Coatings World - December 2015

by Arnold Wang China Correspondent

It is estimated that the coil coatings output in 2014 is around 540 thou- sand tons in China, growing by around 8-11 percent over 2013. But the fierce competition from upstream coated metal market, mainly coated steel, is putting more pressure to the coil coatings producers in China. Currently the coil coatings market is led by several domestic companies such as Shanghai Zhenhua, and Wuhan Twin Tiger and several foreign companies such as Nippon Paint, Valspar, Becker, AkzoNobel and PPG. The domestic coil coatings producers normally have a closer customer relationship with local major coated steel manufacturers. For example, the partnership between Shanghai Zhenhua and Baosteel and the partnership between Wuhan Twin Tiger and Wugang have been formed for many years.

Shrinking real estate
industry led to coil coatings
market structure change

The structure of China’s coil coatings market did not change much compared with 10 years ago, with real estate still holding the largest share, followed by automotive and electrical appliances. Although no institute has reported a precise number of how big each segment is now, one thing for sure is that the market structure has been changing followed the structure change of the Chinese economy. The sales of China’s real estate market fell by 7. 6 percent in 2014, comparied with a growth rate of 17. 3 percent in 2013. With the quick shrinking of the real estate market, the market share of coated steel used for the manufacturing of electric appliance and automotive will grow. On the contrary, the market share of coated steel used for China’s real estate industry will decrease accordingly.

Among all the electrical appliance products, washing machine, refrigerator and air conditioning consume the most steel. In 2014, the output of washing machine decreased by 3. 34 percent and refrigerator decreased by 0.8 percent. But China air conditioning’s output increased by 11. 5 percent. Because washing machine and refrigerator consumed more steel per unit, the total steel usage of electronic appliances has only small increase in 2014. Following the salary increase of Chinese customers and the change of Chinese life style, the electrical appliance structure has been changing rapidly: the reduction of one basic electric appliance segment means the increase of another new product segment. In addition, the export of electric appliance increased by 5.2 percent to 58.1 billion U.S. dollars.

So the coil coatings companies who
take advantage of this market trend will
continue growing in China, but not so
easy as before. They need to put more
efforts developing new technologies to
meet the fast changing customer de-
mand. Nippon Paint is leading the mar-
ket for the coal coatings used for coated
steel used for electrical appliances in
China. This company developed sev-
eral unique coil coatings technologies
which enables its coatings to be used
on plasma color TV, microwave oven
machine and elevator. Besides, foster-
ing a strategic relationship with steel
processing producers becomes another
way for some coil coatings producers to
increase their market share under fierce
competition. For example, Nippon
Paint has forged strategic partnership
with Sinosteel Shanghai and Magang
Holding Co., Ltd. To reduce production
cost and increase competitiveness in the
market, Haier chose to forge strategic
alliance with downstream raw material
companies. At the end of September,
2015, Hebei steel agreed to acquire 70