Developments in the Coatings Industry

By Yang Yuande, China Coating Industry Association

China’s output of coatings between 2005 and 2014 increased from 3.8257 million tons to 16.4819 million tons (see table 1), with annual growth averaging 17.6%. In the same time frame, annual output value grew from RMB73.474 billion to RMB386.759 billion, with average growth of 20.3%. This year, few expect output growth to be double-digit – instead, it may be similar to 2014’s 7.9%, so the industry may be entering a period of 6%~8% growth.

Table 1   Major economic indices for China’s coatings industry, 2005-2014

Year    Output (kt)    Production value
(RMB billion )    Profit (RMB billion )    Average price
(RMB thousand/t )
    Actual value    YoY Growth (%)    Actual value    YoY Growth (%)    Actual value    YoY Growth (%)    
2005    3 825.7    28.31    73.474    36.09    4.431    38.14    19.2
2006    5 078.0    32.73    96.316    31.09    6.567    48.21    19.0
2007    5 972.8    17.62    126.468    31.31    8.639    31.55    21.2
2008    6 380.0    6.82    182.194    44.06    9.922    14.85    28.6
2009    7 554.4    18.40    183.590    0.77    11.352    14.42    24.3
2010    9 666.3    27.96    202.682    26.40    14.077    19.90    21.0
2011    10 795.1    16.40    272.976    25.60    18.391    13.80    25.3
2012    12 718.7    11.80    293.460    12.40    21.409    16.34    23.1
2013    15 279.6    20.13    341.678    16.43    24.410    14.02    26.2
2014    16 481.9    7.90    386.758    13.19    27.626    13.17    23.4


Table 2   China’s coatings output by region

Region    Coatings output (kt)
    2014    2013    YoY growth (%)
China        16 481.9    15 279.6    7.9
North China    Beijing    214.5    228.0    -5.9
    Tianjin    304.7    274.2    11.1
    Hebei    840.7    700.5    20.0
    Shanxi    31.2    31.8    -1.7
    Inner Mongolia     1.6    1.4    12.0
Northeast    Liaoning    533.0    593.6    -10.2
    Jilin    131.1    108.0    21.4
    Heilongjiang    119.2    63.7    87.1
East China    Shanghai    1 870.9    1 692.4    10.5
    Jiangsu    1 821.5    1 727.7    5.4
    Zhejiang    850.3    786.3    8.1
    Anhui    536.3    465.4    15.2
    Fujian    694.2    594.5    16.8
    Jiangxi    80.8    84.1    -3.8
    Shandong    907.0    982.4    -7.7
South Central    Henan    889.4    808.4    10.0
    Hubei    402.4    343.8    17.0
    Hunan    1 258.6    964.4    30.5
    Guangdong    3 339.9    3 123.8    6.9
    Guangxi    200.5    246.0    -18.5
    Hainan    2.4    2.6    -5.7
Southwest    Chongqing    230.9    211.0    9.4
    Sichuan    875.4    946.3    -7.5
    Guizhou    35.4    38.0    -6.7
    Yunnan    61.4    59.6    3.1
Northwest    Shaanxi    181.9    142.9    27.3
    Gansu    26.7    28.2    -5.4
    Ningxia    4.9    2.9    68.3
    Xinjiang    34.8    27.4    26.7




