New Opportunities Emerge as China's Waterborne Polyurethane Takes Center Stage

China's highly competitive paint and waterproof coating industry operates within a structured hierarchy, characterized by fierce competition among numerous manufacturers. In this dynamic market, a distinct three-tier structure is evident as market shares gradually consolidate among well-established brand owners. The top tier features international giants such as Nippon Paint, AkzoNobel, and PPG Industries, holding expansive portfolios of paint products and commanding significant market shares in China. The second tier is comprised of leading Chinese coating manufacturers, including rapidly emerging players like 3TREES and Oriental Yuhong, enjoying relative advantages in specific market segments. The third tier encompasses numerous small domestic enterprises, contributing to the industry's diverse landscape.

The polyurethane waterproof coating sector in China presents formidable barriers to entry, making it challenging for new entrants to establish a foothold. The complexity of production technology and stringent requirements for production facilities and operators limit the number of manufacturers capable of producing polyurethane waterproof coatings to fewer than 200 in China. Consequently, the barriers to entry are substantial, fostering a competitive landscape dominated by established players.

The prevailing downturn in the real estate sector has resulted in weakened demand for coatings. In 2023, China's real estate market remains subdued, showing no clear signs of recovery, leading to reduced demand for coatings due to a decline in housing starts. However, a silver lining emerges as the renovation of old residential communities gains momentum in 2023. This comprehensive refurbishment, including painting external walls, roofs, doors, windows, and floors, presents a new growth avenue for the coating industry in China.

China's coating industry has experienced fluctuating growth in the past and is poised to maintain robust expansion in the future. Since surpassing the United States in production in 2009, China has held the position of the world's largest producer of coatings. Despite experiencing a dip in production in 2022 due to sluggish real estate sales and recurring epidemics, the industry witnessed a resurgence as the impact of the Covid-19 pandemic dissipated. The initiation of the renovation of old communities in China has fueled growing demand for coatings, resulting in a production volume of xx million tonnes in 2023. The Chinese coating market is witnessing a growing share of waterborne polyurethane coatings, driven by their environmental benefits and exceptional performance. Concurrently, there is a notable surge in demand for polyether polyols, a key raw material for polyurethane, within the coating industry. The increasing popularity of waterborne polyurethane coatings underscores their eco-friendly attributes and superior functionality, contributing to their expanding presence in the Chinese market. Simultaneously, the rising demand for polyether polyols highlights their pivotal role as a crucial component in the production of polyurethane within the coating sector.