The Asia Pacific Paint & Coatings Industry

Douglas Bohn, Orr & Boss Consulting 

The Asia Pacific paint and coatings market is the largest market in the world at an estimated $90 billion. The market is a diverse market with many different segments and geographies. The largest market, of course, is China, but India, Japan, South Korea, and Southeast Asia are all significant markets, as are Central Asia and Australia and New Zealand. 

Over the last several years, growth has been subdued, mainly as a result of a struggling real estate market in China. This year, the added complication has been the impact of the closure of the Strait of Hormuz. This has led to a challenging market in Asia Pacific. But despite those challenges, there continue to be good opportunities for the paint and coatings industry in Asia.

Strait of Hormuz Impact

Outside of the Middle East, Asia has been the most impacted by the closure of the Strait of Hormuz, particularly Southeast Asia, South Asia, Japan, and South Korea. The region gets most of its oil from the Middle East. Also, unlike the Americas, most countries in the region are net oil and gas importers and thus are dependent upon energy imports. The table below shows the energy production and consumption of some of the major countries in the region, and all are energy importers (they consume more than they produce). 

In the region, China is the largest energy producer but also consumes nearly three times what it produces. One significant advantage that China has had is that it has been releasing oil from its strategic petroleum reserves to cover the gap. 

Availability of raw materials has been an issue in Asia, but not to the extent that we feared at the start of the conflict. Oil from other countries, reduction in consumption, and the use of the strategic petroleum reserves have helped stabilize the market. Nonetheless, raw material prices have gone up significantly across Asia. 

The supply chain for paint and coatings raw materials can be complicated, and the exact supply chain is dependent upon each individual raw material. But many of the key raw materials are based on a handful of base chemicals like ethylene, propylene, acetone, benzene, and a few others. In Northeast Asia (which includes China, Japan, and South Korea), these base chemical prices were up significantly, which has driven higher paint and coating raw material prices. We think paint and coatings raw material prices are up in the 20-30% range in the region.

In Southeast Asia and South Asia (including India), the situation was even more dramatic, with paint and coatings raw material prices up about 25% in total.

As noted above, availability of raw materials has not been as large of a problem as initially feared, but some solvents are in short supply, and some resins are also in short supply. If the conflict continues and the fall in global oil and gas inventory levels continues, it is likely that this region will continue to feel the impact and availability will become a more important concern.

China

China was the engine of growth in the global paint and coatings market for many years. It remains the world’s largest paint and coatings market. We estimate the market to be $49 billion in 2026, with decorative paint being about 25% of the value at $12.5 billion. The remaining $36.5 billion of the market is spread out among various industrial markets like automotive, coil, industrial wood, packaging, powder, protective and marine.

Starting in 2022, China’s property market has slumped, and since over half of paint and coatings find their way into some sort of building and construction application, this has slowed growth. As the graph shows, the decline in the China real estate market is showing no signs of ending. It has declined by double digit percentages for several years. 

Expectation is that the property market will remain soft for the coming years and with that, we do not expect a broad-based recovery in the China paint and coatings market. 

The China automotive market has been growing at strong rates, and that has led to growth in the automotive sector over the last few years. This year, production is down as domestic sales have decreased significantly. But the domestic sales decrease has been offset by significant increases in exports of automobiles. Overall, production has been down in the 3-6% range in the first half of 2026. Nonetheless, as the graph indicates, growth in China automotive production has been significant over the last 25 years and after this year, we expect further growth. 

Outside of automotive, manufacturing in China has been flat for several years. The China Purchasing Manages Index (PMI) has been close to 50 since Q2 2023 and is expected to remain so. 

Despite the slow real estate and manufacturing segments, there are growth segments in China. Even though vehicle production is down this year in China, it is expected to grow moderately in the coming years. Furthermore, renewable energy projects are also expected to grow. Also, the overall protective coatings market is expected to grow in China.

If we put it altogether, we expect the China paint and coatings market to grow at a 1% volume rate into the early 2030s. We expect growth in the decorative paint market and other markets related to building and construction to be negative. That will be offset by some growth in the automotive market and modest industrial coatings growth in other segments.

India

India is the second largest paint and coatings market in Asia and is the third largest in the world. Its total size is estimated to be $12.8 billion. Unlike China, the market in India continues to grow strongly. It is the fastest growing large paint and coatings market in the world. The underlying drivers for that growth are favorable demographics (large, growing, and young population) and relatively low per capita usage of coatings giving the market lots of runway for growth. 

IMF is forecasting India’s GDP growth rates in the 6 to 7% range through early 2030s. No other large country can match that growth rate. In addition to the economic growth, the population continues to grow. The UN has estimated that India’s population is growing 0.9% per year. This is faster than other large countries. Furthermore, the per capita usage of paint is low in India. As the graph shows, India’s per capita paint consumption is less than half that of the other major countries in the world.