1. Production

The value of China’s coatings output has been growing more slowly, but the slowdown has been smooth, reaching a year-on-year growth of 13.19% last year, when 1 344 of the larger enterprises produced 16.482 million tons, up 7.9% year-on-year (see table 2). Environmental protection policies, competition for funding, variable production costs and the emergence of branding make it increasingly difficult for small enterprises to survive. Thus, a wave of failures is sure to hit small coatings enterprises in the next five years.
In 2014, coatings output declined in Beijing, Shanxi, Liaoning, Shandong, Sichuan – all of them major producing areas – down 5.9% in Beijing, 7.7% in Shandong and 7.5% in Sichuan. The causes were product structure, market conditions, government policies and costs. In addition, the number of larger coatings enterprises in Inner Mongolia and Guangxi declined. Several enterprises in Inner Mongolia were basically idle, and most of the small coatings enterprises in Wuhai, Baotou and Hohhot were bankrupt. On the other hand, the number of larger enterprises increased in Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Anhui, Hubei, Guangdong, and Sichuan – other major producing areas in China. These areas still have the market opportunities and environmental resources to introduce new coatings enterprises. Coatings output in Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Henan, Hubei, Hunan, Guangdong increased 20.0%, 10.5%, 5.4%, 8.1%, 15.2%, 16.8%, 10%, 17.0%, 30.5%, 6.9%, respectively, and the combined output of these areas in 2014 was 12.504 million tons, 75.9% of the nation’s coatings output. Tianjin, Jilin, Heilongjiang, Chongqing and Shanxi maintained robust growth trends, up 11.1%, 21.4%, 87.1%, 9.4%, 27.3%, respectively.

2. Import and export

China’s import and export of coatings in 2014 reached a combined US$1.77 billion, up 7.9% from US$1.64 billion in 2013. The trade deficit was US$340 million, down 20.9% from US$430 million in 2013. In 2014, China imported 185 kt of coatings, up 2.2% year-on-year, and worth US$1.06 billion, up 2.2% year-on-year. The average import price was US$5 700/t, to the same as in 2013. China exported 197 kt of coatings in 2014, up 10.9% year-on-year and exceeding the import volume for the first time. The value of the exports was US$720 million, up 18% year-on-year, and the average price was US$3 600/t, higher than 2013’s US$3 400/t and continuing a rising trend. Export was still small fraction of output, about 1.2% of value and 1.2% of volume.
In 2014, the two categories of products with the highest foreign trade volumes, both import and export, were “32081000 polyester paint and varnish soluble in non-aqueous medium” (27 kt in, 43 kt out) and “32089090 other paints and varnishes soluble in non-aqueous medium” (38 kt in, 64 kt out). However, the import volume of “32081000” was down 5.3% year-on-year and the import volume of “32089010 polyurethane paint and varnish soluble in non - aqueous medium” increased significantly, up 39.9%. The import price of “32089010” decreased from US$4 600/t to US$3 800/t, biggest drop among import prices.
Most import prices of coating products increased, except “32089010” and “32089090”, and the biggest price increase was “32099020 fluororesin paints and varnishes”, up from US$15 000/t in 2013 to US$17 000/t in 2014. Besides, the export price of “32099020” was in the process of decline, down from US$18 100/t in 2012 to US$16 000/t in 2013, to US$14 700/t in 2014, dropping 18.8% in two years. Meanwhile, the export volume and export value increased greatly, up 46.4% and 34.8%, respectively.
The product category with the biggest drop in export volume was “32082020 polyethylene paints and varnishes soluble in non-aqueous medium”, with 943 tons exported, down 15.8%. However, the export prices on this category increased fastest, up from US$4 500/t in 2013 to US$7 800/t in 2014, and the export value was up by 44.7%. The product category with the biggest increase in export volume was “32091000 polyacrylic acid paint and varnish soluble in aqueous medium”, with 16 kt exported, up 23.7%. Export prices decreased somewhat, down from US$2 300/t in 2013 to US$1 700/t in 2014.

3. Prospects

Players in the domestic coatings industry should pay more attention to developing special functional coatings, such as functional nano coatings, ceramic silicone coatings, phase-transfer thermal insulation coatings, photocatalytic purification coatings, and especially environment-friendly coatings. In addition, applications of graphene in coatings and the refreshing & recoating process will be hot topics and significant research directions of China’s coatings industry.
Pressure is high this year, with much uncertainty. Output is expected to reach 17.6 million tons, with an annual growth rate of 7%, and output value reaching RMB415.0 billion, up 7%~8%. Profit is expected to exceed RMB30 billion – rapid growth of 8%~10%.