Coatings industry is facing funding pressure

Looking at this year's architectural coatings market, there has been a "volume price rise" trend. March and April are the golden season of the property market. The old saying “The year is in the spring” has absolute appeal in the real estate market. Real estate that has experienced the accumulation of power throughout the winter must have a high profile appearance at the spring housing fair, regardless of price. Or in terms of sales, there is a steady increase in the posture. Such a good start has also given a boost to the supporting architectural paint market.

For paint manufacturers to cooperate with the second half of the year or will continue to sell the situation, but also in the channel construction, especially the terminal store, dealers and other aspects of intensive training and investment and a lot of manpower and material resources. In terms of price, the price of coatings in the first half of the year rose with the price of important raw materials such as titanium dioxide, solvents, iron oxide pigments, and resins, and the coating price increased by about 10%-15% over the same period.

The property market is bleak because traditional autumn and winter seasons are not suitable for large areas of wall painting, especially in the northern regions. With the gradual cooling of the weather, after entering November, it will be impossible to carry out wall paint and insulation work due to climate conditions. Therefore, entering the fourth quarter, especially in the shadow of the “turning point” of the property market, paint production will shift to the off-season. Under the influence of multiple unfavorable factors, can the paint market “hold” the price in the fourth quarter?

In the second half of this year, it is quite different. Especially after August, the scene of this kind of paint has faded out of the market. Instead, the slowdown in production and the slowdown in sales have been replaced. This phenomenon under the psychological hint of the property market watching tide, despite the market did not appear to significantly reduce the price of paint, but the demand has appeared some wilting.

"Jinjiuyinshi" coating business is very hurt. In addition, the fact that the paint industry has been hit hard is that the traditional "Jin 9 Silver Ten" does not bring the expected "big cake" to the industry. The signs that paint prices continued to rise throughout the first half of the year have also begun to cool down. On the one hand, the sales pressure caused by big brands and “foreign coatings” on domestic small and medium-sized brands hit, and on the other hand, more small businesses, especially informal paint workshops and “chat paints” that are more than prohibitive, are used in rural areas at low prices. The dumping of township and village enterprises has caused some paints to use the “low-priced entry” strategy or the idea of ​​gift discounting. Under the total pressure, people in the industry clearly felt: "The price of paint cannot hold up!"

The shortage of funds increases the pressure on the paint. However, the reason that the paint manufacturers can't hold up is because of financial pressure. The government's efforts to regulate and control continue to strengthen, and the tightening of monetary policy has made it more difficult for small and medium-sized paint companies to obtain credit. To make matters worse, the capital market has suffered from the recession caused by the subprime mortgage crisis in the United States. The stock market has shrunk by nearly 50%. Even in the capital market, it is difficult for the coating industry, where the investment rate of return is not considered "profiteering". It's getting bigger and bigger. In contrast, before last year, many paint companies were blindly optimistic, and they were all overwhelmed, and many companies even expanded their liabilities to build factories. One side is the expansion of debt, one side is the financing obstacles, and the expected peak sales of paint in the third quarter did not reach the ideal sales volume. The fourth quarter was also the off-season of the paint industry, and the fund recovery was difficult. Under internal and external problems, some paint companies have had to put further pressure on dealers, requiring distributors to purchase more goods, and quick paybacks. They have also adopted a “low-cost” strategy in order to sell products quickly and return funds as soon as possible. Heavy financial pressure.

Another point that needs to be pointed out is that the expected slowdown in GDP growth, the persistence of inflation, and insufficient confidence in the prospects for the development of the paint market in the fourth quarter. Although there is a paint company's latest position: “Although the original price of titanium dioxide has been greatly reduced, but the labor costs are still high. The paint industry is already a meager profit, the drop is down, it should not be reduced.” There are also dealers admitting: "Compared with previous years, the off-season, it is also non-profit, promotion, and today's results are not satisfactory. Under such market conditions, the paint price should be slightly in reasonable.