People say that the price increase of products is due to the increase in raw material prices. This is the most obvious phenomenon in the paint industry. However, are the many difficulties in coating products really the fault of raw materials such as titanium dioxide?
Since the beginning of this year, price changes in coating raw materials have stirred up the emotions of the coatings industry several times. The confusing market price trends of major raw materials such as titanium dioxide, TDI, MDI, and acrylic acid have made the coatings industry We can vaguely see the dawn of declining cost pressure. However, contrary to expectations, raw material prices did not enter the downward price channel as expected. Instead, they always fluctuated at a high level and then continued to rise.
Titanium white powder that has just trapped the “carcinogenic” vortex. After the industry is strongly “rumored”, the international titanium pink giant scoring, Tino, and Ishihara collectively announced that The price of titanium dioxide products has been raised again since July 1. Although domestic companies have not made any price adjustments, major companies have not announced price reductions. TDI, which stopped falling in early June, recently Wanhua Chemical announced that it will increase prices in North America starting from June 15. and WANNATE® TDI product prices in the Caribbean, BASF announced that it will increase the price of TDI products in North America starting from June 19; the price increase of MDI products in the past two weeks has exceeded 5%; and due to the impact of supply and demand, after entering May, Acrylic products have begun a new round of price increases and so on.
Overcapacity and industry restrictions are the main causes of the dilemma
With raw material prices remaining volatile, the coatings industry will continue to be under cost pressure this year. Production capacity and prices will be affected by costs, and sales will be affected by prices. It seems likely that There is no doubt about the status quo. However, this is not the case according to the feedback from the coating business market visitors. They said that as far as the terminal is concerned, the coating market this year is indeed very severe, but it has little to do with the increase in raw material prices. Because price wars are still prevalent in the market, they are not affected by price increases at all, and the main reason for price wars is overcapacity.
The person in charge of the marketing department with 8 years of experience in market visits reported, “In the current paint market, if the supply of products is reduced by 50%, the market may still be saturated. Competition. It’s so fierce, how can we not start a price war?” Although his statement is more of a subjective inference, from the data, from January to April 2017 alone, my country’s cumulative production of coatings has reached 5.9615 million tons, and production capacity has increased. 2.6%.
In fact, the demand for raw materials such as acrylic acid and titanium dioxide is consistent with the growth rate of coating production. To be precise, the coating industry guides the trend of raw materials to a certain extent, increasing The tendency of raw material prices to rise. The symbiotic relationship between the two within a certain scope determines the relevance of interests, rather than the inhibition. What’s more, paint companies are much more affected by the industry’s own restrictions than by rising raw material prices.
Some media reported that “due to difficulties in financing, few projects, and policy pressures, small and medium-sized coating companies have either gone bankrupt or are on the road to bankruptcy. .” Although the results are exaggerated, it is true that small and medium-sized coating companies are currently in a difficult situation. In terms of traditional paint products, homogeneity is serious and operations are worrying; in terms of transformation and upgrading, they are often stretched.
Environmental protection is now a major trend in the industry. In order to seek breakthroughs, many coating companies are transforming in the direction of environmental protection. Therefore, water-based coatings, artistic coatings, etc. have become areas where companies gather. However, due to the lack of sufficient financial support and effective financing channels, small and medium-sized enterprises either fell into financial difficulties by forcibly supporting the research and development of water-based coatings, or for the sake of survival, they could only introduce the concept of water-based coatings symbolically. In the end, In the name of environmental protection, it mainly sells paint products.
And in terms of the hot art paint, it is difficult for small and medium-sized paint companies to get a share of the pie. Due to the lack of corporate visibility and brand influence, when promoting art paint products, small and medium-sized enterprises do not have the inherent dealer channels to deploy like big brands. They can only start from scratch to attract investment agents. However, the high-end positioning of art paints, for The store image and store address (many require an area of about 100 square meters, equipped with high-end stores such as Red Star Macalline) are very demanding, resulting in a high threshold for agents, making it difficult to attract investment. And once� Low threshold, it has blossomed in various building materials markets, and it has lost its product advantage and has become the same competition as ordinary paint products.
Rather than cutting expenditures and increasing revenue, sustainable vitality can be created
Even mainstream companies that have great advantages in the field of environmentally friendly products such as water-based coatings and art coatings also have deep-rooted industry limitations. Such a large supply of production capacity in the coatings industry every year is basically the result of the domestic market. Exports account for a very small proportion. It is difficult for the influence of well-known domestic coatings brands to be transferred abroad, let alone setting up factories and sites overseas. Although Bardez and others have acquired foreign brands and invested and built factories overseas in recent years, and the paint industry has also made export moves, these are too small compared to the huge base of the paint industry. Therefore, it is difficult to open up coating production capacity to the outside world and can only continue to accumulate in the domestic market.
Looking back at the field of coating raw materials, not only do many of them have vast overseas market resources, but the companies also have extensive global influence. Among them, the output of the titanium dioxide industry in 2016 was 2.597 million tons, with net exports of 531,000 tons, and the export volume maintained a growth rate of about 15%. The leading company in the industry, Longman Baili, is also the fourth largest titanium dioxide company in the world; TDI The polyurethane industry is not far behind. The leader Wanhua Chemical not only has factories in North America and the Caribbean, but has also become the world’s largest MDI supplier, with a production capacity of 2.04 million tons, accounting for about 1/4 of the world’s total production capacity. China’s MDI has become the benchmark for the global MDI market.
Therefore, compared with the “savings” that can be affected by the increase in raw material prices, it is obvious that the “open source” in sales has a more critical and far-reaching impact on the industry. . So why can’t the paint industry draw more analogies and learn more about open source methods and rhythms from the raw material field? Instead, it is always worried about the unchangeable price increase of raw materials that is not the main cause of the predicament and has been repeatedly restrained. Extending further, there are indeed many reasons that affect the progress of the paint industry’s “going abroad”. The paint industry also has its own particularities. The increase in raw material prices has an impact and other reasons exist objectively. However, although the downstream real estate industry is not as prosperous as before, but House prices are getting more expensive as they sell. As the main painting supplies, the prices of paint products have not increased significantly. On the contrary, furniture, bedding and other supporting house supplies are becoming more and more high-end, often costing tens of thousands, hundreds of thousands, or millions. At the same time, the furniture field is also a downstream field of the coating industry, precisely due to the popularity of furniture products. Prosperous, the furniture paint subdivision has done particularly well in the past two years.
In summary, it can be seen that the coating industry is too dependent, too passive, and too creative. You always need to chase hot spots (real estate, furniture) to prosper. Once the market of the object you are attached to declines, you will immediately slump. This has little to do with whether the price of raw materials will increase or not. After all, what matches it is that economic development has reached a certain stage, and the coating industry itself also has a demand for price increases. Therefore, there is no need for the coatings industry to respond to changes in raw material prices every time. The raw material industry should not bear the “crime” of quickly “forcing” the coatings industry. It should start from the industry itself, and more from the ” From the perspective of “open source”, we can increase the creativity and sustainable vitality of the industry.
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