Economic Performance of China Coatings Industry in 2016

China Coatings Industry Association

In 2016, the annual output of China’s 1 358 coatings enterprises above state designated scale was up to 18.9978 million tons, up 7.2% YoY. The main business income of those firms reached RMB435.449 billion, up 5.6% YoY.
China’s total output of coatings increased from 5.078 million tons in 2006 to about 18.9978 million tons in 2016 (see Table 1), increasing 2.74 fold; the main business revenue of coatings industry increased from RMB90.316 billion in 2006 to RMB435.449 billion in 2016, increasing 3.82 fold. In recent years, the growth of coatings output and related business income has been gradually slowing; although growth is slowing down, it is more stable (see Figure 1 and Figure 2).

Output & main business revenue by region

During 2016, there was no significant YoY change in the distribution pattern of coatings output by province. Output in East and Central South China predominated (as shown in Figure 3). The combined output of these two regions accounted for 78% of the country's total coatings output. As shown in Table 2, actual output growth in three provinces and one municipality – Guangdong, Shanghai, Jiangsu and Hunan – added up to 738 kt. In addition, the output of Sichuan, an important province in the southwest, increased 11.1% YoY, 133kt; growth of Gansu province in the northwest was also prominent, an increase of 360% YoY, 101.7 kt.

Table 1   Major economic indicators of China’s coatings industry, 2006-2016

Year         Output (kt)    Main business income (RMB million)    Profit (RMB million)
    Volume    YoY growth (%)    Value    YoY growth (%)    Value    YoY growth (%)
2006    5 078.0     32.7     96 316.01    31.09     6 567.24    48.2
2007    5 972.8     17.6     126 468.03    31.31     8 639.08    31.6
2008    6 380.0     6.8     182 193.59    44.06     9 922.01    14.9
2009    7 554.4     18.4     183 590.59    0.77     11 352.53    14.4
2010    9 666.3     28.0     202 682.00    26.40     14 077.00    19.9
2011    10 795.1     16.4     272 976.30    25.60     18 390.81    13.8
2012    12 718.7     11.8     293 460.32    12.40     21 409.24    16.3
2013    13 033.5     3.6     341 677.66    9.50     24 410.54    11.1
2014    16 481.9     7.9     386 758.56    11.90     27 626.04    12.9
2015    17 175.7     4.2     418 484.43    7.30     30 848.33    10.0
2016    18 997.8     7.2     435 448.90    5.61     35 340.03    15.4



In 2016, the distribution of the main business revenue by province was roughly the same as that of output, as shown in Table 3. East China and Central South China together accounted for 83% of the national coatings main business revenue. The real increase of the main business revenue of Guangdong province, Shandong province and Tianjin municipality contributed an obvious pulling effect to the growth of the national total main business revenue.  Decline of main business revenue was most obvious in Liaoning province, suffering a decline of 75.88%, or RMB6.86 billion.

Import & export

China’s total trade value of import and export in the coatings industry was US$1.6449 billion in 2016, a decrease of 12.04% compared with US$1.87 billion in 2015; the trade deficit continued to rise in 2016, reaching US$384.4 million, an increase of 65.44% compared with US$232.35 million in 2015, up by 12.58% compared with US$341.46 million in 2014. In 2016, the import volume of coatings was 173kt, a decline of 1.4% YoY; the import value amounted to US$1014.65 million, an increase of 1.3%; the export volume of coatings was 178kt, a decline of 14.9% YoY; export value of US$630.25 million, down 18.1%.

Table 2   Coatings output by region, 2014-2016

Regions    Number of enterprises    Coatings output (t)
    2016    2015    2014    2016    2015    2014    2016-2015
YoY (%)
Total    1358    1348    1344    18 997 792    17 729 580    16 487 971    7.2
North China    Beijing    25    27    30    213 933    218 150    230 763    -1.9
    Tianjin    37    33    33    347 684    305 515    304 698    13.8
    Hebei    31    29    30    798 618    727 058    839 516    9.8
    Shanxi    6    6    5    28 629    33 081    32 653    -13.5
    Inner Mongolia    2    2    3    3 250    2 461    1601    32.1
Northeast    Liaoning    33    48    60    170 471    350 014    489 597    -51.3
    Jilin    9    11    12    129 940    119 765    132 979    8.5
    Heilongjiang    6    8    8    207 583    156 518    129 797    32.6
East China    Shanghai    93    95    97    2 113 292    1 913 445    1 867 976    10.4
    Jiangsu    187    200    195    2 272 633    2 157 078    1 901 488    5.4
    Zhejiang    122    119    118    840 927    848 129    871 952    -0.8
    Anhui    63    65    56    661 712    663 125    585 092    -0.2
    Fujian    60    55    58    794 285    756 082    692 780    5.1
    Shan-dong    68    67    66    996 013    964 092    944 873    3.3
    Jiangxi    14    15    13    81 148    70 253    83 767    15.5
Central South    Henan    52    45    47    1 077 006    1 056 378    804 449    2
    Hubei    48    52    46    407 349    382 430    425 683    6.5
    Hunan    50    47    48    1 338 646    1 191 452    1 011 552    12.4
    Guang Dong    314    290    292    3 873 513    3 597 915    3 371 096    7.7
    Guangxi    16    17    16    385 428    342 184    197 669    12.6
    Hainan    2    2    1    39 580    29 801    2 435    32.8
Southwest    Chong Qing    28    27    25    297 617    265 217    235 211    12.2
    Sichuan    54    50    49    1 335 740    1 202 804    964 748    11.1
    Guizhou    4    4    4    31 114    28 439    32 654    9.4
    Yunnan    7    7    7    49 231    52 889    61 401    -6.9
    Tibet    0    0    0    0    0    0    —
Northwest    Shaanxi    16    15    14    246 463    212 565    181 931    15.9
    Gansu    4    4    4    129 969    28 239    26 674    360.2
    Qinghai    0    0    0    0    0    0    —
    Ningxia    1    2    1    3 479    2 543    2 952    36.8
    Xinjiang    6    6    6    122 539    51 960    59 985    135.8



