1 Overview of Production and Operation in the Coatings Industry

1.1Overview of the Development of China Coatings Industry in the First Half of 2024

In the first half of 2024, the overall development situation closely followed the macroeconomic development trend, and the growth of major economic operation data performed well in the petrochemical industry. The overall operation was stable, showing a trend of steady progress, boosting industry confidence and laying a solid foundation for achieving the annual target tasks.The total production of coatings in the first half of the year was 17.556 million tons, a year-on-year increase of 2.0% (see Figure 1).

Figure 1 Production and year-on-year growth rate of China Coatings industry from 2019 to H1 2024

In terms of business revenue, the operating revenue for the first half of 2024 was ￥190.63 billion a year-on-year increase of 0.4% (see Figure 2).

Figure 2 Main business revenue and year-on-year growth rate of China Coatings Industry

In terms of profit, the total profit for the first half of 2024 was ￥11.23 billion, a year-on-year increase of 7.6% (see Figure 3).

Figure 3: Total profit and year-on-year growth rate of China Coatings Industry from 2019 to H1 2024

In the first half of 2024, the cost index of raw material procurement in China's coating industry has increased compared to 2023 (see Figure 4), especially in the second quarter, which is the most significant; The finished product price index has decreased compared to 2023, especially in the first quarter. Reflected in the overall industry output and revenue, the increase in output is more significant, while the profit growth is limited.

Figure 4: Double Index of Raw Material Procurement and Coating Products in China from 2023 to H1 2024

2 Introduction to Import and Export of Coatings and Inorganic Pigments

2.1 Overall data on the import and export of coatings and inorganic pigments (see Tables 1 and 2)

Table 1 Export Data of Coatings and Pigments in H1 2024

Table 2: Import Data of Coatings and Pigments in 2024

2.2 Analysis of Import and Export Data in the Coatings Industry

According to import and export data, the export volume and value of coatings continue to grow in both directions, reaching 28.11% and 15.45% respectively.

The import volume and import value have also maintained dual growth, with imported products mainly concentrated in certain high value-added specific product areas, and the product positioning is relatively stable. According to customs data analysis, the main focus is on clear varnish, acrylic acid, and fluororesin.

2.3 Analysis of import and export data in the field of titanium dioxide

The cumulative export volume from January to June 2024 was 972600 tons, an increase of 136400 tons or 16.31% compared to the same period last year. Among them, the export volume in March accounted for the highest level in recent years, at 196100 tons, while the export volume in June increased the most year-on-year, with a magnitude of 40.45%.

Overall, the domestic demand for titanium dioxide continues to be weak, downstream coating factories are running low, and terminal procurement is not very active; However, China's titanium dioxide production capacity has increased significantly, and the supply-demand imbalance has intensified. Faced with severe competition from oversupply and the impact of anti-dumping investigations, the export volume has increased significantly in the first half of 2024.

From the perspective of export trade partners in 2024, the top five are India, Brazil, Türkiye, Belgium and South Korea, and the top five account for 37.63% of the total export volume. From the top ten, the export volume is 549200 tons, accounting for 56.47% of the total export volume. Among them, India, Brazil, Belgium, and Vietnam have shown significant increases, with Belgium increasing by 94.57% year-on-year and Vietnam increasing by 50.56% year-on-year. Belgium and other European countries have seen a significant increase, mainly due to the EU's anti-dumping investigation into titanium dioxide from China starting last year. Before the official results were released, domestic production increased and export orders to Europe also caused inventory transfer to some extent. India, Brazil, Vietnam and other places are in the stage of economic development, with a significant increase in infrastructure and a growing demand for titanium dioxide. In addition, in 2024, India and Brazil will conduct anti-dumping investigations on titanium dioxide, and titanium companies are actively negotiating export orders.

From the comparison of exports to different continents in 2024, the total export volume of the top 40 countries is 890700 tons, accounting for 91.58% of the total export volume in the first half of the year. The export countries are mainly concentrated in Europe, South Asia, Southeast Asia, the Middle East, and South America. Among them, Europe occupies the first place, accounting for 21.83% of the top four export volumes; Next is South Asia, accounting for 18.75%; The third is South Asia, accounting for 17.25%; The fourth is the Middle East, accounting for 12.85%; The fifth is South America, accounting for 10.79%. The total export volume of the top five continents is 725900 tons, accounting for 81.49% of the export volume of the top ten continents and 74.63% of the total export volume in the first half of the year. This also reflects the importance of Europe, South Asia, and Southeast Asia in exporting titanium dioxide domestically. With the investigation of anti-dumping measures against China by the European Union, India, and Brazil, subsequent exports may face challenges.

2.4 Analysis of the Import and Export Field of Iron Oxide

In the first half of the year, the average export price was 970.6 US dollars per ton, a year-on-year decrease of 19.94%; From a monthly perspective in May, the average export price for this month was 904.8 US dollars per ton, a decrease of 2.12% compared to the previous month, and the monthly decline narrowed.

Firstly, the main business revenue will turn positive in early 2024, with an average monthly growth rate of 2.4%, slightly weaker than the national GDP growth rate of 5%, indicating that there is still room for growth.

Secondly, the growth rate of total profit has remained above 5%, but has fluctuated greatly and is significantly affected by the upstream and downstream markets.

Thirdly, the overall inventory is on the rise, with a year-on-year growth rate of 13.1 percentage points. There will be a significant rebound by the end of the second quarter of 2024, and the industry should pay attention to the issue of inventory backlog.

Fourthly, accounts receivable are showing a slow upward trend with significant fluctuations in 2024, and there is still a risk of continued growth in the middle and later stages of 2024, which the industry should focus on controlling.

Fifth, operating costs have shown an overall upward trend with a slight slowdown in the second quarter, and will remain stable by mid-2024. Cost control should continue to be emphasized in the second half of the year.