Plastic pipe is a kind of pipe fitting and pipe which is processed and produced by extrusion molding, injection molding and composite molding technology of plastic.
There are many kinds of plastic pipeline products, the raw materials are mainly petrochemical products, according to the raw material material can be divided into PVC pipe, PE pipe, PPR pipe, PB pipe, ABS pipe and so on.
Compared with cast iron pipe, galvanized steel pipe, cement pipe and other traditional pipes, plastic pipe has the advantages of energy saving and material saving, environmental protection, light weight and high strength, corrosion resistance, smooth and non-scaling of inner wall, simple construction and maintenance, long service life and so on. Therefore, in some application scenarios, the traditional pipeline with high cost and high energy consumption has been gradually eliminated.
At present, plastic pipes are widely used in construction water supply and drainage, urban and rural water supply and drainage, urban gas, agricultural irrigation and other construction, municipal, industrial and agricultural fields.
After many years of development, China has established the plastic pipe processing and application industry based on PVC pipe, PE pipe and PP pipe. In 2019, the output structure of PVC pipe was the largest, accounting for 43.6%, followed by PE pipe (31.2%) and PP pipe (10.8%).
PVC pipeline system is the earliest in China and the largest at present, but with the continuous development of PE and PP pipes, the proportion of PVC pipe output is decreasing year by year.
Among the downstream demand applications, municipal (municipal water supply and drainage, gas pipe) has the highest demand, including 24.5% for water supply and drainage, 5.1% for gas pipe, 29.6% for total, 27.2% for agriculture and 16.9% for construction.
Under the guidance of industrial policy, China’s plastic pipeline industry has made rapid development after 2000, and has become the largest plastic pipe production and application country in the world.
In recent years, with the slowdown of downstream demand growth, plastic pipeline production growth has also slowed at the same time, industry demand has entered a platform period. In 2019, the total output of plastic pipes and accessories in China reached 16.06 million tons, an increase of 2.5 percent over the same period last year, and the growth rate continued to slow down.
PVC plastic pipe application scene is mainly building water supply and drainage and agricultural water use. In the past two years, the demand has been reduced due to the downturn in the completion of real estate and the reduction of farmland irrigation area.
In order to ease the capital pressure and step up the push in the downlink cycle of real estate, housing enterprises have implemented a “high turnover” strategy and intend to slow down the pace of construction, resulting in a depressed growth rate of real estate completed area in 2017-2019, namely:-4.4 per cent,-7.8 per cent and 2.6 per cent, respectively. Since 2016, the irrigation area of new farmland in China has decreased year by year, and the growth rates from 2016 to 2018 are-20.79%,-31.09% and-22.5%, respectively.
PE pipeline has a large caliber, generally in 400mm-1200mm, is widely used in municipal engineering, mainly used in water supply, drainage, gas, heating and other fields. With the continuous progress of urbanization in China, the municipal construction in full swing has led to the rapid growth of PE pipe demand.
According to the 13th five-year Plan for the Construction of Urban Municipal Infrastructure issued by the Ministry of Housing and Construction, during the 13th five-year Plan period, the water supply network-planned to build 93000 kilometers, renew and transform 80800 kilometers, sewage pipe network-planned to build 95000 kilometers, transform the old pipe network 23000 kilometers, transform the confluence pipe network 29000 kilometers, and plan to build the city Rain Water pipeline 112400 kilometers Gas pipeline-planned to build 137000 km, retrofit 31000 km; heating pipeline-planned to build 41000 km, 50000 km. At present, they have basically exceeded expectations.
According to the National Bureau of Statistics, the length of urban water supply and drainage pipes in China increased from 909300 km in 2010 to 1.6641 million km in 2019. At the same time, the demand for PE pipe in China is also increasing year by year, the output is 3.12 million tons in 2014 and 5.01 million tons in 2019.
During the 14th five-year Plan period, there is still a new round of construction demand for municipal pipelines, and on the basis of the current high base pipeline, the demand for renewal and transformation will continue to be released in the future, and the consumption of PE pipeline is more optimistic.
According to the National Bureau of Statistics, the length of urban water supply and drainage pipes in China increased from 909300 km in 2010 to 1.6641 million km in 2019.
At the same time, the demand for PE pipe in China is also increasing year by year, the output is 3.12 million tons in 2014 and 5.01 million tons in 2019. During the 14th five-year Plan period, there is still a new round of construction demand for municipal pipelines, and on the basis of the current high base pipeline, the demand for renewal and transformation will continue to be released in the future, and the consumption of PE pipeline is more optimistic.
