Weak demand in paint market

The global economic downturn in 2011 caused the entire building materials market to be sluggish and lifeless. Of course, the paint industry is no exception. According to the forecast of the head of building materials, the production and sales growth of the paint market in 2011 will be flat or declining. However, thanks to the support of the Chinese government's active policies, the paint market should resume rapid growth in 2012.

Lack of demand caused the market to be weak. Influenced by the world economic environment, China's economic growth began to slow down. Regardless of many indicators such as GDP growth, industrial added value, or corporate orders, the Chinese economy is already shrinking. Insufficient demand has become China's economic development, including the major problems in the development of the paint industry.

The direct impact of the global economic downturn on China is the sharp decline in external demand. The impact of the world financial crisis on the Chinese paint and coating industry began to appear in September 2008, and overseas orders decreased by about 10% year-on-year. As a major exporter, the export volume of architectural coatings and wood coatings has dropped significantly. In addition, due to the shrinking export market of plastic toys, ships and machine tools and other products, the corresponding demand for paint varieties has decreased, and the decline ranged from 5% to 15%.

While the export situation is not optimistic, the internal consumption of China's paint products is also facing the problem of whether it can be started quickly and effectively. Although the country has recently taken various measures to expand domestic demand, judging from the Chinese chemical industry itself, 2011 may still experience a period of more difficult. The downturn in the upstream market and the cooling of consumer hot spots mean that the domestic demand for coatings in the downstream is also in a weak state.

Although the Chinese paint market still has a large room for growth and the prospects are promising, we must realize that there is still a big gap between the level of development of the Chinese paint industry and developed countries. Including market capacity and per capita consumption level, market standardization level, industrial concentration, talent, scale and financial resources of enterprises, technological innovation capability, business model and ideas, laws and regulations. Among them, the disparity in talents ranked first. Chinese companies generally lack the management and management talents with global business philosophy, group management ideas, financial foreign trade ideas, upstream and downstream integrated marketing models, and going global. At present, China's paint industry is dominated by private-owned SMEs. The cultural level of enterprise owners and managers is generally low. Most companies have market regionality and product unitary weaknesses. Few companies have a lack of continuous stability. High quality technicians who are committed to the development of new products and new processes. Due to the lack of infrastructure, scientific research funds and experimental equipment, most of the product development is at a low level. The technical personnel of Chinese coating companies often do some raw material substitution and generational testing, and their innovation components are relatively small. The faults of industry experts are serious. Apart from the well-known technical experts of the older generation, the young and middle-aged generation of technical experts have hardly any leader in the field recognized by the country.

There is a lack of paint professional teachers with high theoretical and practical standards. At present, China does not have a real sense of paint universities and coatings, and thus can not form a regular coating of professional teachers, paint industry experts are guerrilla for the enterprise, for the industry, for the government services. Without a standardized education system, coating education cannot form a systematic theory. The cultivation of professional and technical talents in the coating industry mostly depends on the pattern of ''master-educated apprentice'', and the inheritance and systematicness of technology and formula are not strong.

The paint industry generally lacks high-quality production specialists and skilled construction teams in the later period. There is a serious lack of color-grading personnel, analysts, and testers in the production of paint, or the level is uneven, and the degree of professionalism is not enough. The late construction site lacks the supervision of paint supervisors and professional and technical personnel.

Affected by the raw material market, some companies raised their prices. The building materials industry has continued to increase commodity prices in the raw materials market since the first half of the year, so that consumers and paint companies are constantly speculating about paint prices. For example, previous market surveys after the Mid-Autumn Festival show that most of the prices of building materials are “being fixed”, and some manufacturers are still taking advantage of the fall season as a season of discounted sales to quietly cut prices. At that time, consumers were also very sensitive to price increases, and many responsible persons for building materials supermarkets denied it. However, at present, the rate of renovation of building materials is also relatively fast. The prices of old and outdated products will surely have a certain decline. With the introduction of new products, prices may increase. After 2 months of brewing, the new wave of price increases in the paint industry finally burst.

Statistics Bureau's newly released September CPI data for the second consecutive month reached a record high of 3.6% for 23 months. The impact of the new price increase factors was mainly due to the increase in food and housing prices. These two factors contributed 90%.

Looking back at the current round of price hikes, we can discover several features. First, price increases have spread from small commodities to large commodities. From the raw materials to the lower terminals, the “domino effect” of price increases is evolving. Titanium dioxide rose, the solvent followed up, followed by pigments, resins, etc. Finally, the end-to-end paint manufacturer was also brewing and rushing to raise prices. According to the manufacturer's price adjustment notice, all engineering coatings will be sold at adjusted new prices starting from December 13. One barrel of the project uses 20 kilograms of external wall paint, the current price is 743 yuan, adjusted to 817 yuan, up 10%.