April 24, 2025 – A perfect storm of fluctuating tariff policies, skyrocketing raw material prices, surging logistics costs, tightened environmental inspections, and widespread global chemical plant maintenance has propelled the chemical industry into a “super cycle” of high – volatility pricing. During this extraordinary period, structural contradictions within the industry have become increasingly pronounced. The continuous rise in prices of upstream basic chemicals is cascading down the supply chain with irresistible force, putting immense cost pressure on small and medium – sized enterprises (SMEs) and rapidly reshaping the industry landscape.
The ongoing surge in chemical raw material prices is nothing short of astonishing. On April 17, the propylene oxide market witnessed a dramatic upswing, with related indices soaring and closing with a 5.46% gain. Stocks of companies like Yida Co., Ltd. and Hongbaoli Group Ltd. hit the daily limit, while Binzhou Bohai Chemical Group Co., Ltd. and other enterprises saw increases exceeding 7%. This price surge was triggered by global chemical giants Covestro and LyondellBasell’s announcement of the permanent shutdown of their 315,000 – ton propylene oxide production facility, creating a supply gap that fueled intense price hike expectations. Beyond propylene oxide, titanium dioxide, a key raw material in the coating industry, has also experienced successive price increases. Since late March, leading domestic enterprises such as Longbai Group Co., Ltd. and CNNC Hua Yuan Titanium Dioxide Co., Ltd. have issued multiple price adjustment notices, resulting in an approximately 8% cumulative increase this year. In April, international chemical heavyweights like Henkel Group and WACKER Chemie AG also announced price hikes, aiming to ease cost pressures. According to insights from AsiaMB, in the context of major manufacturers halting production and surging costs, price increases have become a crucial survival strategy for companies.
In the face of this industry – wide tempest, leading companies in China’s coating industry have demonstrated remarkable resilience. SKSHU Paint Co., Ltd. launched the “Quality Enhancement and Efficiency Improvement for Return” action plan, achieving high – quality development through business structure optimization and marketing system upgrades. Beixin Building Materials Group Co., Ltd. is focused on the “One Profit and Five Ratios” target, accelerating its global expansion, with its subsidiary Carpoly aggressively entering the renovation market. Nippon Paint (China) Co., Ltd. has adopted the “Move Upwards” development strategy, strengthening cooperation with manufacturers and advancing overseas strategies. Badish Group has clearly defined its brand upgrading goals, striving to build high – end artistic paint brands. These leading players have unanimously chosen to enhance their internal strength to weather the storm, replacing cost – cutting with quality and efficiency enhancement, which highlights their formidable market competitiveness.
For numerous SMEs, however, this price surge is more like a death knell. The increase in raw material prices far outpaces the price adjustments of end products, severely squeezing profit margins. Moreover, the huge investments required for environmental protection technological transformations are overwhelming for SMEs with limited annual revenues. The stringent requirements of the China Compulsory Certification (CCC) have laid bare the management and technical deficiencies of these small businesses. Statistics show that the first – time certification pass rate for SMEs is less than 35%, and frequent rectifications not only cause production disruptions but also put them at a disadvantage in market competition. The “Matthew Effect” in the industry is becoming more pronounced, with leading companies leveraging their scale and technological advantages to absorb cost pressures, while SMEs, plagued by a lack of funds and technology, are pushed to the brink of survival. Surveys from multiple regions indicate that since 2023, 23% of small coating enterprises have been forced to halt production lines, accelerating industry consolidation and continuously shrinking the survival space of SMEs.