As shown in Table 4, the largest category of imported coating products in 2016 was “non-aqueous polymer coatings not included in other codes” under HS code 32089090, whose imports amounted to 39.7kt, an increase of 8.8% YoY, and its import value was US$280 million, an increase of 23.4% YoY. The largest export volume was also happened by this code, the export volume of 59.7kt, down by 15% YoY, the export value of US$187 million, down by 17% YoY. Compared to the last year, the actual export volume decreased 10.5 kt. The overall decline in exports was also influenced by another code-32081000 “polyester based paints and varnishes (including enamels and lacquers), dispersed or dissolved in a non-aqueous medium,” compared to the previous year, and the export volume under this code decreased by 15.1 kt. The total reduction of exports of these two codes was 25.6kt, accounted for 82% of the national export reduction of 31.1kt, and had a significant effect on the decline in total exports.

Table 3   Major economic indicators of China’s coatings industry by region, 2016

Region    Number of enterprises in 2016    Main business revenue (RMB million)    Total profit  (RMB million)
        2016    2015    YoY (%)    2016    2015    YoY (%)
North China    Beijing    22    3 205.98    3 066.60    4.55     230.06    236.51    -2.7
    Tianjin    47    23 163.88    18 912.20    22.48     3 290.515    2 993.70    9.9
    Hebei    57    11 598.24    10 821.01    7.18     1 459.88    1374.77    6.2
    Shanxi    7    368.44    819.63    -55.05     10.35    33.54    -69.1
    Inner Mongolia    3    614.49    614.73    -0.04     0.48    -0.50    195.2
North-east    Liaoning    51    2 180.35    9 039.97    -75.88     57.87    377.05    -84.7
    Jilin    19    6 526.30    5 544.37    17.71     383.49    397.67    -3.6
    Heilongjiang    8    1 808.50    1 401.00    29.09     38.50    35.10    9.7
East China    Shanghai    127    37 082.54    37 849.74    -2.03     3 399.25    3 065.80    10.9
    Jiangsu    352    105 757.19    106 254.38    -0.47     7 286.77    7 341.40    -0.7
    Zhejiang    133    12 370.73    14 918.06    -17.08     957.63    970.94    -1.4
    Anhui    95    12 097.85    12 290.93    -1.57     862.27    750.03    15.0
    Fujian    89    15 731.11    15 580.22    0.97     866.55    922.32    -6.0
    Shan Dong    31    5 242.78    4 532.93    15.66     293.73    256.97    14.3
    Jiangxi    142    31 841.56    27 427.47    16.09     2 189.42    1 982.65    10.4
Central South    Henan    68    12 933.21    12 410.24    4.21     1 124.77    1 097.36    2.5
    Hubei    116    16 179.25    15 325.59    5.57     832.12    728.01    14.3
    Hunan    59    19 878.08    16 440.13    20.91     1 787.34    1 460.68    22.4
    Guang Dong    450    85 480.29    80 860.90    5.71     8 315.69    5 347.01    55.5
    Guangxi    18    5 005.87    4 776.38    4.80     282.09    314.06    -10.2
    Hainan    2    1 789.41    837.21    113.74     0.76    -5.95    112.8
South-west    Chong Qing    32    4 270.10    3 314.11    28.85     665.68    496.99    33.9
    Sichuan    68    10 408.51    9 853.26    5.64     810.89    783.35    3.5
    Guizhou    7    348.27    146.59    137.58     19.69    1.56    1163.1
    Yunnan    5    499.02    433.53    15.11     5.18    6.91    -25.1
    Tibet    0    0    0    ——    0    0    ——
North-west    Shaanxi    22    3 469.66    2 715.66    27.76     375.56    306.47    22.5
    Gansu    6    2 547.43    385.08    561.52     -214.16    22.44    -1054.4
    Qinghai    0    0    0    ——    0    0    ——
    Ningxia    2    98.55    65.68    50.05     16.89    7.95    112.5
    Xinjiang    6    2 549.05    1 846.84    38.02     -28.17    -456.44    93.8


