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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 demand. Nippon Paint is leading the market for the coal coatings used for coated steel used for electrical appliances in China. This company developed several unique coil coatings technologies which enables its coatings to be used on plasma color TV, microwave oven machine and elevator. Besides, fostering 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 percent share of Haier Specialty Steel, a coated steel manufacturer who sells 80 percent of its products to Haier.