What is even more surprising is that most of the India paint and coatings market is decorative. We estimate that 77% of the India paint and coatings market is decorative versus 25% in China and 46% globally. This means that non-decorative industrial coatings market has strong room for growth. This is occurring in India as factories expand into India. The graphs show overall manufacturing production, which is increasing at over 5% per year. That is faster than any other large economy market.

Not only is overall manufacturing activity growing strongly, but automotive production has also grown at an 8.7% CAGR since 2000, and is projected to continue to grow at a high rate going forward as the graph indicates.

Japan

In Japan, the market has been flat to down for several years. Although a large economy with a large population, paint and coatings volume has not grown. Mainly this is a result of an aging population that is declining. The other issue impacting the Japanese economy and the paint and coatings market is the depreciating yen. Since 2021, the yen has depreciated by over 50%, which reduces the size of the Japan paint and coatings in U.S. dollar terms. A weaker yen does help Japanese manufacturers export more globally. 

The median age in Japan is 50 years old compared to 30 years old in India and 39 years old in the United States. Furthermore, the population continues to decline in Japan. By 2035, the Japanese population is estimated to decline to 115 million from the current 122 million people. This has resulted in a flat to declining economy and a flat to declining paint and coatings market. This trend has been occurring for many years. As the graph shows, there is a decrease in new building starts in Japan. Over a 30-year period, building starts have declined by 60%. 

The sluggishness in the overall economy is also reflected in the industrial production and automotive production values in Japan. Since 2018, overall industrial output has declined by about 10%, with automotive production declining slightly more over that time period.

Despite the relatively slow growth, Japan does offer opportunities for paint companies. Average selling price in the Japan paint and coatings market is among the highest in Asia (along with South Korea and Australia). 

South Korea

The situation in South Korea is similar to Japan. The population is aging and declining. But average selling prices are relatively high and the country does have a strong marine and automotive coatings market and is a global leader in technology and semiconductor chip manufacturing. 

Over the longer term, industrial production in South Korea has continued to grow, although over the last several years, that growth has slowed to less than 2% per year. In addition to slowing manufacturing growth, much of the growth in the economy is in the semiconductor chip and technology segments, which are not significant drivers of paint usage. The graphs show the growth in industrial and automotive production.

 Putting it altogether, we expect slow volume growth in the South Korea market. We think over the longer term, the decorative paint market in South Korea will be flat and there will be modest growth in the non-decorative industrial coatings markets.

Southeast Asia

The Southeast Asia paint and coatings market is estimated to be $8.9 billion. Like other regions, decorative paint is the largest at 45% of the value of the market. Other key end use markets include wood, marine, protective, auto OEM, refinish, and other industrial markets. 

Countries in this region include Indonesia, Vietnam, Thailand, Malaysia, Singapore, Philippines, Cambodia, Laos, and Myanmar. Indonesia is the largest at about 30% of the market, with Thailand being the second largest at approximately 20% and Vietnam is third at 15% of the market. 

The countries all have economies growing at relatively high rates with building and construction growing at high rates as well. Despite this, these markets can be a bit choppy. Earlier in the year, we were very worried about the impact of the closure of the Strait of Hormuz on the market. This did have an impact on the region as raw material prices increased at significant rates and availability was an issue, But overall, demand has held up and is growing at reasonable levels. For the year, we expect volume to be up about 1%, with demand being up in the 2-4% volume range
next year.

Implications for Paint Companies
And Raw Material Suppliers

The review of the above regions within the Asia Pacific paints and coatings market has several strategic implications for all companies involved in the market. Some of these include:

• China Repaint and Renovation Market: Given the continued decline in the China real estate market, focusing on the repaint and renovation market will lead to more growth. The true DIY portion of the decorative repaint segment is small in China (less than 5%), but there is a significant Do It For Me (DIFM) segment where the homeowner buys the paint, but a contractor applies it and there is a repaint contractor market. Selling into distributors that service this market and raising brand awareness among homeowners and contractors can help paint companies grow in the repaint portion of the market. 

• Protective Markets and Green Energy Markets: Given the conflict in the Middle East and reduced flow of oil through the Strait of Hormuz, we think that it is very likely that many countries in the region will increase oil and gas production as well as increase investments in green energy projects like solar and wind energy. This should lead to more opportunities for protective coatings companies.

• Automotive Market: The China automotive builds are down year to date due to soft auto sales within China, but the export market is increasing significantly, and we expect EV sales to grow in the future. Furthermore, we expect production of vehicles to continue to increase at high levels in India, and thus India would be another market to look for growth.

• Focus on the Premium End: Japan, South Korea, and Australia are all projected to be slow growing markets, but all have high average selling prices compared to other geographies within Asia and other geographies around the world. So even though the growth is not there, these markets could be attractive since they have profitable niches. Focusing on the premium portion of these markets may be an effective strategy.

• Other Countries: Other countries in the region, like Indonesia, Vietnam, Bangladesh, and Kazakhstan, are expected to have economies that are growing at high rates and thus paint markets growing at high rates as well. Many of these countries have low average selling prices, so having an economy or value-based paint is important to enter these markets. CW