China’s coatings market has witnessed another rise in output for H1 2017, while the
profits for manufacturers went down once more due to rising raw material prices
and environmental pressure.
the first six months of this year, the combined output of 1,358 large-scale
coating manufacturers in China increased by 10.50% YoY to 641,000 tonnes. The output
growth was supported by the strong economical southern region of China, while
other areas in west and north even saw declines in output.
2016, China produced 57% of coatings in the Asian Pacific and 28.50% of the
world total, proving that China had become a major production base of the
international coating industry. In H1 2017, domestic coating
manufacturers ended up in the red and the profit losses of them surged YoY
due to climbing prices of raw materials, environmental inspections and merger and
elimination in the coating industry.
the latest round of environmental inspections in China, coatings manufacturers
have suffered huge pressure with several small and middle-sized enterprises
needed to shut down due to insufficient environmental protection measurements.
to market researcher CCM, despite the rising output of China’s coatings
industry, the profit for manufacturers actually fell down in the first half of
2017. One of the main reasons for the shrinking profits can be found in the
rising costs for raw materials like TiO2, which is the largest raw material for
the coatings industry, as Chinese manufacturers are consuming about 60% of the
domestic TiO2 supply yearly. To be more precise, the price of emulsion, resin,
and solvent has boomed by over 30% from 2016 to 2017.
all, producers of coatings are very vulnerable to price hikes of raw materials,
because the costs of those can make up to 86% of the total operating costs. As
a result of the rising prices, many manufactures have increased their quoted
prices for coating products to relieve some of the cost pressure.
to statistics from the National Bureau of Statistics of the People's Republic
of China, domestic large-scale coating companies produced a total of 1.91
million tonnes of coatings in June 2017, up by 11.70% YoY, and the combined
coating output from Jan. to June increased by 10.50% YoY to 9.64 million
at the downstream industries of coatings in China, while the constructing
industry in China is getting some setback by the government, the furniture and automobile industry are prosperous and driving the demand for coating.
countries, like India or China, have a booming construction and automotive
market, which are the main drivers for the coatings industry. Hence, the demand
for coating products is very high. Chinese coating market has already climbed
number one in the world size, but industry insiders still see huge potential
for the future, as the consumption per capita is still lower than other
industrial coatings market is growing steadily and will reach a market worth of
about USD41,700 by 2022. The industry is marked by a row of mergers and
acquisitions, while manufacturers are paying more focus on enhancing their
product portfolio to stay ahead of the fierce competition.
China’s subsidiary of PPG Industries, PPG Zhangjiagang, has announced to expand
its production lines of packaging coatings, industrial coatings, and automotive
paints. The current largest coating production base is PPG Paints, another
subsidy located in Tianjin, China. PPG Tianjin was PPG's first factory in
China, and is mainly engaged in the production of high performance automotive
coatings and industrial paints. In 2016, sales and output from the plant
reached USD782.03 million and 110,000 tonnes respectively. Zhangjiagang's new
construction will actually be the fourth expansion to the production base. PPG
has recently accelerated investment and capacity expansion in China. This can
be attributed to pressure from AkzoNobel, one of PPG's rivals, which is
developing rapidly, and the promising future of China's vast coating market. In
January 2016, the company has opened a USD20 million center for on-site
electrocoat coatings in the Zhangjiagang facility. The center was mainly opened
to meet the high demand in the automotive-manufacturing industry in China,
which is in line with the growing environmental regulations in China.
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