntite hydromagnesite – which are a proven halogen-free fire retardant," the company said.

While they may be a costly headache for some companies, changes in product criteria are no bad thing for innovation. In the paints industry, for example, changes in regulation and shifts in customer preferences are driving the emergence of new products.

According to the "Global Paints and Coatings Market Report: 2014 Edition", published by Market Research Reports, paint manufacturers are focusing on zero-volatile organic compounds (VOC) and eco-friendly paints.

This trend is opening up opportunities for agile R&D departments at mineral companies to supply products that meet these criteria.

Global industrial minerals leader Imerys SA recently announced that it plans to release a new range of architectural paints into the market that boast both high performance and sustainability credentials. The product range, called ECO-PHYL, is a newly developed product based on mica, chlorite and quartz, specifically designed for indoor and outdoor architectural paints.

As well as this eco-friendly range, the company is also introducing products for industrial coatings, including one called Mistrogard – which it describes as a multifunctional mineral extender with low oil absorption to meet VOC standards.

AkzoNobel, meanwhile, was recently awarded a prize at the WBM Bio Business Awards in the Netherlands for its pioneering work into making coatings chemicals that imitate the process of photosynthesis used by plants to convert carbon dioxide and light into oxygen.

The trend towards greener coatings looks likely to be a strong influence on the development of the market for the foreseeable future.

According to a report published in February by Markets and Markets, entitled "Low-VOC Coating Additive Market by Type – Global Forecast to 2020", the low-VOC coating additives industry will be worth $5.8bn by the end of the decade, bases on a compound annual growth rate of nearly 5.8% over the next five years.

Performance tops cost

While price points are important in determining a new product’s ability to enter the highly competitive coatings market, LKAB told IM that placing a product in the industry is not always about cost.

"The customers we primarily work with are those that are looking beyond only cost and focusing on quality, green solutions and top performance to differentiate and grow their businesses," LKAB said.

"For these companies, as for us, the challenge is to show the added value and why that supersedes a low cost approach. This is clearly not a me-too strategy and requires confidence in your own product, technology and expertise."

As with the drive for green coatings, this willingness to pay a premium for performance characteristics in coatings has spurred a raft of research into new products and new and exciting findings are emerging all the time.

At the beginning of March, a team of scientists at University College London (UCL) in the UK revealed that they had developed a type of TiO₂-based nanocoating paint capable of creating self-cleaning waterproof surfaces.

The researchers said that the coating is robust enough to resist considerable wear when applied to paper, steel, glass and even cotton wool. "Being waterproof allows materials to self-clean as water forms marble-shaped droplets that roll over the surface, acting like miniature vacuum cleaners picking up dirt, viruses and bacteria along the way," Yao Lu, lead author of the paper on the study said.

As opposed to commercially available self-cleaning surfaces, which often degrade when damaged or contaminated, the nanocoating maintained its self-cleaning property in the face of all attempts to impair it, the researchers reported.

In another recent eye-catching development, Florida, US-based RGF Environmental Group announced that it had developed a type of billboard coating that could purify air.

The coating product in question was a super oxidation catalyst that combines ultraviolet (UV) light from the sun and moisture from the air to produce advanced oxidation plasma (vaporised hydrogen peroxide) that oxidises pollutants in the air.

According to the company, an earlier version of the catalyst is already being used on buildings in Europe and Japan and RGF plans to add the catalyst to its line of environmental products.

Meanwhile, the US Air Force has come up with a new type of high temperature, abrasion-resistant coating called Proteckt, that is says can improve the reliability and maintainability of weapon systems used by the military division, including its F-35 Lightning II fighter jet.

Major George Woodroth, the Air Force Laboratory project manager who worked on developing Proteckt, said that the new coating’s performance represented "roughly a 2,000% improvement in the average time between coating failures and directly addresses a current F-35 need".

"We anticipate that the new material will provide the program an estimated $14m in life-cycle cost savings," he added.

Outlook for coatings

Although pockets of growth have been identified for certain sectors of the coatings market, such as anti-corrosion, nanocoatings and low-VOC products, indications from the TiO₂ pigment industry are that the main demand segment, architectural and decorative coatings, is under pressure from saturation in mature markets and slowing growth in emerging economies.

While parts of Asia still offer high growth prospects for construction-related coatings, demand needs to catch up with supply and inventories need to run down in order for the market to be rebalanced.

Prices for TiO₂ and feedstocks are low at present, as are prices for bromine, while the cost of talc and calcium carbonate are more or less stable, however raw material price fluctuation has been a concern for coatings manufacturers in the recent past. Supply security is not really an issue, however.

Perhaps the chief challenge facing the coatings industry in the near term is the pressure to innovate and successfully negotiate the competitive landscape. High performing products for niche applications certainly make headlines and bring companies’ R&D capabilities to public attention, but the real test comes when a company has to prove that its coating product outruns its peers on one or all of the cost, performance and sustainability criteria lionised by the evolving coatings industry.

*Conversions made March 2015