The integration of the hottest coating industry ma

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The integration of the coating industry may just begin

the integration of the coating industry may just begin

March 11, 2020

China is currently the largest coating market in the world, accounting for about 33% of the global market by value, or even higher by volume. In addition, although the growth rate of the Chinese market has slowed down in recent years, it is still higher than the global average as a pan European dealer for 1 parent time, which further improves China's position in the global market. However, the future market development is closely related to many dynamic factors, including strict environmental regulations, the transfer to high-end products and the increase in labor costs. It is these factors that promote the integration of coatings in China's coating industry

since the implementation of relevant environmental protection regulations, the use of solvent based coatings in more developed cities and provinces has been limited by the ratio of the number of teeth of large and small gears. For example, since May 1st, 2017, Shenzhen has banned the use of solvent based coatings, adhesives and toxic plates in the manufacturing of furniture products. From May 1st, 2018, Shanghai banned the use of solvent based exterior wall coatings in new, reconstructed and expanded construction projects; It is forbidden to use solvent based wood coatings in construction (decoration) projects. In March, 2018, Tianjin issued the implementation plan for the comprehensive treatment of painting operations in the motor vehicle maintenance industry in Tianjin, requiring the city's auto repair industry to fully start using water-based coatings by January 2019

in addition to these separate prohibitions, another alternative driver is the imposition of environmental taxes on volatile organic compounds, including benzene and toluene. In fact, the catalogue of guidelines for industrial restructuring issued by the national development and Reform Commission in April 2019 encourages the use of low volatile organic compound coatings in water-based woodwork, industry, marine coatings, functional exterior wall insulation coatings and other fields

based on this, all companies have made corresponding responses, increasing the production capacity of their water-based coatings and shutting down the production capacity of solvent based coatings. For example, Chongqing Three Gorges announced the construction of a water-based industrial coating production line with an annual capacity of 25000 tons in May 2019 to replace the existing 10000 tons of solvent based coating production capacity

in addition, due to the policy of transferring the production of hazardous chemicals from cities to chemical parks, many coating companies need to relocate. For small paint manufacturers with low-end products and low investment capacity, relocation is usually equivalent to a complete closure of the factory, especially when the chemical park is increasingly strict about the choice of tenants installed in the machine. This opens the main motor source of the experimental machine and may further push the coating industry to Western China. Sichuan is already the fourth largest coating production area in China's provinces. Although environmental regulations in Shanghai and Jiangsu are strictly enforced, Sichuan's chemical parks are still open to new entrants

in general, these phenomena will promote the continuous integration of the industry. By the end of 2015, there were about 10000 paint manufacturers in China, of which only 2000 had annual sales of more than 20million yuan. In the past three years, due to strict environmental protection regulations, 4000-5000 of the 8000 smaller factories have closed or stopped production. Even so, the sales of China's top 100 paint manufacturers account for only 49% of the total sales of China's paint industry. Similarly, although eight of the world's Top 80 coating companies are headquartered in China, their scale is still small compared with the world's largest coating manufacturers, and the two largest coating manufacturers in China are only ranked 26th and 28th in the list

integration pressure also comes from the need to develop new and more environmentally friendly products. Companies that cannot invest in R & D will sooner or later be driven out of the market unless they try to sell themselves to large companies before they are forced to shut down. On the contrary, some large domestic coating companies have recently expanded their R & D activities and subsequently launched many new products

leading enterprises continue to invest heavily in increasing production capacity and new products, such as:

• AkzoNobel has added three new production lines in the powder coating factory located in Changzhou, Jiangsu

• asitrang will build a new production base in Changsha, Hunan Province, with an investment of 600million yuan and an annual output of 200000 tons of architectural coatings

• aistrang will focus on the high-end powder coating market, Launch a new product line and service mode

• BASF will build a new factory for automotive touch up paint in Jiangmen City, Guangdong Province, which will be put into operation in the first half of 2022

• garberry will establish a 500000 ton new building materials production line in Anhui Mingguang Economic Development Zone, including architectural coatings

• Haihong elderly will invest US $170million in Zhangjiagang to increase 200000 tons of marine coatings Production capacity of industrial coatings and water-based coatings

• Keshun Co., Ltd. held the foundation laying ceremony of Fujian Keshun new material intelligent production base project in December 2019

• Dongfang Yuhong put into production several production lines in September 2019, including one with an annual output of 40000 tons of water-based coatings and one with an annual output of 100000 tons of polyurethane waterproof coatings

• PPG will build a R & D and production base in South China from 2020 to 2022, Invest 620million yuan

• sankeshu opened its Anhui sankeshu eco industrial park in April 2019, and invest 686 million yuan

• Sherwin Williams opened a new Asian headquarters in Shanghai in 2019, calling it "an important bridgehead to promote the growth of the region"

• Shenzhen Youwei and Hubei Yihua will invest 8billion yuan in Hubei to build the world's largest UV curing material project, Products include raw materials for UV curing coatings and LED curing coatings

with the consolidation of the industry pattern and the rise of labor costs, the degree of automation will also be improved. Automatic coating production line can not only reduce operating costs, but also improve production efficiency and product quality. After the opening of bards Zhongshan factory in February 2019, the company announced that the introduction of intelligent manufacturing system aims to improve production efficiency and the stability of product quality

coating companies are also actively looking for partners to consolidate their position. For example, Lanling chemical aims to cooperate more closely with Sinopec, while Dongfang Yuhong signed strategic cooperation agreements with Celanese and Yanshan Petrochemical. Chenyang group announced that it plans to cooperate more extensively with DSM, a Dutch chemical company, to promote the development of sustainable coating solutions in the Chinese market. Some coating companies have reached long-term supply agreements with downstream user companies

in the long run, leading Chinese enterprises may hope to reduce their dependence on the domestic market by targeting markets outside China. The acquisition of overseas coating companies is the most promising way to achieve sales outside China in a timely manner

industry integration may have a highly positive impact on the current development of China's coating industry. Industry integration will be accompanied by a higher share of high-end environmental protection products and higher profit margins. However, only those strong paint companies that can survive in the current merger stage will benefit. For many small businesses, mergers mean that they must exit the market unless they can find strong partners or buyers for their companies. Large companies may want to take advantage of this opportunity to acquire assets and brands, or consider expanding overseas

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