According to a report by the National Bureau of Statistics, 1,336 large coating companies produced about 17.6 million tons of paint in 2018. This represents an increase of 5.9% (16.6 million tons) over 2017's adjusted output. Total powder coating production is expected to be 1.76 million tons in 2018, up 9.7% YoY, reflecting that environmentally friendly coating products are growing faster than the overall coatings industry.
Anhui Meijia New Materials Co., Ltd. is the first powder coating company listed in China. In 2018, Meijia's total revenue reached 806 million yuan, an increase of 21.2% over 2017. Research and development costs increased by 16.85 per cent, but their share of total revenue was only 0.33 per cent, which means that domestic companies still have a lot of room to develop and invest more in research and development.
The main application Fields
Household appliances, building materials and the general industrial sector are the main application areas for powder coatings. Over the years, the share of powder coatings for electrical and electronic appliances has shrunk from about 25% in 2012 to 19.6% in 2017.
In addition, the building materials and general industrial sectors continued to increase their share during the same period. But unlike the Western car market, This area in China has not yet become a major application area for powder coatings. The industrial and agricultural machinery and automotive industries account for only about 6% of the total. Pre-coated steel plates are widely used in refrigerator manufacturing, which limits the overall growth of powder coatings in the household appliance spree.
Although China produces about half of the world's powder coatings, high-end powder coatings such as polyurethanes, acrylics and fluorocarbons still account for less than 1%. It is estimated that there are about 2,100 powder coating manufacturers in China. As a result, low-level competition with pricing at its core slows down the overall quality of the industry.
In addition, although TGIC has been subject to regulatory restrictions in some Western countries, it is still widely used in China in polyester powder coatings, especially aluminum products.
However, the development prospects of China's powder coatings are very optimistic. Environmental regulations have prompted more companies to adopt green technologies, including powder coatings, and the automotive industry offers huge growth potential.
Currently, although the penetration of powder coatings used in the automotive industry is less than 2%, some car companies have begun to expand the use of powder coatings, which may increase the demand for powder coatings.
In fact, more and more large players are strengthening their competitiveness in China, but everyone has their own perspective and strategy. Jotun, the global leader in marine coatings, is relatively small in the powder coatings market.
The company's marine coatings sales are about Rmb2.7bn. By comparison, its powder coating sales are only about 100 million yuan. Jotun plans to expand its sales in the construction sector through close collaboration with designers and major customers.
But a growing number of international companies want to become independent in China and end existing relationships with local companies, which is a new phenomenon.
Faster response times and business agility are the main reasons behind decisions.
By the end of 2018, AkzoNobel had acquired all of Swire's stake in a joint venture previously owned by the two companies. At the same time, Swire said it would sell all of its paint interests, estimated at HK$2.7bn, to AkzoNobel. The joint venture mainly sells decorative coatings based on the Doleshi brand. AkzoNobel's profits fell 29.2% in the first half of 2018.
In addition to AkzoNobel, Essade is close behind. Both Essd and Yongjia have announced that they will dissolve their joint venture, which they have invested in in China for years.
According to the press release, Asda will acquire the Qingpu plant from the deal, and Yongjia will acquire four other plants, namely Huangshan, Chengdu, Dongguan and Jinan.
Essd said the move would help Estech accelerate the introduction of its global high-quality powder coating technology into the Chinese market.
Yongjia also said that in the future will increase research and development investment and increase production capacity.
The construction coatings market will be a battleground for large enterprises of the future, with leading companies adding new capacity across China. The three new plants in Anhui started production in April. The plant has a total investment of 686 million yuan, mainly the production of interior and exterior coatings, waterproof, insulation, accessories, flooring and other products. With nine production sites and 43 joint ventures in China, Three Trees is one of the largest construction coatings companies in China.
U.S. President Donald Trump's administration has raised tariffs on $200 billion in Chinese exports from 10 percent to 25 percent, pushing furniture, home appliances and electronic sons and equipment manufacturers to move factories to other countries.