The container market provides unique growth opportunities for water-based coatings

In 2017, China produced 257,000 tons of container paint. The VOC emissions of the entire container industry have been reduced by 120,000 tons. Compared with the 150,000 tons of emissions before the widespread adoption of water-based paint a year ago, this achievement is very impressive. This remarkable change should be attributed to the public commitment made by the China Container Industry Association, which is led by several major container manufacturers in the world.

The story starts with the signing of the self-discipline convention
In 2016, the China Container Industry Association organized its member companies to hold the signing ceremony of the VOCs Governance Self-Discipline Convention, and promised that by April 1, 2017, the entire container industry will start from solvent-based coatingsChange to water-based paint. After the signing of the Convention, companies that still use solvent-based coatings to paint containers will be fined 800 yuan for each container they produce. The members of the association include China International Marine Containers Group (CIMC), which accounts for about 50% of the world’s container production. Together with other companies, it accounts for 75% of the global container market, and China’s share of the global container market is as high as 90%.
Therefore, the significance of this commitment is very significant. Millions of dollars have been invested in new coating production lines for water-based coatings. This top-down approach, which usually makes things easier in China, demonstrates excellent efficiency. In the past, 40% of solvent-based container coatings used organic solvents. In addition, about 20% of organic thinners need to be added during the coating process. It is estimated that after container companies switch to water-based coatings on their production lines, the VOC emissions of a standard dry cargo container will be reduced from 36kg/TEU to 5-8kg/TEU, which is equivalent to a 80% reduction in VOC emissions.
This is the first self-discipline commitment made by the entire industry in China, and it provides a huge opportunity for water-based coatings to occupy a single market in a short period of time. Water-based coating companies will fully benefit from this opportunity and expand their market share. This change in the container coating market has also promoted the development of the entire industrial coating in China. Both water-based and high-solid coatings have achieved rapid growth in the past two years.
Structural changes in the container coating market
Companies in the downstream market can usually make demands on upstream suppliers and receive attention. In Western countries, this is called Extended Producer Responsibility (EPR).
This incident in the container industry is just one example. This has led to structural changes in the container coatings market.
99% of China’s container coatings market is now occupied by water-based coating manufacturers, which is amazing. Both domestic and foreign coating companies are actively participating in this process. The primer of water-based paint system is generally zinc-rich epoxy paint or PVDC paint.
Valspar is one of the main manufacturers of PVDC coatings, and its products are widely used in Dongguan Maersk Container Factory. However, PVDC coatings have not been widely adopted by other container companies in China. The middle coating and top coating are epoxy or acrylic coatings. In addition, 80% of the topcoat on the inner wall of the container is water-based acrylic epoxy paint.
In 2017, Dulwich Coatings, a domestic container coatings company, saw significant growth in its business, with total sales exceeding 2 billion yuan, and the company occupies 45% of the water-based container coatings market share. But you may not think that in 2016, the company’s sales were only 400 million yuan. In the first quarter of 2018, the company’s sales increased by 300% over the same period in 2017.
Dulwich is not the only domestic container coating company that has achieved such rapid growth. Jitai’s water-based container coatings have also won amazing growth.
In the first half of 2018, the company’s sales of water-based coatings increased by 56.8% year-on-year. In contrast, their solvent-based asphalt coating sales fell by 30% compared to last year.
On the contrary, some large coating companies are facing huge cost pressures. Kansai Paint’s water-based coatings business has also grown significantly in China. In the first quarter, COSCO Kansai’s sales increased by 33% year-on-year to 516 million Hong Kong dollars, mainly due to the increase in the selling price of container coatings. However, the rise in raw material prices has led to a decline in gross profit margin. Therefore, although container manufacturers are willing to pay for higher-priced water-based coatings, rising raw material prices have swallowed the profits of coating companies. This situation is commonly seen in the financial reports of most coating companies.
New market entrants join the competition by establishing strategic cooperation
The rapid expansion of the water-based container coating market has attracted some companies to increase the production capacity of China’s water-based coatings. The new production base of Baojun New Material Co., Ltd. has been put into production, which can produce 50,000 tons of water-based container coatings in Tianjin. In addition, Valspar’s annual production capacity of water-based container coatings has also increased by 8,000 tons. Valspar and Maersk have been cooperating in China for many years, and Maersk is also the first container company in China to use water-based coatings.
As large container companies continue to upgrade their coating production lines through new investments, as CIMC (China International Marine Containers Group) said, the group will take the same measures in the future. Coating manufacturers will continue to follow up accordingly and launch new water-based coating technologies and new coating solutions in China.