This lament was heard at a paint exhibition in Beijing. In this spring season, the rise in oil prices has driven the price of raw materials soaring and the price of paint has nearly reversed. The paint industry is facing a major reshuffle. According to statistics, there are 7,000 Chinese paint manufacturers. Comments about the big reshuffle in the coatings industry have often been heard. Before and after the financial crisis, it was proposed that the paint industry would reshuffle. However, because of the Chinese government’s RMB 4 trillion investment, the rapid growth of the Chinese paint industry in 2010 has made China the largest paint country.
However, the situation in 2011 is different. To summarize, there are several factors:
Rising costs: The price of raw materials has risen, raising the cost of paint products. According to Fusite Paint (Beijing) Co., Ltd., since October 2010, the company's raw material emulsion, titanium dioxide, additives and other raw materials have appeared 10% to 30% of varying degrees of gains.
Demand decline: The national real estate market regulates and controls, reduces trading volume in a short period of time, affects the real estate market, and affects the related paint demand.
It is difficult to raise prices: China's paint market is heavily homogenized, allowing downstream customers to easily replace products, and to curb paint manufacturers, especially SMEs without product advantages, to control the price of their products.
Inflation will cause problems for all paint manufacturers. However, for a long time no technology has been invested in small and medium paint factories, 2011 will be a year of life and death.
Raw materials promote paint prices "After the New Year, the price of paint per barrel rose by 20 yuan to 30 yuan, but the paint market profit is getting smaller and smaller, like this bucket of 5 liters Dabao paint, and now the price is 400 yuan. And during the promotion period , The customer bought the paint to send the primer, the profit of a bucket of paint is only 30 yuan, remove the storefront, rent and other expenses, and finally only 5 yuan of profit space." March 6, Jimei home paint building materials factory Chen Hui told the author.
The profit space is shrinking and the production cost is increasing day by day. The prices of paint raw materials—solvent materials, titanium dioxide, rosin, emulsions, and auxiliaries are all closely related to the trend of oil prices. The additives used in the production of titanium dioxide are petroleum by-products, and solvent materials in coating materials are also petroleum products. With the recent sharp rise in international oil prices, the prices of these raw materials have also risen correspondingly.
“In addition to the oil price increase factor, the price of upstream raw materials titanium ore and titanium slag has doubled since October 2010. The raw material market is now approaching madness.†March 10, the largest domestic titanium dioxide manufacturer According to Zhou Wei, a deputy head of sales of Shandong Dongjia Group, “The price of titanium dioxide in August 2010 was 14,000 yuan per ton, but in March 2011, it had risen to 20,000 yuan per ton. We don’t want to go up, but The price of ore and slag has been rising steadily. The price of titanium ore was 700-800 yuan/ton in 2010 and has now risen to 2,000 yuan/ton.â€
Dongjia Group produces 170,000 tons of titanium dioxide each year. After October 2010, it was a painful and happy state for Zhou Wei. On the one hand, the price of raw materials can be said to be a one-day change, and the cost increases rapidly. However, on the other hand, the demand in the downstream market is still large, and the output is gradually rising.
Zhou Wei said that the downstream market is a paint manufacturer. As the prices of raw materials in the upstream rise, downstream production companies also have a chain reaction. The head of Fuste Paint (Beijing) Co., Ltd., with titanium dioxide as the main raw material, stated that in 2010, 10 Since the beginning of the month, raw material emulsions, titanium dioxide, auxiliaries and other raw materials have seen 10% to 30% increase in different degrees.
Guo Xiangen, chairman of Beijing Red Lion Paint Co., Ltd., said: Coatings belong to the traditional industry, and profits have been around 5%. However, at present, the average increase in raw material prices has reached 20%, which will inevitably lead to price adjustment in the end market.
“Now the paint price is almost 10%, and the price of a 5 litre bucket of paint has risen by 30 to 40 yuan compared to the original, and it’s still more appropriate to buy now, because these goods are basically inventories, and if the new products are listed, the future price will increase. The price range may be higher." Chen Hui said.
The risk of price inversion is approaching. With the increase in the procurement costs of raw materials in the upper reaches of the market, it casts a shadow over coating companies. In the interview, many business leaders have said that the winter of the paint industry is coming! In an interview with the author, Guo Xiangen said: “At present, some paint companies are hoarding materials through banks. However, the current strength of Red Lion is relatively weak, and the pressure on raw materials after the price increase is so great that it can’t be said to bear the price of raw materials. If there is no control then there is a possibility of an upside down. It is now at the critical point."
In the survey, the author found that many paint companies loomed down the “high-low-low†hang-up phenomenon in the purchase of raw materials. On the one hand, they must ensure that customers can’t make great adjustments in prices, and on the other hand, the production costs of enterprises. Gradually increase, leading to the continuous squeeze of corporate profits, and the long run, companies will be difficult to sustain.
