Business Express: Warmth Advent paint competition for recovery opportunities

From the end of 2008 to the present, the word with the highest frequency in the world's large and small economic media is probably the word “crisis”. The subprime crisis that broke out in the United States triggered the worst economic recession since World War II and quickly spread to the global real economy. The "recovery" is the key word that frequently appears in the recent economic forecast. When Premier Wen Jiabao of the State Council met with the World Bank President Zoellick, he said: "At present, the world economy shows signs of stabilization, but a full recovery will be a slow, tortuous and complicated process." "The Chinese economy is in a critical period of stabilization and recovery. ". The recovery is an exciting word. However, for the coatings industry, is the moment of full recovery actually coming? For the raw material companies, finished products companies and many dealers in the coating industry chain, have they felt the warmth of the past winter?

If the coating industry chain is compared to a rope, then the shock transmitted from one end of the rope to the end of the rope will take some time. In the same way, with regard to the sensibility of changes in the economic situation, it is clear that the upstream and downstream of this industrial chain also have different response times. It should be pointed out that due to the combined effects of various factors, the order in which such responses occur is not in the order from top to bottom from raw materials to finished products, but has its own response characteristics. Here's to analyze the upstream and downstream of the paint industry chain who will seize the recovery opportunities.

Coatings raw materials companies: price increase integration Those who have never stopped paying attention to the coatings industry will find that from the beginning to the present, no matter whether the economic situation has reached a low point or announced a recovery, it is not uncommon for news of coating raw material prices to increase. Just over the past two months, for example, Dow Chemical Epoxy Resin Products has implemented a price increase on September 1. The price of epoxy resin products in Europe (including Turkey) will increase by 150 euros/ton, while that in the Middle East, Africa, and India sub-continent will increase by US$210/ton. The DuPont Titanium Technologies Division recently announced that DuPont Ti-Pure®, the price of all DuPont titanium dioxide products in the Asia Pacific region, will be priced upwards. BASF announced on August 24th that it will increase the sales price of four kinds of carbonates globally. The delivery price in Europe will increase by 100 euros per ton. The delivery prices in North America and Asia will increase by US$100 per ton. Major global raw material suppliers such as Huntsman, Eastman and Ashland have also announced price increases. The rise in the price of these raw materials will directly affect the prices of architectural coatings. The main reason for these price adjustments is the continued rise in the prices of some major raw materials, which has led to shrinking profits. The raw material suppliers decided to adopt price increase measures to ensure the long-term and stable development of the business in order to respond to changes in the market environment in a timely manner. In times of economic downturn, low-priced goods are undoubtedly more competitive in similar products, and the price of raw materials does not decrease, but on the one hand it reflects the huge cost pressures on raw materials companies, on the other hand, it reflects The word "recovery" is too early for these companies. The business situation is still not optimistic. Hessen Company stated that compared with the same period of last year, the staff salary and welfare costs decreased by 23%. The company’s recently released financial report shows that sales of Hexion dropped by 43% to 947 million U.S. dollars in the second quarter of this year compared to the same period last year; the net loss for the quarter was 71 million U.S. dollars.

At the same time, the integration of some businesses is quietly underway. In August, Dow-Rohm and Haas mergers and acquisitions that attracted much attention in the industry came to an end. Dow Chemical said at the 5th China (Shanghai) International Building Energy Conservation and New Building Materials Exhibition that it has completed the integration of the Rohm and Haas building materials business unit. The newly formed Dow Construction Business Unit will have more than 30 factories. Annual sales of more than 2 billion US dollars. Another noteworthy merger was the chemical manufacturer Huntsman Inc. (HUN) has bid for approximately $415 million to acquire Tronox Inc (TRXAQ)'s titanium dioxide and electrolysis business. The deal is expected to make Huntsman the second largest in the world. Bleach manufacturer.

Paint Finished Products: Production and sales are still stable The Mid-Autumn Festival is approaching. It has been reported that domestic sugar prices have risen this year, and the price of moon cakes has remained basically the same as last year. This is due to the fact that the moon cakes' raw materials at the beginning of the year are sufficient to meet the production of moon cakes this year. Higher sugar prices did not affect the production and sales of mooncakes.

I think of the paint industry from this point of view, it seems that there is the same truth. From the second half of last year to the beginning of this year, the performance of many finished products companies fell sharply. The reason for this was that at the beginning of the year, the high-priced raw materials that were hoarded had not yet been digested, and the resulting raw material prices were drained, making the production costs higher than market expectations. The demand was poor, and the two sides caught heavy losses. With the replacement of raw material stocks, high-priced raw materials are consumed, and they are added to low-priced raw materials, which reduces the production costs of enterprises and can reduce the final product prices to stimulate market demand. According to HC Coatings, sales of most paint companies in the first half of the year showed an upward trend, with sales of Carpoly paint rising 2.6% from January to June. It even reached a level higher than in previous years.

There is also an interesting phenomenon in the paint market this year. After experiencing last year's downturn, paint companies have all this year hired celebrity endorsements and formed a wave of endorsements in the paint industry. The Olympic girl Lin Miaoke speaks of Fu Xiang paint, the famous singer Yin Xiangjie speaks the paint of Desert Oasis, film and television star Chen Jianbin speaks for Cardin paint and Daao paint, Wong Ama Zhang Tielin serves as the spokesperson of Kao paint, movie and television star Zhou Haimei speaks for Yacheng Chemical, famous performer Zhai Cunyi speaks Bardez Paints, the famous laughing star Guo Donglin signed the endorsement Terai paint. To follow the trend, it is better to create a brand against the trend. For coatings companies, the breath of economic recovery seems to be within reach.

Coatings dealers: The Big Wave Ebbs is the king The economic crisis is undoubtedly a test of life and death for paint dealers with relatively low risk resistance. The market is cruel and there may have been a number of dealers that have been eliminated in this crisis. For a living dealer, how to live better is the most important issue to be straightened out. The end customers facing the dealers, how the downstream situation of the paint industry, they are the first to feel, and conveyed to the upstream. The author once wrote an article specifically to discuss the relationship between the current recovery of the domestic domestic architectural coatings, industrial coatings, automotive coatings and other industries and the paint industry. With the construction of the World Expo in the countdown phase, the painting and renovation of the thousands of square meters of viaducts and buildings on both sides of the urban landscape roads are in full swing. These large-scale construction projects have provided huge market demand for the architectural coatings industry. Also worth mentioning is the automotive coatings industry. This year, the Chinese auto industry has experienced strong growth. It has outshone the downturn in the global auto market. Even for the first time, the average monthly sales volume surpasses that of the United States in ranking first in the world. This provides a broad space for development for the downstream automotive coatings industry. As paint distributors, as long as they grasp the opportunities for market recovery, they can survive better after the crisis.

Although the signal of economic recovery is still not very obvious, the paint industry has already seen the hope of the harsh winter. As long as the upstream and downstream of the industrial chain join hands, it will surely usher in the spring of a full recovery of the entire industry as soon as possible.