Colourants market: Fighting the slump sustainably

There's always painting going on, you might think. But the paints and coatings market varies by and application. A slump in the automotive market or a downturn in the construction industry have a negative impact. Asia, Africa, and the Americas are making progress - but the European market struggles. Companies such as BASF, Akzo Nobel and Eckart/Altana respond with sustainable innovations.

Written by Dr. Ulla Reutner

Aerial view of nine large square containers of red pigment. Two people wearing yellow helmets and red gloves are standing by the central container with tools. — Europe - like here at Lanxess in Leverkusen, Germany - produces high-quality, innovative dyes. But high energy costs and strict environmental regulations are putting the industry under pressure.

2023 was not a good year for manufacturers of paints, coatings, and printing inks in Germany. According to the industry association VdL, 1.47 million tonnes were sold in Germany. In 2021, the figure was 1.585 million tonnes of paints, coatings, and printing inks, which was also a five per cent drop on the previous year. 2024 is likely to be even worse. A further decline of two per cent is forecast. Even more worrying is the significant drop in exports in 2023: -11.2 per cent to just 774,000 tonnes. The sub-markets of printing inks, buildings, and furniture/wood look particularly bad. The automotive sector will still perform surprisingly well in 2023, with growth of 18 per cent, but the industry association VdL expects growth of just five per cent in 2024. Given the generally poor economic outlook in Germany, but also in China, and the uncertainties of the American market, the paint industry has little reason to be optimistic.

Moderate growth in Europe in the medium term

It is important to broaden the horizon. According to a market study by Ceresana, the European market for paints, coatings and pigments is expected to grow moderately in the coming years until 2032, by an average of 1.2 per cent per year. According to the study, water-based and bio-based paints, which are often used in the construction industry, will become increasingly important in Europe. Acrylic paints are expected to record the strongest growth.

However, the Asia-Pacific and Africa regions will see the greatest growth. Global demand for pigments is expected to rise to around 14.5 million tonnes per year by 2032, according to market researchers, with the construction industry being the main consumer. The second largest area of application for pigments is plastics, for example for packaging, but also consumer goods and components for the automotive industry.

Effect colours drive growth in Asia

Despite the expected positive development overseas in the medium term, the industry faces major challenges. On the eve of the European Coating Show 2025 (5-27 March), participants are swearing by innovation, sustainability, and collaboration. Dr Mark Stoll, Global Head of Marketing Strategy at pigment manufacturer Eckart, stresses the importance of decarbonising production processes in the ECS preview. Although he does not expect the market to grow in the near future, he says: "There are at least two strong long-term growth drivers over a five-year period. These are the recovery in automotive production, which will lead to increased demand, and the trend towards more effect colours.” The latter is driving the market, particularly in Asia.

Sustainable innovative products, modernised processes

Regulatory requirements and the resulting growing demand for sustainable products offer innovative pigment manufacturers new opportunities. Eckart, for example, is responding to this with a portfolio based on secondary aluminium, compostable effect pigments and printing inks as well as mineral oil-free metallic printing inks. BASF Coatings scores highly in the area of automotive series coatings with a single-layer coating that has a pearlescent effect without the use of conventional effect pigments and also reduces the amount of material and energy used in the manufacturing process. Sun Chemicals supplies the textile and clothing industry with eco-tex-certified colour pigments for textile dyes. AkzoNobel Powder Coatings recently introduced a new colour range that does not emit any solvents or volatile organic compounds.

Many manufacturers are also modernising their production processes and their energy supply. Lanxess, for example, produces yellow iron oxide in Brazil in an almost climate-neutral way using renewable energies. And Akzo Nobel is responding to the trend towards a clean spraying process with reduced CO2 emissions with a hydrogen-powered spray booth in a training centre in Belgium.

A futuristic-looking, cream-coloured body of a small car with only the front wheel visible. — A single-layer coating that combines all functions in one layer and has a pearlescent effect without effect pigments is one of the latest innovations from German manufacturers.

For all their innovative strength, manufacturers must react to the declining attractiveness of the European markets - and are doing so. For example, by relocating production facilities or setting up new production sites in growing markets such as Asia. Current example: In January 2025, the East Westphalian company Peter Lacke announced the construction of a new production facility in Huizhou in southern China. This is in response to the growing market for electric vehicles there.

At the same time, European sites are being restructured, for example at Akzo Nobel. Also in January 2025, the company announced that it would be investing EUR 22 million in its French site in Montataire. It is to become a ‘flagship site’ for the production of architectural paints. To this end, operating processes will be rationalised and optimised, which will involve a reduction of up to 211 jobs by the end of 2026. The company had already announced in 2024 that it would be closing production sites in the Netherlands, Ireland, and Zambia.

Greater acceptance for masterbatches

The market trend for masterbatches, which are also part of the colour market, is more positive than for ‘pure’ pigments. Masterbatches are concentrated granulates consisting of pigments, additives and/or fillers embedded in a carrier plastic. They are easier to dose than powder pigments or liquid dyes and are the preferred choice for colouring plastics. The European market has seen moderate growth over the past three years. It was estimated at USD 4.20 billion in 2023. It is expected to grow to USD 5.63 billion by 2029. This would correspond to an average annual growth rate of around 5%. Here, too, there is a dependency on customer industries such as packaging, automotive and construction.

A component painted blue is still half immersed in a bath of glossy blue liquid coating. — Coatings not only provide colour, but they often also protect against environmental influences. Here a metal component is dip coated.

Conclusion: Changeable prospects

The growth prospects for paints and coatings in Germany and Europe remain subdued. There is no recovery in sight for printing inks, as publication printing in particular continues to shrink sharply. Construction crises, such as the current one in Germany, are also having a negative impact on the market. However, there are also positive developments: In some countries, including Germany, demand for corrosion protection is increasing from mostly state-funded road and bridge construction and the subsidised construction of onshore and offshore wind turbines. The market for masterbatches is also developing positively.

Things are looking a little better on the international market. However, competition is tough. Until recently, the industry was still focussing on the USA as a growing sales market, but now there is a threat of extensive tariff increases there. These not only affect colour and pigment manufacturers directly, but also their major customers. The Chinese market has also recently become increasingly important for Europe's exports. However, high energy costs and strict environmental regulations are causing problems for European manufacturers. Asian manufacturers often offer cheaper alternatives. The competitiveness of German and European manufacturers must continue to be secured through technological leadership, for example for high-quality industrial paints and powder coatings, as well as through innovations such as sustainable, solvent-free, water-based solutions.

Author

Dr. Ulla Reutner

Chemist and freelance specialised journalist