Table 4   Foreign trade in coatings & inorganic pigments, 2016

Product code    Product name    Import    Export
        Volume
(t)    Value (US$ million)    YoY (%)    Volume
(t)    Value (US$ million)    YoY (%)
                Volume    Value            Volume    Value
inorganic pigments    28170010    Zinc oxide    9 642    22.38    17.3    1.0    16 457    30.13    22.5    18.8
    28211000    Iron oxides and hydroxides    200 256    104.08    -0.9    -5.5    307 228    306.79    2.6    -7.2
    28241000    Lead oxide (litharge, yellow lead)    0    0    -    -    519    1.48    -13.3    -14.4
    32061110    Titanium dioxide    189 242    468.89    -7.1    -8.4    720 470    1197.58    33.8    24.5
    32062000    Pigments and articles based on chromium compounds    1 191    12.95    -7.4    24.8    7 795    25.34    12.0    8.0
    32064210    Charlton white (lithopone)    128    0.55    -8.7    -5.5    18 306    30.49    -9.1    41.4
    32129000    Pigments used in the manufacture of paints (including enamels); dyes and other coloring materials in retail and retail packaging    13 218    146.81    10.0    12.5    16 060    108.32    57.5    63.8
Coatings    32081000    Paints and varnishes based on polyester ingredients (including enamels and lacquers), dispersed or dissolved in a non-aqueous medium    23 902    115.98    -13.7    -18.1    31 124    118.19    -32.7    -32.9
    32082010    Paints and varnishes based on acrylic polymer ingredients (including enamels and lacquers), dispersed or dissolved in a non-aqueous medium    24 180    173.70    -3.1    -2.1    28 184    109.34    -13.8    -15.8
    32082020    Paints and varnishes based on vinyl polymer ingredients (including enamels and lacquers), dispersed or dissolved in a non-aqueous medium    522    2.89    -13.0    -29.2    1 893    19.02    18.3    6.8
    32089010    Paints and varnishes based on polyurethane compound    13 596    56.61    -22.2    -12.6    9 640    46.63    -1.3    2.9
    32089090    polymer coatings solved in non-aqueous medium, not included in other codes; solution of Chapter note 4     39 742    280.68    8.8    23.4    59 747    186.51    -15.0    -17.0
    32091000    Paints and varnishes based on acrylic or vinyl polymers, solvedin water    30 675    87.44    25.3    16.4    13 065    29.29    2.0    26.0
    32099010    Paints and varnishes based on epoxy resins    12 100    31.27    -32.5    -23.2    3 039    16.12    -15.7    -25.6
    32099020    Paints and varnishes based on fluorine resins    617    10.39    -9.4    -8.2    1 845    28.04    -41.0    -38.1
    32099090    Paints and varnishes based on unlisted polymers    9 010    59.27    12.7    2.2    18 534    32.87    5.1    1.6
    32100000    Other paints and varnishes, water born pigments for leather    12 451    97.12    7.5    6.2    5 597    18.61    -9.1    -28.5
    Other coatings products    6 623    99.29     -    -    5 226    25.64    -    -
    Total (coatings)    173 418.4    1 014.65    -1.4    1.3    177 893.7    630.25    -14.9    -18.1



Development of inorganic pigments industry in China in 2016

1. Titanium dioxide
China's titanium dioxide production reached 2.6434 million tons in 2016 (see Table 5), an increase of 31.98% YoY, due mainly to product prices rising continually over the past year (unit price rose from RMB10 000/t to almost RMB20 000/t). Supply was not adequate to meet demand.
In 2016, the foreign trade surplus of China’s titanium dioxide industry continued to grow; exports increased from 538 394 tons in 2015 to 720 470 tons, an increase of 33.8% YoY; export value increased from US$962.06 million in 2015 to US$1.19758 billion, an increase of 24.5% YoY. A large increase in export volume reduced the pressure on the stock market and pushed up product prices. The import volume and value both decreased YoY (see Table 6).
2. Iron oxide
The main operation characteristic of China’s iron oxide inorganic pigment industry in 2016 was that prices of finished products rose slowly compared with raw materials prices. Since the third quarter of 2016, the prices of raw materials for iron oxide production have risen rapidly. Algam prices went up to about RMB2 200 /t from RMB1 950/t; ferrous sulfate price rose from RMB190/t to RMB210/t. Prices of liquid caustic soda rose from around RMB800/t to about RMB1 200/t. Coal price rose to RMB1 050 /t (6000 kcal coal). According to an insiders’ forecast, iron oxide pigment prices will rise by 10-15% in 2017.

Table 5   Titanium dioxide capacity & output, 2012-2016

Year    Capacity (kt)    YoYgrowth (%)    Output (kt)    YoYgrowth (%)    Output in rutile type (kt)    Ratio of rutile type (%)
2012    2 785    6.3    1899    5.2    1326.7    69.9
2013    2 907    4.4    2137    12.5    1539.5    72.1
2014    3 217    10.7    2466    15.4    1879    76.2
2015    3 290    2.3    2323.6    -5.77    1763.6    75.9
2016    3 243    -1.4    2643.4    31.98    2004.7    75.8

Table 6  Foreign trade in titanium dioxide, 2015-2016

Year    Import    Export