A busy 2018 has given way to a spottier 2019 for the painted metals market. Some companies report brisk business through the first half of the year, while others are seeing softer demand for painted products.
Steel Dynamics, the leading supplier of prepainted metals among the North American steel production community, has been enjoying a solid start to the year. “The painted market for Steel Dynamics continues to grow. Also, there is actual growth in the prepaint market,” says Don Switzer, sales manager for SDI’s Flat Roll Group, Columbus division.
SDI already operates three paint lines, running from 0.018 inches by 73 inches wide and 0.16 inches by 68 inches wide. A new paint line will be included in the company’s new mill in the Southwest.
“Demand for PAC-CLAD painted metal products is strong right now. The first quarter was a little slow but was expected due to winter weather in most of the United States. Sales activity has risen to typical levels in the second quarter. The increased interest in metal wall cladding products is influencing our business tremendously,” says Rob Heselbarth, director of communications for Elk Grove Village, Ill.-based Petersen Aluminum, makers of PAC-CLAD.
But others report flat or stagnant growth, or even declines in business activity. And places where the sales activity has been less robust, the reason behind it is the refrain heard throughout the metals supply chain – uncertainty. And that lack of clarity is most often attributed to the ongoing trade concerns affecting all commodity metals.
According to the National Coil Coating Association, the leading trade group representing the entirety of the painted metals industry, 2018 painted steel shipments finally climbed back to pre-2008-09 levels. “However, the spike into pre-recession demand did not last throughout the year and 2019 is off to a slow start as hesitation and tariff issues linger keeping the pace of building and construction and manufacturing activity lower than hoped,” says Derek Deakins, who chairs the marketing committee for the NCCA.
“The tariff situation is the hottest topic in the industry currently. Not only has it changed the pricing landscape while encouraging users to take a second look at worldwide supply chains, but competitive materials are always a threat as well and have become more of a threat as the steel and aluminum tariff situation continues to progress,” says Deakins, who is also the key account manager for Vorteq Coil Finishers, a Pittsburgh-based provider of coil coating services.
Edcoat has seen a little bit of both. It’s coating business in Indiana has remained ahead of 2018 through the first quarter, but its products business in Minnesota is running a little behind. And, from the perspective of Jeff Williams, the overall industry has softened.
Like Deakins, he points to uncertainty as the reason for any sluggishness. “Most of the products we’re going to sell at Edcoat Products are somewhat discretionary, siding, gutters, etc. Most of that residential stuff tends to be remodel vs. new. And I think people are in a wait and see mindset,” says Williams, vice president of manufacturing for Edcoat LLC.
Painted aluminum shipments have held up better this year. Shipments last year also returned to pre-recession levels, but the momentum has been maintained through the first half of 2019. The upturn has been driven by the transportation sector, which the NCCA is referring to as the “Amazon Effect.” Prepainted aluminum demand has been pushed by the use of the material in vans, trailers and other commercial vehicles.
Overall, the outlook is quite healthy. That’s largely because prepainted metals continue to gain share in the markets where they operate. The most notable example of that is roofing.
“Ten years ago, our share hovered around 6 percent. Today, that number has doubled and continues to gain share. The same is true with appliance, HVAC and lighting,” says SDI’s Switzer.
“People are seeing the value in metal. It’s stronger, it’s more wind resistant, all the things we’ve been talking about forever. And I think there’s still a hangover from 2008-09, where people have decided they’re going to live in their homes longer, and they’re investing in it,” says Williams.
The biggest issue for metal roofing is the difficulty getting traction on the residential construction side. “Brand new builders is the tough nut,” says Jim Prassas of Prassas Metal Products, Gardena, Calif. “There are some victories out there, but I don’t know too many of our customers who are constantly supplying a U.S. Builder or Broadmark.”
The initial price tag steers home builders away from metal, as up-front costs matter more to construction companies than the life-cycle costs.
On the other hand, buoying metal roofing’s durability and strength attributes is its environmental ones. As interest in sustainability and other green concerns grows with builders, metal roofing become a more appealing option. Not only is the material infinitely recyclable compared with other types of roofing materials, which must be landfilled, but new technological developments have allowed for heating and cooling savings as well.
Pushing the environmental benefits of the material is one of NCCA’s charges. Though their efforts are occasionally hindered by “the overuse of ‘green’ or ‘sustainable’ claims made by competing materials. There is a concern that we could lose some of the ground that metal has gained in recent years, particularly in the metal roofing market,” Deakins says.
The environmental issues aren’t limited to the product. “Due to environmental concerns and limited space at many manufacturing facilities, prepainted steels are a great solution,” Switzer says.
One company, Industrial Louvers, Delano, Minn., has recently transitioned its operations to become completely chrome-free, while renovating the facility to deliver fresh air and daylight. It was a move that required considerable study and investment, but the company’s operators did it both for the health of the employees, and what it says to the building community.
“There are a number of architectural firms that have a very strong focus on sustainability and human health,” says Lisa Britton, director of sales and marketing for Industrial Louvers. “And we are helping to develop that market.”
Another development aiding the market for painted metal’s growth is advancements in printing. Paints can be applied to metal that give the appearance of other materials. Williams points to garage doors that have the appearance of a wood finish. Metal roofs can also be made to look like shale or shingle, though maintaining the advantages of steel or aluminum.
Also, “Scratch and graffiti resistant coatings are being developed with the hopes of gaining traction from architects and end users,” Deakins says.
Petersen Aluminum’s Heselbarth says another area of growth is in perforated metals. “Architects have become very interested in using perforated painted metals to add architectural flair to their projects. We expect this interest to continue.
Developments like these have supply chain participants excited about the long-term outlook for painted metals.
“Prepainted steel will continue to be the product of choice for construction applications, both residential and commercial. There is also a shift in onshoring and as some of this manufacturing returns to the U.S., it that presents additional opportunities,” Switzer says.
“As long as the construction market continues to be healthy, we’ll be OK. There aren’t any significant threats for replacement materials at this point,” says Jo Reinhart, CEO and president of Industrial Louvers.
The supply chain itself has been undergoing some changes. In December, Petersen Aluminum Corp. was acquired by Carlisle Companies Inc., a Scottsdale, Ariz.-based company that specializes in commercial and industrial building envelope products.
“There has been some vertical integration through the supply chain, which sometimes makes an interesting dynamic between some suppliers and their customers. There has also been quite a lot of horizontal integration with what seems like a steady flow of M&A activity,” Deakins says.
Williams believes some of that M&A may be behind his company’s stronger than expected first quarter. “If you’re used to a lot of one-on-one customer service with a small guy and suddenly they’ve been incorporated into a larger corporation, you may not feel the love.”