In recent years, the price of main raw materials for coatings has fluctuated greatly. The price of raw materials such as titanium dioxide, resin, lotion and additives has risen sharply, causing coating enterprises to bear heavy cost pressure. During the rising price of raw materials, a large number of domestic and foreign enterprises have raised product prices to ease the pressure of rising costs. However, it is still difficult to calm the pressure brought by raw material prices, and most enterprises' profits have declined significantly.

Starting from the second half of 2022, raw material prices have gradually declined, and after entering 2023, raw material prices have further declined. In 2023, the prices of major raw materials such as titanium dioxide, epoxy resin, and other products have declined from a high level. With the gradual decline in raw material prices, the cost pressure on enterprises has been alleviated, and profits have been repaired. Some coating companies have optimized their product structure, implemented cost reduction and efficiency improvement strategies, and combined with factors such as the decrease in raw material prices in 2023, the gross profit margin of products has significantly increased year-on-year.

From the perspective of the paint industry chain, although there has been a certain degree of improvement on the demand side in 2023, the overall tone is still dominated by slow recovery. The production capacity growth rate of the raw materials industry is greater than the demand growth rate, especially for products such as titanium dioxide, epoxy resin, TDI, etc. Downstream end markets are unable to consume the newly added upstream production capacity. Enterprises are seeking overseas opportunities to increase their export efforts, coupled with the decline in international crude oil prices, resulting in a significant decline in prices in 2023 compared to previous years. Especially for upstream raw materials such as TDI, epoxy resin, vinyl acetate, etc. in coatings, the highest price drop exceeds 20%.

But there are also some highlights on the demand side, such as the significant growth rate of exports of products such as titanium dioxide and TDI, which also plays a positive role in driving the demand for related products. Driven by good industry data, products such as ethylene glycol butyl ether, MMA, isopropanol, acetic acid, isooctyl acrylate, acetone, etc. have seen a certain price increase compared to the beginning of the year due to the combined effect of supply and demand.

According to the paint procurement cost index of the China National Institute of Plastics, the paint procurement cost index in December 2023 was 87%, a decrease of 1 percentage point from November and an increase of 2 percentage points from the same period last year.

According to the Purchasing Cost Index of Powder Coatings at the Institute of Plastics, the Purchasing Cost Index of Powder Coatings in December 2023 was 87%, unchanged from November and an increase of 2 percentage points from the same period last year.

The upstream raw materials of waterproof material industry chain include asphalt, SBS modifier, polyester base, polyether, membrane (including isolation membrane), lotion, base oil, paraffin, etc. From the perspective of the cost proportion of waterproof materials, the cost proportion of direct materials is as high as 90%, and changes in raw material prices directly affect the cost of waterproof materials. According to the Purchasing Cost Index of Waterproof Materials by the Institute of Plastics, the Purchasing Cost Index of Waterproof Materials in December 2023 was 95%, a decrease of 3 percentage points compared to November.