Weak demand of construction coating in the first half of 2019 to be reversed

Coating is one of the indispensable materials for the development of national economy. As an important type of coating, architectural coating has undergone great changes in the past decade. In recent years, with the steady and rapid growth of China's overall economic scale, China's coating production is increasing year by year. In the era of rapid development of national economy, the rapid rise of the real estate industry has driven the rapid development of the construction coating industry. In recent years, some domestic mainstream coating enterprises, such as sankeshu and badz, have gradually expanded their layout. However, foreign enterprises, such as nippon, PPG and Akzo Nobel, are still making sustained efforts in the field of building coating. According to relevant data, in 2007, the total production of architectural coatings in China was only 1.796 million tons, increasing to 6.389 million tons in 2016; in 2018, the total production of architectural coatings in China was about 7.176 million tons, accounting for about 38% of the total production of national coatings. From the perspective of the development of architectural coatings in the first half of 2019, the sales situation of some coating enterprises is not optimistic. In the first quarter of 2019, libon's financial report showed that the sales volume of the coatings business amounted to 9.046 billion yuan, down 1.1% year on year; among them, the sales volume of the construction coatings reached 4.708 billion yuan, the same as the previous period, and the sales volume of the construction coatings accounted for 52.05% of the total.

In the first half of PPG financial report, the sales volume of architectural coatings in the Americas and Asia Pacific region showed a single digit decline compared with the same period of last year, and the performance of various channels and regions was uneven. Due to the influence of climate on the market demand, the same store sales of self owned construction coating stores in the United States and Canada increased slightly. Due to the change of customer classification, the total sales volume of national retail (DIY) customers and independent dealer channels decreased significantly compared with the same period of last year. As of the end of the second quarter, the implementation of customer classification changes has reached one year. Sales of architectural coatings in Europe, the Middle East, Africa and Latin America saw low single digit growth, driven mainly by higher product prices. It is worth mentioning that the overall demand of China's construction coating market is increasing year by year, and the market capacity is also increasing. In recent years, under the guidance of the national mandatory "building external insulation" building energy-saving transformation and other policies, the integrated solution of building external insulation and coating system is advocated, and the relevant policies of urban-rural integration construction and old city transformation project also bring new development opportunities to China's architectural coatings. The demand trend of architectural coatings is closely related to the real estate industry. As an important part of the post cycle industrial chain of real estate, architectural coatings are closely related to the investment and development of real estate. However, as a pillar industry in China's economic system, real estate will still have considerable market space in terms of increment and stock in the future. The development of architectural coatings industry has three characteristics: periodicity, seasonality and regionality. In terms of periodicity, as an investment driven industry, architectural coatings and wood coatings are closely related to the demand for infrastructure construction and real estate industry development.

In terms of seasonality, due to cold weather and other factors, construction will be affected. In the first quarter, building construction and home decoration are less, so building coatings are in the off-season of sales. In the second quarter, the weather gradually warms up, while in the third and fourth quarters, building coatings are in the peak season of demand. Regionally, architectural coatings are mainly concentrated in Guangdong, Zhejiang, Jiangsu and other provinces. According to the data of the National Bureau of statistics, the real estate development investment in 2018 was 12026.4 billion yuan, up 9.5% year on year. In 2015, it dropped by 1%. In 2016, the national real estate market was in a high fever. The investment in real estate development exceeded 10 trillion yuan, with a year-on-year growth of 6.9%. In 2017, the investment in real estate development continued to grow at a high speed under the premise of no speculation in housing. It is worth noting that in 2018, the completed area of non real estate was only 940 million square meters, less than half of the construction area, which directly reduced the market demand of the construction coating industry. For the investment trend of real estate development in 2019, professionals analyze that the investment amount of real estate development in 2019 will be basically the same as that in 2018. At the central economic work conference, it was pointed out that we should build a long-term mechanism for the healthy development of the real estate market, adhere to the positioning that the house is used for living, not for speculation, and strengthen the main responsibility of the city government and improve the housing market system and housing security system because of the city's policy and classified guidance. Therefore, it is very difficult to achieve a substantial increase in the amount of real estate development investment in 2019.

Data shows that in 2018, about 90% of domestic architectural coatings are water-based coatings, which do little harm to human body in the construction field. At present, the degree of water-based coating is low, and the performance of water-soluble coating is only inferior to solvent coating. Architectural coatings took the lead in the initial completion of the replacement of water-based to solvent-based, in which the interior wall coating basically achieved water-based, the exterior wall was coated with fluorocarbon paint and oil-based varnish and a small number of oil-based products, other products have achieved water-based. Compared with wood coatings and industrial coatings, the proportion of waterborne coatings in building coatings is the highest. The main reason is that the water property of wood coatings is affected by national policies, downstream furniture factories and other comprehensive factors, while industrial coatings are more affected by policies, construction application environment, water-based technology and other factors. According to a foreign research report, by 2022, the market scale of architectural coatings in Asia Pacific will grow at a rate of 5.2% every year, and the output will reach 16.4 million tons. Although the growth of China's construction paint market slows down, the production is expected to reach 9.1 million tons in 2023. The first driving force for the development of architectural coatings is real estate. The renovation market of old houses is the new driving force for the development of architectural coatings. In order to realize the great leap forward of architectural coatings industry, we must grasp the key point driven by intelligent manufacturing innovation and overtake at the corner, which is not only the reform of human resources, production capacity and quality, but also the basic point to realize the industrial modernization of made in China 2025. With the state's control over the real estate industry and the increasing downward pressure on the national economy, the growth of the real estate market will slow down, so the growth of demand for building coatings will slow down. However, the transformation of old houses and the acceleration of urbanization may make up for the demand of some architectural coatings. The development of architectural coatings should be diversified, functional and customized.