Plastic pipeline belongs to light asset industry, the technical barrier is not high, the product homogenization is more serious, and there is a transport radius of 500-1000 km, so the industry is full of a large number of local small and medium-sized enterprises.
At present, there are more than 3000 large-scale plastic pipeline production enterprises in China, with a total annual output of more than 30 million tons. Among them, there are about 30 million enterprises with an annual output of 10, 000 tons, about 10 percent, and more than 20 enterprises with an annual output of more than 100000 tons, accounting for less than 1 percent, and the competition pattern is more scattered.
The plastic pipeline industry relies on the upstream refining and chemical production capacity to gradually form an industrial functional agglomeration area, the production enterprises are mainly concentrated in coastal and economically developed Zhejiang, Guangdong, Shandong, Fujian and other provinces and cities, East and South China has accounted for more than half of the national capacity.
Due to the limitation of the transportation radius of pipe products, the current large-scale enterprises have gradually begun to build production bases in the national layout, and China’s leading enterprises, such as United Plastics, Yonggao shares, Xiong plastic Science and Technology, Weixing New Wood, and so on, have begun to build production capacity in the central and western regions.
With the slowdown of downstream demand growth, the head enterprises rely on strong comprehensive strength, in the fierce stock competition, gradually occupy a dominant position, industry concentration has been significantly improved. According to statistics, in the past five years, the plastic pipeline output of five listed companies, such as Lian Plastics, Yonggao shares, Weixing New Wood, Xiong plastic Technology and Gu Di Science and Technology, has been increasing, the growth rate is higher than the average level of the industry, and the market share has increased year by year.
In 2019, the total output of the five listed companies exceeded 3.6 million tons, with a market share of 22.5 percent, an increase of 5.1 percentage points over 2015. Considering that the industry has Zhongcai Pipeline, Rifeng Group, Jinde Management, Wuhan Taurus and many other strong unlisted companies, the level of industry concentration may be higher.
According to the China Plastics Pipeline Association, 60 percent of the country’s plastic pipe production in 2018 was contributed by the top 400 companies, and the top 20 companies sold more than 40 percent of the industry’s total.
Plastic pipe similar waterproof material belongs to hidden engineering, if the product quality is not up to standard, leakage or burst phenomenon, not only the maintenance cost is high, but also damage the image of the owner.
Previously, due to the strong concealment of plastic pipeline construction, the awareness of consumer rights protection has not yet been fully awakened, and the phenomenon of second-best filling in the market is more common.
Now, with the continuous upgrading of consumption, downstream customers pay more attention to product brand, quality and service, whether in the field of engineering or retail, the head enterprises are more likely to stand out in the competition.
Downstream real estate concentration is also increasing, driving plastic pipe head enterprises market share growth. Large housing enterprises have relatively low price sensitivity to plastic pipes, but pay more attention to quality and brand, and because of the large demand, there are also important considerations for suppliers’ supply capacity, professional services and response speed. Plastic pipe head enterprises with strong advantages of brand, quality, capital and service have gradually become the first choice for large housing enterprises to purchase.
In addition, the leading housing enterprises implement the strategic collection mining model, although the proportion of pipe collection and mining is not high, but the resources will still be more inclined to large plastic pipeline enterprises. According to the data of the China Real Estate Association, among the top 2020 pipe and pipe fittings suppliers of the top 500 Chinese real estate development enterprises, the top 10 top selection rates have reached 95%, all of which are well-known enterprises in the industry.
At present, the state does not reduce the intensity of real estate regulation and control, the impact of small and medium-sized housing enterprises is particularly obvious, and the market share of large housing enterprises is gradually expanding. In 2019, the sales area of TOP30 housing enterprises, led by country Garden, Evergrande and Vanke, reached 552 million square meters, with a market share of 32.15 percent, an increase of 1.64 percentage points over the same period last year, and the sales area of TOP100 real estate enterprises reached 761 million square meters, with a market share of 44.36 percent, an increase of 0.65 percentage points over the same period last year.
Despite fierce competition in the plastic pipeline industry, the leading companies are strong, with the market share of CR3 rising steadily from 14.5 per cent in 2014 to 20 per cent in 2019 from 18.2 per cent in 2014 to 23.6 per cent in 2019.
In 2019, the sales of plastic pipes in China accounted for 15.3% of the total domestic sales, while the second Yonggao shares accounted for only 3.5% and Weixing New Wood accounted for 1.5%.
With the implementation of environmental protection policy in recent years, the brand effect and head effect of leading enterprises appear, the industry clearance accelerates, the backward production capacity enterprises withdraw gradually, and the plastic pipeline industry gradually moves from the disorderly competition of “big industry and small enterprise” to the standardized and orderly market competition environment.