Zhou Wei's remarks in an interview with the author also reflected the drastic changes in the paint business in 2011. "Every year before and after New Year's Day are the off-season sales, but with the rise in raw materials in 2011, there has been a situation in short supply. Raw material prices will not continue all the time, but many companies are holding buying and not buying down the mentality. The key to the time depends on the financial strength of the enterprise, and if it can persist, it may become the final winner, otherwise it will only be eliminated by the market. This surge of wave prices may exacerbate the industry's reshuffle."
However, the situation in 2011 is different. To summarize, there are several factors:
Rising costs: The price of raw materials has risen, raising the cost of paint products. According to Fusite Paint (Beijing) Co., Ltd., since October 2010, the company's raw material emulsion, titanium dioxide, additives and other raw materials have appeared 10% to 30% of varying degrees of gains.
Demand decline: The national real estate market regulates and controls, reduces trading volume in a short period of time, affects the real estate market, and affects the related paint demand.
It is difficult to raise prices: China's paint market is heavily homogenized, allowing downstream customers to easily replace products, and to curb paint manufacturers, especially SMEs without product advantages, to control the price of their products.
Inflation will cause problems for all paint manufacturers. However, for a long time no technology has been invested in small and medium paint factories, 2011 will be a year of life and death.
Raw materials promote paint prices "After the New Year, the price of paint per barrel rose by 20 yuan to 30 yuan, but the paint market profit is getting smaller and smaller, like this bucket of 5 liters Dabao paint, and now the price is 400 yuan. And during the promotion period , The customer bought the paint to send the primer, the profit of a bucket of paint is only 30 yuan, remove the storefront, rent and other expenses, and finally only 5 yuan of profit space." March 6, Jimei home paint building materials factory Chen Hui told the author.
The profit space is shrinking and the production cost is increasing day by day. The prices of paint raw materials—solvent materials, titanium dioxide, rosin, emulsions, and auxiliaries are all closely related to the trend of oil prices. The additives used in the production of titanium dioxide are petroleum by-products, and solvent materials in coating materials are also petroleum products. With the recent sharp rise in international oil prices, the prices of these raw materials have also risen correspondingly.
“In addition to the oil price increase factor, the price of upstream raw materials titanium ore and titanium slag has doubled since October 2010. The raw material market is now approaching madness.†March 10, the largest domestic titanium dioxide manufacturer According to Zhou Wei, a deputy head of sales of Shandong Dongjia Group, “The price of titanium dioxide in August 2010 was 14,000 yuan per ton, but in March 2011, it had risen to 20,000 yuan per ton. We don’t want to go up, but The price of ore and slag has been rising steadily. The price of titanium ore was 700-800 yuan/ton in 2010 and has now risen to 2,000 yuan/ton.â€
Dongjia Group produces 170,000 tons of titanium dioxide each year. After October 2010, it was a painful and happy state for Zhou Wei. On the one hand, the price of raw materials can be said to be a one-day change, and the cost increases rapidly. However, on the other hand, the demand in the downstream market is still large, and the output is gradually rising.
Zhou Wei said that the downstream market is a paint manufacturer. As the prices of raw materials in the upstream rise, downstream production companies also have a chain reaction. The head of Fuste Paint (Beijing) Co., Ltd., with titanium dioxide as the main raw material, stated that in 2010, 10 Since the beginning of the month, raw material emulsions, titanium dioxide, auxiliaries and other raw materials have seen 10% to 30% increase in different degrees.
Guo Xiangen, chairman of Beijing Red Lion Paint Co., Ltd., said: Coatings belong to the traditional industry, and profits have been around 5%. However, at present, the average increase in raw material prices has reached 20%, which will inevitably lead to price adjustment in the end market.
“Now the paint price is almost 10%, and the price of a 5 litre bucket of paint has risen by 30 to 40 yuan compared to the original, and it’s still more appropriate to buy now, because these goods are basically inventories, and if the new products are listed, the future price will increase. The price range may be higher." Chen Hui said.
The risk of price inversion is approaching. With the increase in the procurement costs of raw materials in the upper reaches of the market, it casts a shadow over coating companies. In the interview, many business leaders have said that the winter of the paint industry is coming! In an interview with the author, Guo Xiangen said: “At present, some paint companies are hoarding materials through banks. However, the current strength of Red Lion is relatively weak, and the pressure on raw materials after the price increase is so great that it can’t be said to bear the price of raw materials. If there is no control then there is a possibility of an upside down. It is now at the critical point."
In the survey, the author found that many paint companies loomed down the “high-low-low†hang-up phenomenon in the purchase of raw materials. On the one hand, they must ensure that customers can’t make great adjustments in prices, and on the other hand, the production costs of enterprises. Gradually increase, leading to the continuous squeeze of corporate profits, and the long run, companies will be difficult to sustain.
Zhou Wei's remarks in an interview with the author also reflected the drastic changes in the paint business in 2011. "Every year before and after New Year's Day are the off-season sales, but with the rise in raw materials in 2011, there has been a situation in short supply. Raw material prices will not continue all the time, but many companies are holding buying and not buying down the mentality. The key to the time depends on the financial strength of the enterprise, and if it can persist, it may become the final winner, otherwise it will only be eliminated by the market. This surge of wave prices may exacerbate the industry's reshuffle."
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