Niche Markets Offer Precious Growth Opportunities
The soft downstream markets, along with stricter government regulations, pushes polyurethane coatings companies to advance their production technologies, develop and introduce waterborne polyurethane coatings and explore new potential markets to release their existing capacities.
For example, foreseeing the growing demand for high quality and safe materials for sportsground in China, especially when poisonous sports tracks raised public concerns to the health of school students, BASF quickly introduced into China their polyurethane solution. It is a polyurethane system which combines coatings, adhesives and rubber particles together. By targeting the market of outdoor sports tracks and indoor sports floors, BASF cooperates with local companies to standardize their installation services by controlling qualification certifications in order to make sure BASF’s products are delivered with a high quality to the end users.
Facing the same market pressure, domestic coatings producers also speed up their product upgrading process. And some of them use the capital market to help them achieve this objective. A major coatings and ink supplier for major toy producers including Mattel, Lego, etc., Yonghui Chemical listed their stock in the national share transfer system since March 12, 2015. Yonghui Chemical said the company will use the new raised capital to enter the children’s wood furniture and home decoration markets. Although the toy market in Guangdong province has been shrinking for several continuous years, Yonghui’s business has kept growing. In the first half of 2015 Yonghua’s sales was increased by 4.29 percent over the same the period of 2014. But they are also clear that the plastic and wood coatings produced by Yonghua are mainly solvent-based, so the new capital will help them add new production lines to get into new market segments and develop more environmental friendly products.