GCC Paints & Coatings market size is estimated to reach US$4.5 billion by 2027 after growing at a CAGR of 2.5% from 2022-2027. Paints and coatings are materials that protect surfaces from rusting, abrasion and also help in product surface durability enhancements. Such materials are made of resins like alkyd, polyester, acrylic, epoxy. In GCC countries, the paint and coatings industry is rapidly developing due to its unique feature of providing glossy and decorative finishes which have increased the industrial application of paints and coating in sectors like construction & buildings, automotive, energy & power, etc. The major drivers for the GCC paints & coatings market are rapid development in the construction sector and growing efforts to boost industrial growth. However, as the GCC countries are major producers of oil and gas, hence the fluctuation in the price of crude oil can disrupt the manufacturing of oil-derived paints and coatings type like oil-based coating. Hence such disruption in manufacturing will hamper the growth of the GCC paints & coatings industry
Gulf countries are major manufacturers of crude oil and natural gas and the major sectors such as construction, automotive, oils refinery are the major contributors to the economic growth of such countries. To prevent COVID-19 from spreading, lockdown and other social restrictions like social distancing, quarantining were imposed by the governments of Gulf countries. Such restriction negatively impacted the functioning of these sectors as there was a shortage of labor in work plants, automotive car sales declined due to shutdown of auto workshops and fewer cars being imported due to import restrictions, the decline in global oil demand led to cut-back of oil supplies to major exporters and construction activities were halted. For instance, 2020 auto sales in the United Arab Emirates decreased up to 45% and sales of auto parts decreased by 50%. The 2021 report of World Bank Gulf Economic Updates the oil supply cutbacks and a low average oil price of US$41.30 per barrel slashed the goods and services exports for Kuwait, Bahrain, and Omar by 8.1% in real terms and turned the current account surplus of 6.8% of GDP in 2019 into a deficit of 2.9% of GDP in 2020. Also, the output of the construction sector for 2020 contracted by 10.4% in UAE. Hence such a decrease in the production and supply in such sectors negatively impacted the demand for automotive refinish paint in the automotive sector and protective coating & maintenance in oil refineries.
GCC Paints & Coatings Market Segment – By Resin Type
Acrylic resin held the largest share in the GCC paints and coatings market in 2021, with a share of over 40%. This owns to factors like acrylic resin has a high drying rate, is anti-corrosive, anti-adhesive, has flexibility, and has resistance properties that make it suitable to be used as paints and coatings. Hence such resin type is mostly used in architectural coatings for interior and exterior walls, panels, etc. The increasing number of infrastructure projects will have a positive effect on the demand for acrylic resin. For instance, Abu Dhabi’s government announced in 2020 an ambitious plan to procure over US$ 2.72 billion worth of infrastructure partnership projects. Also, as per the Sultanate Ministry of Finance of Oman, in 2021 $3.4bn will be spent on infrastructure projects including basic facilities like hotels, resorts, etc. Hence with such an increase in the number of infrastructure projects, the demand for acrylic resin architectural paintings and coatings will also increase thereby providing positive growth to the GCC paints & coatings industry.
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GCC Paints & Coatings Market Segment – By Technology
Water-borne coatings held the largest share in the GCC paints and coatings market in 2021, with a share of over 45%. This owns to factors like water-borne coatings have quick dry rate, low odor, are more durable, more block resistance and have very low VOC emission. Hence such rich properties make water-borne coating highly applicable as decorative paints. in residential and commercial segments. In 2021, Oman’s Ministry of Housing and Urban Planning five new integrated projects that would provide 4800 housing units. Also, in 2021 Bahrain’s Ministry of Housing launched the Salman City Expansion project in which 1382 apartments will be constructed by the second quarter of 2023. Hence as waterborne coatings are used in interior and exterior architectural coatings for commercial as well as residential segments, so increase in the number of housing segments in such countries will lead to more usage of waterborne coatings in them, thereby positively impacting the growth of GCC paints and coatings industry.
GCC Paints & Coatings Market Segment – By End User
Construction held the largest share in the GCC paints & coatings market in 2021, with a share of over 35%. The sector is one of the major GDP contributors and the growing volume of residential and commercial buildings, infrastructure projects, and increase in construction budget to boost economic growth will have a positive impact on the demand for paints and coatings in GCC countries. For instance, in October 2021 United Arab Emirates cabinet approved a budget of US$ 16 billion for the construction of healthcare, educational, social care centers, and also the budget includes US$267 million allocated for energy and infrastructure projects. Also, in 2021 US$58 billion worth of construction projects were tendered in Saudi Arabia in June, showing a rapid acceleration in projects undertaking. Hence with the increase in contracts for construction and infrastructure projects, the demand for paints and coatings like oil paint, cement paint, bituminous paint will increase, thereby having a positive impact on the demand for paints and coatings in the construction sector in such gulf countries.
