Development Status of China's Coating Industry from January to May 2014

2014-08-04

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From January to May 2014, the fixed asset investment and the total retail sales of consumer goods in our country both showed growth compared to the same period last year; however, the total export value saw a slight decline. The structure of the "three driving forces" has not changed significantly, and China's economic growth is still mainly driven by fixed investment. The Producer Price Index (PPI) for industrial producers has increased compared to the same period last year. In the first half of 2013, the total output of the paint industry in China was 5.9836 million tons, an increase of 7.4% compared to the same period last year. From January to May 2014, the total output of the paint industry in China was 6.1303 million tons, an increase of 8% compared to the same period last year.

From January to May 2014, the fixed asset investment completion amount and the total retail sales of consumer goods in our country both increased compared to the same period last year; however, the total export value slightly decreased. The structure of the "three driving forces" has not changed much, and China's economic growth is still mainly driven by fixed investment. The Producer Price Index (PPI) for industrial producers has increased compared to the same period last year.

In the first half of 2013, the total output of the paint industry in China was 5.9836 million tons, an increase of 7.4% compared to the same period last year. From January to May 2014, the total output of the paint industry in China was 6.1303 million tons, an increase of 8.9% compared to the same period last year.

In July, November, and December 2013, the output of the paint industry decreased year-on-year, while the output in other months increased year-on-year. From March to May 2014, the year-on-year growth of the paint industry output was better than the GDP growth.

The impact of environmental protection policies on the development of the paint industry

1. Research on VOC emission characteristics and prevention and control strategies of industrial coating pollution sources

VOCs play a key role in the formation of complex atmospheric pollution. The "Ten Measures for Air" lists surface coating as a key area for comprehensive VOC remediation. The foundation for VOC control management in China's industrial coating is relatively weak, and management requires technical support to implement effective control. Based on the above reasons, the Ministry of Environmental Protection's Environmental Planning Institute has established a project for the research on VOC emission characteristics and prevention and control strategies of industrial coating pollution sources, responsible for the overall design of the project, preparation of emission inventories, design of control standard systems, and formulation of medium- and long-term control roadmaps.

The Paint Industry Association is mainly responsible for investigating the current status of emissions and control, researching VOC content limit standards for paint products, and participating in the selection of feasible control technologies and the formulation of control roadmaps.

The project involves seven key coating industries, including automobile manufacturing, shipbuilding, and container manufacturing, with the consumption of coatings in key industries accounting for about 50% of the total consumption of industrial coatings.

2. Proposed imposition of VOC consumption tax and pollution discharge fees

The tax will be levied based on the VOC content in solvent-based coatings to encourage the development of high solid content coatings and water-based coatings, with different tax rates designed according to the VOC content in solvent-based coatings. Initially, a rate of 4% is set for VOC content ≥420g/l.

Industrial VOC emissions will be included in the scope of pollution discharge fees, and the charging targets will include paint raw material production enterprises, paint production enterprises, and coating enterprises. Based on the different harmfulness of VOCs, the national charging standards are proposed to be 8 yuan/kg VOC (others), 16 yuan/kg VOC (aromatic compounds), and 32 yuan/kg VOC (benzene), averaging around 10 yuan/kg VOC. In Beijing, the average is around 20 yuan/kg VOC.

3. 2014 Paint Industry Development Forecast

In 2014, with increasing environmental protection pressure, the imposition of VOC consumption tax and VOC discharge fees has been put on the agenda of government departments. The prices of major raw materials for coatings have decreased, and the operating conditions of decorative coatings are better than those of industrial coatings, with profits of decorative and industrial coatings gradually converging. Despite a significant year-on-year increase in financial and sales expenses, profits still increased by 26% year-on-year. The government is likely to maintain or encourage economic development to ensure that GDP growth reaches 7.5% in 2014.

Based on the above reasons, it is expected that the output of the paint industry will increase by 10% year-on-year in 2014, and the output value will increase by 15% year-on-year.

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