Wells Fargo Securities hosts ChemQuest for its 17th annual Investor Research Report

The ChemQuest Group, Inc, a leading business strategy firm in speciality chemicals, has released its 2016 Wells Fargo Industry Analyst report, ‘Paints, Coatings, and Adhesives”, delivered in a 40-page pdf available at www.chemquest.com. It features an in-depth analysis of three coatings sectors: Architectural Coatings, Industrial OEM Coatings and special purpose coatings, as well as adhesives and sealants, which use the same intermediates. The global macroeconomic backdrop of ‘steady, slow growth’, is predicated on moderate growth in North America and optimism building in Europe.

CEO, Dan Murad provided insight into the US$140bn coatings industry, including an overview of market conditions, trends and growth forecasts, at an estimated 5% compound annual growth rate (CAGR) through 2020 (estimate). Among the key highlights is the expectation that margins will further strengthen amid a more stable growth environment, supported by recovering end markets and raw material benefits.

Looking across the three major types of coatings, sales growth was highest for both architectural coatings and original equipment manufacturers (OEM) in 2015, at 5.0%. In 2016, USA sales in the US$11.2bn architectural coatings segment are forecast to rise 4%, of which 3.5% can be attributed to volume growth. Since 2011, total construction spending has been on the rebound, including yr-on-yr growth of 10% in 2014 and 11% in 2015, reaching about US$1.10trn in total spending. This string of increases follows five years of decline – signalling a further growth potential for architectural coatings as construction, which is still below peak conditions, continues to recover.

Infrastructure spending and auto-related trends are important drivers for both the OEM and special purpose coatings segments. For the latter, automotive refinish accounts for more than one-third of sales. Auto and light-truck sales have recovered nicely from a trough of about 9.5M units in early 2009, having reached a seasonally adjusted rate of about 17.4M units as of May 2016. Lower oil prices have put a dent in oil & gas activity, leading to special purpose coatings volume posting a modest decline in 2015. Auto refinish trends remain positive, with miles driven increased as a result of lower oil prices, leading to higher demand for refinish. Consistent with the 2015 outlook, volume is expected to be down 1-2% in 2016. A free download of the full 40-page report is available at https://chemquest.com/resource-center/