Chinese Flexible Foam Update

2016 China Flexible PU Foam Remains Slower Growth

2016-05-13    [Source:PUdaily]

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PUdaily, Shanghai-China soft polyurethane (PU) foam industry grew slowly in 2015 with slight growth of products producing in upholstered furniture and automobile field, narrow atrophy in motorcycle and shoes field, steady development in clothing field and smooth growth in fitness equipment field. According to data from PUdaily, Soft PU foam consumption in 2015 was estimated at 189.6 million tons with 145.9 million tons of polyols and 43.7 million tons of TDI, edging up 6.6% year on year. Flexible polyurethane (PU) foam product is the downstream field with largest volume of production and sales in China PU industry, which can be used in upholstered furniture, automobile, shoes, clothing, toy and other industries like bag and luggage. And upholstered furniture and automobile are the primary downstream industries occupying above 70% of all the flexible polyurethane foam products.

According to PUdaily research, flexible PU foam industry will have a relative steady growth with compound annual growth rate (CAGR) of 3% in the next 5 years. Firstly, China real estate industry runs out of steam due to weak macroeconomic environment in Chinese market these years. Besides, a series of real estate policies are published to reduce inventories, which might boost upholstered furniture demand in the coming one or two years, but the current domestic new housing and construction land is shrinking with slowdown development in China economy. The whole industry is thusly estimated to drive hard in the next five years. Furthermore, the automobile market is expected to develop slowly in the future due to the slowdown growth in China second-hand market and automobile production.

1. Upholstered furniture

According to PUdaily research, TDI and polyols demand in upholstered furniture industry is about to keep developing tenderly and steadily with CAGR of 6.1% in next 3 years. And flexible PU foam production used in China upholstered furniture industry was around 108.2 million tons, making up 52.4% of the total flexible PU foam products in 2015. The industrial development will become mature with a slower speed gradually after the period of rapid growth. The consumption growth of polyols in Guangdong runs out of steam due to the migration of furniture companies from Guangdong to central and west China with the factor of labor cost rise. Besides, the real estate tendency is hard to estimate due to high stockpiles despite cancelled housing purchase restriction policy in different regions. The furniture industry is filled with competition. Large and medium-sized furniture factories especially some high-class factories will maintain good development while some small enterprises will be squeezed out the market gradually with booming pressure.

2. Automobile

According to PUdaily research, China automobile industry is expected to develop with average growth rate of 5-7% in next 3 years. China automobile industry will face many challenges, and high inventory in automobile market will be the main pressure with automobile sales and production keeping growing in low speed, but the automobile industry will remain boosted slightly on account of incentive industry policies. Besides, Chinese central and western regions with low automobiles ownership still will be the main growth of the market, and new energy as well as self-owned brand automobiles are expected to become a new driving force in automobile market.

In 2015, flexible PU foam production used in automobiles industry was around 41.1 million tons, taking up 19.9% of the total flexible PU foam products. China automobile market grew slowly and sales of automobile kept declining in 2015, leading to polyols demand growing slowly in automobile industry and keeping atrophying narrowly in motorcycle industry. In 2015, China automobile market is boosted by enterprise, consumer and government. The government published tax preferential policies and series of regulations to boost the market development and promote the standardization of the industry, but the policies are still with uncertainty due to environmental protection and urban governance, which strengthens gambling between auto sales and using.

3. Shoes

According to PUdaily research, TDI and polyols demand in shoes industry is expected to grow slowly with CAGR of 1.5% in the next 3 years. And flexible PU foam production used in shoes industry was around 6.9 million tons, making up 3.3% of the total flexible PU foam products in 2015. China shoes industry maintains tepid and production keeps declining with low operating rate due to fund shortage, labor cost keeping rising sharply, orders of export in China shifting to Southeast Asia and support of public policy fading. China shoes industry has no advantage in production cost and international export situation at present, which slows down growth in TDI and polyols demand.

4. Clothing

According to PUdaily research, TDI and polyols demand in clothing industry is expected to keep growing stably with CAGR of 1.1% in next 3 years. And flexible PU foam production used in clothing industry was around 8.3 million tons, taking up 4% of the total flexible PU foam products in 2015. China clothing industry strengths industrial structure adjustment and actively adapts to the new normal domestic macroeconomic development with stable development and slight growth decrease rate year on year. The textile enterprises production was about 7% rise year on year with export volume rising about 5%, and total profit was about 6% rises year on year.

5. Fitness equipment

According to PUdaily research, TDI and polyols demand in fitness equipment industry is estimated to keep growing steadily with CAGR of 1.6% in next 3 years. And flexible PU foam production used in fitness equipment industry was around 6.5 million tons, taking up 3.1% of the total flexible PU foam products in 2015. China fitness equipment industry is in late beginning with characteristics like small scale and percentage in economic structure, low commercial operation level, single product structure, not enough market diversification development, not releasing all the potential ability in relative industry and etc. China fitness equipment industry is under rapid development period with vast market, cheap human resources and raw material as well as all kinds of government’s preferential policies, which will promote all people to engage in fitness and fitness equipment industry developing.

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