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Macroeconomic tightening and negative growth of real estate will affect the paint Market

macroeconomic tightening and negative growth of real estate will affect the paint Market

October 10, 2008

[China paint information] as we all know, the real estate industry is one of the key areas of national macroeconomic regulation and cooling, and the real estate market is the industry to which decorative building materials products are attached, while architectural coatings and decorative wood paint are one of the products to which they are attached. Therefore, understanding and analyzing the development of Shanghai real estate market in the first half of the year is of great significance to evaluate the trend of Shanghai paint retail market in the first half of the year, which is the most widely used foaming agent

first, the real estate market in Shanghai experienced negative growth in the first half of the year, and the "off-season theory" began to prevail:

from January to March this year, especially from February to March, the trading volume of commercial residential houses in Shanghai has shown a trend of gradually increasing, and

it seems that there is a time of "spring flowers blooming". But in April, the market situation fell sharply, and the trading volume fell by 11.2% over the same period last year. From May to June, the Shanghai real estate market has entered a price sawing state again. Some consumers still wait and see to calibrate the parameters before they can be put into normal use, and the sales volume is not large. Until July, the price of Shanghai real estate market rose slightly, but the Shanghai real estate market is still in a downturn, which is beyond doubt. As a result, the previous trivial boos of the property market have also subsided with the gradual progress of time. The "off-season theory" has become popular recently

Second, the real estate market is relatively depressed, affecting the decoration building materials market in Shanghai:

the relatively negative growth in the sales of the real estate market is the result of national macro-control, plays an extremely important role in the healthy development of the real estate market in the future, and is also a severe test for the decoration building materials market

based on the analysis of the data of B & Q in the building materials market of major supermarkets in Shanghai, the author found that in the first 14 weeks of this year, the sales of major decoration materials (including bathroom, faucet, floor, ceramic tile, paint and other major products) fell by nearly 45% compared with the same period last year. By June, the sales volume still had a negative growth compared with last year, which can reflect the general trend of the retail market of decoration and building materials in Shanghai

in the traditional building materials market, because the product prices of various building materials and decoration materials are lower than those of building materials supermarkets, it meets the low consumption needs of some consumers. Therefore, the decline in market sales is slightly lower than that in the building materials market

third, there are many reasons for the decline in the sales of wood coatings in the retail market:

the demand for wood coatings mainly comes from two markets. The first market is paint for furniture industry, including all kinds of wood finished products

manufacturing paint. Another market is interior decoration paint

1. The demand for paint in the furniture industry has shrunk in the short term:

on the one hand, due to the impact of real estate, the sales of civil commercial housing are depressed, which will inevitably affect the overall decline in the total sales of finished furniture products. On the other hand, due to the implementation of macro-control, the reduction of export tax rebates, the appreciation of the RMB, the U.S. subprime mortgage crisis and other new situations, as well as the cost hike, anti-dumping and other old problems, China's wooden furniture exports have decreased

the above two factors have reduced the demand for furniture paint. As some furniture, wood products and exhibitions have published a prospective study on the mechanical tests and clinical results of 120 patients with this device, it is reported that the decorative paint will be purchased in the retail market, so the sales volume of Shanghai paint retail market will be reduced by 10% in the first half of the year

2. Affected by the adjustment of the real estate industry, the demand for interior decoration wood paint also decreased significantly, and the sales volume in the first half of the year also decreased by about 10% compared with the same period last year

the high temperature in March and June and Huangmei weather also affected the construction progress, but this was not the main reason

in short, the total amount of wood paint in Shanghai decoration market in the first half of this year decreased by 15% - 20% compared with the same period last year

IV. the market demand for architectural coatings has decreased slightly, but there are more opportunities for the development of the engineering market

the direct relationship between architectural coatings and the construction industry and real estate is obvious. The negative growth of real estate is bound to lead to the desolation of the decoration market. In February and March this year, the number of commercial housing transactions in Shanghai increased year-on-year, but in April, it fell by 11.2% year-on-year. From May to June, it began to recover gradually, but the market sales volume was not large. Reflected in the retail market, the sales of interior wall paint fell by about 20%. However, on the whole, despite the severe retail sales in the first half of the year, the overall demand of the building coating market is still very optimistic, mainly reflected in:

in the second half of this year, the building coating will have a good development trend; There are mainly the following opportunities:

the Shanghai WorldExpo held in 2010 has an annual investment of 100billion yuan from 2006 to 2009

the main goal of the "Eleventh Five Year Plan" for the comprehensive transformation of old residential areas from flat to slope in Shanghai is to complete 4million square meters per year

the standard for building design of central villages in the suburbs of Shanghai designs the construction of 60 new towns and 600 central villages

there are 12million square meters of real estate residential construction every year (including affordable housing and low rent housing)

in addition, the "Shanghai urban appearance standard regulations" issued and implemented in 2005 requires that the outer walls of buildings and structures facing the street in main roads and landscape areas should be cleaned and painted regularly, including coating for 2-3 years. This also provides a huge market space for architectural coatings. However, these opportunities have little impact on the sales index of the paint retail market. For example, ICI, Nippon, shendeo, Huili, Zhongnan, Fuchen and other brands of architectural coatings performed well in the first half of the year

v. the rise in the price of raw materials has led coating enterprises into a dilemma of left-right squeeze:

1. Since the rise of raw materials in 2004, coating enterprises have felt increasing pressure. Many

small and medium-sized enterprises that hit the market with low prices can no longer obtain price advantages because of the sharp increase in costs, to the point where they sell more and more. Some small and medium-sized enterprises are difficult to maintain, or close down or transform. If only some small enterprises were greatly affected by the rise of raw materials from 2004 to 2005, the continuous and substantial rise of raw materials from 2006 to 2008 (for example, crude oil broke through the $140 mark in the first half of this year) is a test for the entire coating industry

the rise of crude oil and other materials has led to a sharp rise in the cost of paint manufacturing. Solvent based paint is the most cost pressure. In addition, auxiliary materials are also rising, compared with packaging, promotional materials, etc

2. The substantial rise in the price of upstream raw materials has resulted in a significant decline in the profits of production enterprises. On the one hand, the management and control of enterprise costs should be beneficial to inward management; On the other hand, the ex factory price of products should be adjusted externally. However, it is even more difficult for paint enterprises to implement price increases. First, in the face of many peer enterprises around, price increases need to be very cautious; Second, at the same time, we should pay attention to the attitude of dealers and the response of market end consumption. All the answers have not yet found a way to solve the problem. Therefore, for paint enterprises, the price rise of products is like walking on thin ice

3. Enterprise risks and opportunities coexist: for large and medium-sized enterprises, opportunities are still greater than risks. Some enterprises that compete in the market with brand operation can still achieve good sales performance in the case of market downturn. For example, one of the main production and sales brands of solvent based wood paint in Shanghai market, oulong paint, whose market sales from January to June increased by 16.4% over the same period last year. To sum up, 2008 is a year full of multi-level challenges for the building materials market and coating enterprises, and it is also a comprehensive test for the market. It is expected that in the second half of the year, before the new hot spots in the housing market grow up, the decoration market and coating market will be quiet for a period of time. How to deal with the challenges in 2008 will be answered by relevant industries

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