China’s coating industry has witnessed several price increases recently after manufacturers have suffered under high pressure for a long time. The price increases reflect increasing costs in this industry and are very likely to continue in the near future.
Several Chinese companies have already announced first rounds of price rises in February and March 2017. The first one was Jotun Coatings, who announced the price rise on February 6. The reasons for the price rise by 26% to 40% for ten types of industrial coatings was explained by the company with rising prices of raw materials like titanium dioxide. The next announcement took place on February 20 by SKSHU Paint. However, the price of the company’s emulsion paint and wood paint only was increased by 5% - 9.8%.
On first of March, two companies have announced further price rises. Guangdong Badeshi revealed price rises, due to the increasing costs of raw materials, while Carpoly Chemical stated the price for its home decoration coatings would not rise larger than 12%.
According to market intelligence firm CCM, the price hikes for coating are due to two main drivers. First of all, the coatings industry was fighting under huge pressure in the last year, facing elevating costs of raw materials like titanium dioxide, higher transportation costs and also restrictions and costly requirements for better environmental protection measurements. Secondly, the month of March is the natural beginning for a higher demand for coatings, which enables manufacturers to raise their prices in an acceptable manner.
CCM has specified the different type of factors, that are mainly due to the rising costs for the coatings industry in China.
The main cost driver for the coating manufacturers in China are the steadily increasing prices for raw materials. Some of the upstream products, like aromatics, resin, and titanium dioxide have shown price increases in 2016 by 20% compared to the previous year. The price rises have been announced several times throughout the year, and are still continue to rising in 2017. This adds a lot of pressure to China’s coatings manufacturers, which will be the leading cause of further price increases in the near future.
The next main factor is increasing costs of transportation as well as stricter regulations for hazardous chemical substances. Costs increase up to 35% could be seen in those. Since about 80% of hazardous chemicals in China are being transported on the road, the government has increased the regulations to prevent accidents in this transportation method more effectively. Some measurements are prohibited roads for vehicles with hazardous chemicals or limiting the amount of allowed transportation.
Finally, since several cities in China have witnessed severe pollution problems in 2016, the government has ever since then increased regulations for environmental protection. This includes production limitations in heavy polluted times as well as costly implementations of new solid waste disposals. Due to the fact, that the environmental inspections will go on in 2017, further cost increases for Chinese manufacturers are very likely.
Looking at all these factors, the price rises of China’s coatings industry is widely accepted in the ranks of customers. According to CCM, the first announcements are likely just the beginning of an upward price trend, which will surely spread to other manufacturers as well.