Analysis on Chinese Coating Industry Development

Introduction

The Chinese coating industry mainly includes construction coating, powder coating, automobile coating, wood coating, industrial protective paint, marine paint, coil coating, etc. As one of the biggest industry in China, coating industry is in the midst of transformation. So, the increase rate of coating output slows down in recent years.

In June, 2017, the Chinese coating output in Chinese large-sized companies was 1,908kt, which was up 11.7% Y-O-Y. The accumulative output of coating products was 9,641kt from January to June, which was up 10.5% Y-O-Y.

The development of Chinese coating industry can be summarized as the following aspects:

> The Chinese coating market lacks brand products, and leading companies plan to accelerate arrangement. Although there are numerous coating companies in China, both the scale of companies and the quality of coating products are uneven. Compared with the international coating industry, the Chinese coating industry lacks high-end coating products and the concentration degree is lower. As buyers pay more attentions to brand, the high-end brand of coating products in China is expected to improve. Many large-sized coating factories, like DuPont, begin to arrange the high-end coating industry.

> Many companies take resource integration. In 2017, the resource integration becomes more obvious among Chinese coating companies, which includes integration of companies and financial funds adjustment. The concentration is improved in the Chinese coating industry.

> The reshuffle is accelerating in the Chinese coating industry. The supply-demand is still unbalanced distinctly. Also, the competition among companies is intense gradually. With the change of national macro-control and economic situation in 2017, the Chinese coating industry is facing rapid reshuffle. Moreover, consumers focus far more on brand and services. The companies that lack competitive edge will be eliminated gradually.

> The growth rate of coating output slows down. The Chinese economy market becomes weak gradually. With the real estate industry being grim, the coating market becomes rough. The Chinese coating industry is in the stage of upgrading and transformation. In the future, oil coatings will be replaced by the water-based coatings. As the coating industry is hard to transform at present, it is predicted that the Chinese coating output will maintain on a low level, which will be 5%.

> The transformation of water-based coatings still needs to improve. At present, the Chinese coating industry is undergoing the transition from solvent coatings to water-based coatings. However, because of the production and using method, this transition is hard. On one hand, the production cost of solvent coating is much lower than it of water-based coatings. On the other hand, the prices of water-based coatings are high, and the product performance is lower than that of solvent coating. It is hard for purchasers to accept water-based coatings at once.

However, the VOCs standard is stricter. There are also clear requirements for controlling the total emission of VOCs in many areas. From January 1st , 2018, the government will levy environmental taxes on benzene and methylbenzene producers, which will increase the production cost greatly. As a result, the advantage of using water-based coatings will emerge gradually.