GCC Paints & Coatings Market Segment – By Geography
Saudi Arabia held the largest share in the GCC paints & coatings market in 2021, with a share of over 30%. This owns to factor like the country being the largest oil producer in the Middle East and also has the biggest construction as well as automotive market in the region. The country has undertaken several various projects to promote economic growth. For instance, in 2021 the country issued US$1.5 trillion worth of active projects in Riyadh including major projects like Al Qassim Power plant project, red sea project, Neom Business city, NGL Fractionation plant, etc. and the construction contracts in the country increased to 55% as compared to 2020. Moreover, ae to the 2020 report of an international organization of Motor vehicles, Saudi Arabia held the largest share in several passenger vehicles sold in Middle East countries with a total number of 3,87,709 units.
GCC Paints & Coatings Market Drivers
Rapid Growth in the Construction Sector
The construction sector in GCC countries like Saudi Arabia, UAE is rapidly growing owing to an increase in demand for affordable housing, increasing investments for infrastructures development, and a new line of projects being planned. For instance, in 2019 a total of USD 102.3 billion worth of projects were processed across all GCC countries, compared to USD 101.8 billion in 2018. In 2021, Saudi Arabia started construction on the Red Sea International airport which was part of the Red Sea Project of the country. In preparation for the 2021 Expo, Dubai awarded about 47 construction contracts with a total value of US$ 3 billion to local and foreign companies. Hence as the volume of construction activities in such gulf countries is increasing on account of such new construction projects, it will create demand for paints and coatings products such as enamel paint, anti-corrosive paint, plastic paint, etc.
Growing efforts towards industrial growth
The governments of Gulf countries to boost industrial growth are undertaking new construction and infrastructure development projects. Since paints and coatings are majorly used during such activities, so growing volume of construction and development work will create more usage of paints and coatings materials. For instance, the Dubai Metro Redline Extension project was undertaken as part of the Expo2020 initiative of the UAE government. In 2021, Saudi Arabia launched the National Infrastructure Fund to invest US$53 billion in infrastructure, energy, transportation, health, etc., and also the trillion-dollar pipeline infrastructure project launched by Saudi Arabia aims to diversify to economy from oil towards new areas like smart cities, clean energy. Hence such initiatives and construction of infrastructure projects increase the usage of paints and coatings products for interior and exterior coatings for metal coatings and during re-painting and maintenance of old decorative buildings.
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GCC Paints & Coatings Market Challenge
The fluctuating price of crude oil
The paint industry uses crude oil derivatives such as monomers and titanium dioxide which accounts for more than half of the raw material. Hence the price of crude oil keeps fluctuating due to geopolitical, whether or supply chain mishap reasons which disrupt the flow of crude oil to markets. Such disruption leads to irregular production of paints and coating products by manufacturers which leads to a shortage in supply of these products to major end-users of paints and coatings in GCC countries. For instance, as per the December 2021 report of the U.S Energy Information Administration, the crude oil price dropped to 39.17 US$ per barrel in 2020 from 56.99 US$ per barrel in 2019. Hence due to the price reduction, crude oil production fell by 8% in 2020 i.e., 11.3 million barrels per day compared to 12.2 million barrels in 2019. Such a decrease in crude oil production reduced the paints and oil-based coating output thereby negatively impacting the GCC paints & coatings market.
GCC Paints & Coatings Industry Outlook
The companies to develop a strong regional presence and strengthen their market position, continuously engage in mergers and acquisitions. GCC Paints & Coatings top 10 companies include:
- Ritver Paints and Coating
- Jazeera Paints
- Wacker Chamei AG
- Jotun A/S
- PPG Industries Inc.
- RPM International Inc.
- Berger Paints Emirates Ltd
- Terraco UAE Ltd
- Beckers Group
In 2021, Ritver Paints & Coating has established a new manufacturing plant in Dubai, UAE which enables the company to expand its coating products especially wood coatings in GCC countries.
In 2019, Axalta acquired Capital Paint LLC a UAE-based thermosetting powder coatings manufacturer. Hence such acquisition will enable the company to expand and provide coatings products in emerging markets in gulf countries.
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The large scale of infrastructural projects and strong demand for residential building construction in GCC countries like Saudi Arabia, United Arab Emirates will create more usage of paints and coatings materials in these countries.
The power projects undertaken by GCC countries will create demand for paints used in power panels, such as the Solar Power Project in Saudi Arabia will create demand for solar paint that works as a photovoltaic cell when applied on solar panels.
GCC countries are known for high-rise building and architecture, hence increase in construction of new hotels, restaurants and re-painting and maintenance of old hotels and decorative infrastructure will create more usage of paints and coatings in them.
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