Ibuychem Research Institute

1 Overview of Production and Business Performance in the Coatings Industry

In the first half of 2026, China’s coatings industry maintained overall stable performance yet faced notable headwinds. Total coatings output reached 16.14 million tonnes in H1, down 3.2 % year-on-year. Revenue from main business stood at RMB 176.6 billion, edging down 0.07 % year-on-year. Total profits hit RMB 12.2 billion, a 13.2% year-on-year decline.

Behind this data profile of dual drops in profit and output alongside largely flat revenue lie combined pressures: raw-material cost shocks stemming from geopolitical conflicts in the Middle East, and shrinking demand triggered by the profound adjustment in the real-estate sector. The industry as a whole operated under a pattern of “falling output, rising prices and slumping profits”, with markedly intensified structural divergence. Gaps have widened comprehensively between architectural and industrial coatings, domestic sales and exports, as well as leading enterprises and small-and-medium-sized players.

On the output front, China’s total output amounted to 16.14 million tonnes, dropping 3.2 % year-on-year (Figure 1). Its growth rate fell by 1.57 percentage points quarter-on-quarter, and the decline widened visibly from the 1toMay reading of a 1.6- % year-on-year drop, signalling further weakening of industry sentiment in June alone. Output contraction stemmed from subdued demand for architectural decorative coatings amid real-estate downturns, as well as corporate-led inventory de-stocking and the phasing-out of low-end production capacity.

Figure 1 Production and year-on-year growth rate of China Coatings industry from 2021 to H1 2026

On the revenue side, revenue from main business came to RMB 176.6 billion, registering a mere 0.07% year-on-year drop (Figure 2), with its growth rate rising by 1.58 percentage points quarter-on-quarter. Despite price hikes for finished coatings products, such price increases were not demand-driven, but passive price rises forced by higher costs.

Figure 2 Main business revenue and year-on-year growth rate of China Coatings Industry from 2021 to H1 2026

On the profit side, total profits stood at RMB 12.2 billion, down 13.2% year-on-year(Figure 3). Its growth rate fell sharply by 6.59 percentage points quarter-on-quarter, representing the most pronounced deterioration among the three key indicators. Calculations show that the industry’s implied profit margin shrank from approximately 8.0% in the same period of the previous year to around 6.9%, while the monthly profit margin in June briefly dipped below 6%. Price increases failed to keep pace with surging raw-material costs from upstream suppliers. Profit margins were significantly squeezed by rising raw-material prices, which constituted the core contradiction facing the industry in the first half of the year.

Figure 3: Total profit and year-on-year growth rate of China Coatings Industry from 2021 to H1 2026

Several listed coatings enterprises noted in their 2026 semi-annual reports that the deepening real-estate downturn has dampened demand for architectural decorative coatings, whereas market demand for industrial protective coatings saw a modest uptick. Leveraging advantages in scale, technology and brand recognition, leading players have maintained relatively sound business performance and expanded production capacity against the market trend. Industry concentration keeps rising, while small- and medium-sized enterprises are facing a rapidly shrinking operating space, bringing about clear fragmentation in the market landscape.

In the first half of 2026, the raw-material procurement cost index of China’s coatings industry rose substantially compared with 2025 (Figure 4). Driven mainly by geopolitical tensions in the Middle East, crude oil prices surged and disrupted the supply-demand balance of global supply chains. Amid higher raw-material prices, the finished-coating product price index also climbed relative to 2025.

Figure 4: Double Index of Raw Material Procurement and Coating Products in China from 2025 to H1 2026