The primary factor driving the market studied is the increasing investments in the oil and gas and construction sectors. The fluctuation of oil and raw materials prices combined with political insecurity and the outbreak of COVID-19 is likely to hinder the market's growth.

- Underlying opportunities on the back of insufficient power infrastructure to meet continuously growing demand is likely to act as an opportunity for the market studied.

- By resin type, the acrylic resin segment is expected to dominate the market owing to the increase in the usage in coating applications due to its properties such as transparency and UV resistance.

- By end-user industry, the architectural segment is expected to dominate the market owing to an increase in the construction activities in the region.

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Key Market Trends

Acrylic Resin Type to Dominate the Market

Acrylic resins are the most widely used polymers in the paints and coatings industry. Most of the acrylic paints are water-based or solvent-based and are available as emulsions (latices), lacquers (lower volume solids), enamels (higher volume solids), and powders (100% solids). Common acrylic polymers come in a wide variety of types and combinations, such as methyl and butyl methacrylate. In the case of inexpensive paints, polyvinyl acetate is used primarily. The two principal forms of acrylic used are thermoplastic and thermoset. Thermoplastics acrylic resins are synthetic resins achieved by the polymerization of different acrylic monomers. Thermosets are cured at elevated temperatures by reacting with other polymers.

Thermoplastic acrylic resins are of two types, namely, solution acrylics and acrylic latex coatings. Solution Acrylics are single-component, thermoplastic coatings that dry and cure by solvent evaporation. They are used in wood furniture and automotive topcoats, aerosol paints, and maintenance coatings. They have relatively high molecular weights and are rather low in solid contents, and hence, can achieve workable viscosities. Acrylic Latex Coatings are stable and allow the fine dispersion of polymer in water. They are used in a very large amount in the coatings industry, because of features, such as very low VOC, easy application, and cleanability with soap. The acrylic latex coatings make up the bulk of the house-paint and architectural coatings.

Thermoset acrylics are used in product finishes for metal furniture coatings, automotive topcoats, maintenance coatings, appliances, and other original equipment manufacture finishes. They have major performance advantages, such as gloss, exterior durability, corrosion resistance, chemical resistance, solvent resistance, and hardness. Acrylic resins have properties, such as transparency, high colorability, and UV resistance, in coating solutions. They are used in water-borne systems very often, which results in low VOC emission. The application of acrylic coatings leads to high surface hardness. In certain applications, such as walls, decks, and roofing, acrylic coatings provide elastomeric finishes to improve the UV resistance of the surface, if employed with some fluids. In fact, acrylic paints are the most widely used architectural paints.

Application of acrylic coatings is primarily found in the construction industry, for high-end finishing in roofs, decks, bridges, floors, and other applications. Water-based acrylic coatings are high in demand, owing to the environmental concerns, like the negative impact of VOCs affecting the air quality in the environment. Other applications of acrylic paints and coatings are found in marine vessels and structures, automotive, electrical products, machinery, and various metal product, among others.

Increasing Demand from Architectural Segment

High rates of industrial development, the growth of production processes, and the increase in basic technological parameters (pressure, temperature, the concentration of reactants, etc.) are driving the demand for reliable operation of equipment and building structures. A special significance in the complex of measures to guarantee uninterrupted operation of equipment is rewarded to the development of reliable protective coatings and the use of high-quality and affordable chemical-resistant materials. The protective coatings are used in industries, such as oil and gas, power, and infrastructure.

Oil and gas production has some of the most demanding conditions. Therefore, coating systems used must be equipped likewise. There is a prolonged exposure to penetrating UV rays and constant contact with rough seawater, which increases the need for industrial coatings. Additionally, the oil and gas industry uses industrial coatings in pipes for the transportation of oil and gas inside and outside refineries. The industry has been trying to find ways to cut capital charges. This, along with the need to adhere to strict environmental regulations, led to the demand for protective coating systems with a long life, which may be effective in the protection of the assets.

The usage of protective coatings is based on their capability to form a durable waterproof coating, while retaining the essential technical properties in case of being rejected by chemical reagents during heat treatment. Therefore, compositions based on epoxy and polyester, possessing good adhesion to many materials, good astringent, protective, and anticorrosive properties are widely used in the protective coatings. Iraq is on the quest to improve its industrial sector, which can help to reduce dependency on the oil sector and improve economic performance of the country. The non-oil sector’s growth started reviving on the back of expansionary fiscal policy linked to higher oil prices in 2018, which further persisted in the first half of 2019. In addition, other factors contributing to the economic recovery in 2019 were increasing investments in infrastructure development, improvement in electricity production, and increase in domestic demand.

Efficient infrastructure stands to be an important pillar for the economic growth of any country. In this regard, Iraqi government has been taking required initiatives to redevelop the damaged infrastructure due to war against ISIS. For instance, in July 2019, the government approved about USD 2.2 billion for the redevelopment of damaged infrastructure. Besides, the government approved about USD 900 billion for reconstruction and economic revival over the period, 2018-2027. Out of this, 8% of the investment is planned to be directed toward development of the transportation sector, including rail, road, and airways; 8% for information and communications technology (ICT); 8% for water and electricity; 16% for the development of the industry and mineral sector; and 21% for the oil and gas sector.

Further, the country is investing in water treatment plants. This is further expected to drive the consumption of protective coatings. For instance, in July 2019, BP planned the expansion of the Qarmat Ali water treatment plant (Basrah). BP operates Qarmat Ali plant and provides water to local refineries, which also supplies water to Zubair oil field. Hence, all such industrial trends are projected to collectively influence the consumption of industrial coatings in the country over the forecast period with majority of the consumption being in the Southern province of Iraq.

Competitive Landscape

The Iraq paints and coatings market is majorly dominated by international players such as Jotun, MAS Paints, Asian Paints Berger, Asia Paints Company, etc. along with only major local player Al-Tabieaa Company. Al-Tabieaa Company is the leading player in the market studied, with an extensive product portfolio of coatings in architectural, wood finishes, and industrial segments. Some of the other major players in the market include Modern Paint Industries Company, Hempel, and Caparol, among others.

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