Competing factors affect the architectural wood coatings market. What are the main drivers of growth and challenges?
The wood coatings market comprises three different wood coatings segments: 1) Trim paints and varnishes: Paints or varnishes for architectural trim, including interior and exterior doors and windows, and interior trim such as skirting boards, architraves, stair railings and bannisters. 2) Wood floor coatings: Varnishes that are applied on site to ready-installed interior wood and parquet floors; to new flooring that has not been pre-finished; and for the renovation of existing floors. 3) Exterior wood coatings: Coatings for exterior timber, including wood facades and cladding, garden fences, buildings and furniture.
By far the largest segment is the trim paints and varnishes segment, accounting for 67% of the global architectural wood coatings market. The two largest regional markets are the Americas and the Asia Pacific region with 41 % and 32 % shares respectively of the world’s demand for trim paints and varnishes. Waterborne products continue to gain market share, driven largely by VOC regulations and consumer demand for environmentally friendly products providing improved indoor air quality: the exception is the Middle East and Africa region, where higher solids coatings will likely be preferred to waterborne products in the future, in part because the high ambient temperatures in this region cause problems for the application of waterborne products.
The use of wood in residential and commercial properties faces increased competition from uPVC, composite and aluminium doors, windows and sidings, both in new property construction and in the replacement market, and growth in the use of wood for doors, windows and cladding is weak by comparison. For example, in a five-year period in the last decade, the number of wooden replacement windows fitted annually in the United States fell nearly 13 %, while vinyl replacement windows grew by 13 %. In the US new construction market, the number of vinyl windows fitted grew by a third over the same period, compared to only 6 % for wooden windows.
PRA’s 12th International Woodcoatings Congress, in colloboration between Vincentz Network and PRA, gives insights into the latest trends in the field. It will take place in Amsterdam from 8-9 November 2022.
The second largest segment is the exterior wood coatings segment with 25 % of the global architectural wood coatings market. Europe and the Americas account for 50 % and 39 % respectively of the global demand for exterior wood coatings. The size of the segment reflects the relatively low use of wood as a cladding material and the discretionary maintenance of garden fencing, furniture and decking. For example, in the United States, where there are many houses with clapboard or weatherboard sidings, many wooden facades and windows are being replaced by alternative lower maintenance and price competitive materials, particularly vinyl sidings and uPVC windows, when the wood sidings and windows are in need of maintenance. The wood floor coatings segment is the smallest of the three segments with about 7 % of the global architectural wood coatings market, with Europe accounting for 60 % of the global wood floor coatings market.
In today’s flooring market, there are basically three types of wood flooring, which compete alongside other forms of flooring, such as vinyl flooring and ceramic tiles, in residential and non-residential properties: solid or hardwood flooring, engineered wood flooring and laminate flooring (which is a wood-effect flooring product). All engineered wood and laminate flooring are factory finished, and only a proportion of all solid/hardwood flooring is supplied unfinished and coated on-site, which enables a degree of customisation in terms of stain and sheen that is attractive to the customer. Both prefinished flooring and that coated on-site will require maintenance and refurbishment to maintain its appearance; the frequency of maintenance will depend on the location of the flooring, and the amount and type of foot traffic. Laminate flooring consists of a compressed MDF or HDF fibreboard plank, to which a decorative paper printed with an image of wood, stone or tile is laminated. If the decorative paper becomes damaged, it is not possible to sand back the surface and recoat: so laminate flooring would need to be replaced.
In common with the architectural coatings market in general, the key drivers for architectural wood coatings are new construction of residential and non-residential properties, and property refurbishment (which is in part supported by increasing disposable income in many regions of the world). The need for more construction of residential properties is supported by global population growth and increasing urbanisation. For decades, affordable housing has been a major concern in most countries, and can only really be solved by increasing the housing stock. The United Nations has estimated that the global population was 7.7 billion in 2019, and their medium-variant projection indicated that it could grow to 8.5 billion in 2030. In addition, the UN believes that about 55 % of the world population live in urban areas (in 2018) and this is predicted to rise to 68 % by 2050. These factors will lead to increased building construction and a higher proportion of multi-family dwellings.
Trends in disposable income regionally and globally can be fickle. Over the last decade or so, pre-covid, the global middle-class population had increased, predominantly in developing economies, accompanied by middle-class disposable income that may be spent on improving their living environment. However, post-covid pressures on inflation from the reduced supply of various products, transportation issues and increased energy costs will likely lead to reduced disposable income for many. The fierce competition from alternative materials has led to relatively weak growth in the use of wood for doors, windows, bannisters and stair-rails, flooring and cladding, both in new construction and when it is time to maintain wood features: often the wood is replaced with an alternative material rather than recoated.
However, another major factor supporting growth in the use of wood in construction is the increased concern about the environment, which is influencing construction techniques and the choice of building materials. Offsite construction techniques, prefabricated or modular construction, has a number of advantages and has seen growth in Europe, Japan, North America and parts of Africa in recent years. Wood is a sustainable building material that has a positive carbon balance, since it uses solar energy to grow, and stores carbon dioxide (one cubic metre of wood stores around one tonne of carbon dioxide). Compared to other building materials, the production of one tonne of sawn wood produces about 13 % of the greenhouse gas emissions as the same weight of concrete and less than 5 % of the same weight of steel. Wood also has better insulating properties than either concrete or steel.
If properly maintained, wood structures and products used in construction and the exterior environment have been a long-term form of carbon storage for decades, even centuries. In addition, wood is readily recyclable (to make new products), and at the end of its useful life it can be used as fuel. Although there are concerns about deforestation in some parts of the world, most timber used for construction is sourced from countries that have long-standing policies to re-grow more timber than is felled. In spite of the sustainability arguments for increased use of wood in construction, Irfab estimated a compound annual growth rate (CAGR) for global architectural wood coatings of only 1.8 % out to 2025. However, recent raw material supply issues, energy price rises and rising inflation, exacerbated by the conflict in Ukraine, will undoubtedly affect the disposable income for many people around the world and, depending on how long these constraints persist, may make even this weak growth estimate seem optimistic.
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