percent share of Haier Specialty Steel, a
coated steel manufacturer who sells 80
percent of its products to Haier.
More pricing pressure
comes from upstream
customers
But the profitability of China’s coil coatings market has been under enormous
pressure because of overcapacity in the
coated steel market, especially in the
coated steel segment. The coated steel’s
capacity in China has been surpassed
its demand in recent years, leading to
fierce price war in China domestic market as well as in related export markets.
Lacking of a leading brand image in
the international market, the Chinese
coated steel products are mainly exported to Southeast Asian markets, Brazil,
Ukraine and Turkey. Besides, frequent
anti-dumping policies applied by some
foreign countries also worsened the
situation of China’s coated steel market
from time to time.
It is reported that the utilization
rate of the production lines of China
coated steel is only around 50 percent.
The problem of overcapacity is even
worse in Boxing County, which owns
80 percent of the coated steel capacity
of Shandong province and over 30 percent of the total coated steel capacity of
China. Boxing County alone consumes
200 thousand coil coatings a year. But
the concentration of coated steel production in one place has not driven
industry escalation in Boxing County
but led to one negative phenomenon:
the price war. The fierce competition in
pricing made some local companies in
Boxing County to choose the low cost
strategy by sacrificing product quality,
namely selling coated steel with thinner
steel sheet or thinner coatings film to
their customers. So the image of Boxing
coated steel is tarnished and even the
sales of some companies who insist on
selling quality products are affected.
New technologies
and quality push coil
coatings companies grow
continuously!
China coil coatings producers are mainly
located in Shanghai, Jiangsu, Guangdong
and Shandong. The leading companies have
been working hard to tackle environment
pressure from stricter regulations, and develop new products to meet new customer
demands. To achieve economy of scale, both
Zhenhua and Twin Tiger have expanded
their production capacity recently. Shanghai
Zhenhua has been growing its market share
from Baosteel to other steel producers by
developing high quality and new coil coatings products to meet customer demand. To
take advantage of the new environmental
trend, Zhejiang Tiannu Coatings also introduced water based coil coatings into the
market. Although the price pressure from
upstream market is high still, high quality
and new technologies will help both foreign
and domestic coil coatings producers continuously grow in China. CW
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