Analysis of the construction hardware industry in 2018 is facing challenges in the short term, and long-term development is good

The hardware industry is divided according to the use of the products, which can be divided into construction hardware, tool hardware, daily hardware and gas cookers. Among them, construction hardware products include door and window hardware, door control hardware, point support glass curtain wall components, stainless steel guardrail components and plumbing hardware.

As a traditional building material, construction hardware has a long history of development and is steadily developed along with the development of the construction industry. Especially after the 19th century, with the common use of metal materials and the needs of social life, construction hardware has developed rapidly.

Although the development of China's construction hardware industry started late, it has shown a good momentum of development under the continuous advancement of urbanization and the vigorous development of the construction industry. The data shows that China's urbanization rate has increased from 45.89% in 2007 to 58.52% in 2017. The added value of the construction industry has increased from 409.87 billion yuan in 2013 to 557.89 billion yuan in 2017, both of which have maintained rapid growth. The construction hardware industry has brought tremendous development opportunities.

Chart 1: Changes in urbanization rate in China from 2007 to 2017 (unit: %)

Chart 2: Changes in the added value of China's construction industry in 2013-2017 (unit: 100 million yuan, %)

Construction hardware industry market status

From the perspective of the industrial chain, the upstream of the construction hardware industry includes steel, colored, plastic, fiberglass and other raw materials, while downstream is the application areas such as curtain walls, doors and windows, real estate, and municipal construction.

The cost of construction hardware products is mainly derived from upstream raw materials. The quality of raw materials directly determines the quality of construction hardware products, and its price fluctuations also affect the operation of construction hardware enterprises. In recent years, under the supply-side structural reform and environmental protection supervision, the supply scale of steel and non-ferrous metals has shrunk significantly, and the price has risen sharply, which has a great impact on construction hardware.

Taking steel as an example, steel prices continued to rise due to the in-depth advancement of steel production capacity, the comprehensive ban of “strip steel”, the peak production during the heating season and the rebound of market demand. The comprehensive price index of steel products from 2015 56.37% rose sharply to 121.80% in 2017.

Chart 3: China's steel comprehensive price index chart for 2009-2017 (unit: %)

Although the raw materials have a great impact on the development of the construction hardware industry, the development space of the construction hardware industry is still determined by the downstream application areas. In recent years, with the rapid advancement of urbanization construction, China's construction industry market is booming, providing a strong driving force for the construction hardware industry. At the same time, the continuous improvement of consumption levels will effectively stimulate the potential demand for high-end construction hardware products, and the future prospects of the construction hardware industry are still promising.

According to the China National Hardware Association, in 2017, the total import and export volume of the construction hardware industry reached US$22.233 billion. Among them, the accumulated export value was US$29.974 billion, up 11.49% year-on-year, up 23.9 percentage points from the same period of last year; the cumulative import value was US$12.259 billion, up 10.65% year-on-year.

Chart 4: Import and Export of China's Construction Hardware Industry in 2017 (Unit: 100 million US dollars)

In the entire hardware industry, the total import and export of construction hardware products accounted for the largest proportion, reaching 32.99%, 14.88 percentage points higher than the second-ranked tool hardware.

Figure 5: Proportion of construction hardware in total imports and exports of hardware in 2017 (unit: %)

Source: Prospective Industry Research Institute

It can be seen that with the improvement of the world economic growth, the domestic economy continues to stabilize and the construction hardware industry will usher in the opportunity of change. It is expected to achieve leapfrog progress in structural optimization, technological innovation and quality improvement.

Future prospects of construction hardware industry

The construction hardware industry is an important industry closely related to national economic and social development. It has strong stability and irreplaceability in urbanization construction and is an industry with a long life cycle. The construction hardware industry is characterized by intensive capital technology, significant economies of scale, and huge market capacity. It is an important force driving the development of metal materials and machinery manufacturing industries.

With the improvement of people's living standards and the development of building safety, building energy conservation and building decoration, building hardware has become more and more recognized as a key component of modern architecture, and its long-term development is stable and good.

However, as the demographic dividend disappears, the low-cost competitive advantage of enterprises gradually disappears, and the construction hardware industry needs to gradually develop in the middle and high-end direction. At the same time, due to excessive dependence on exports, trade friction has become the norm and the sources of trade friction are diversified. The short-term development of the hardware industry faces challenges.

Despite the challenges in the short term, the construction hardware industry has been upgraded in all aspects of the brutal competition environment, and the overall pressure resistance of the industry is stronger than ever. Under the guidance of national policies, it is expected to break through the bottleneck and enter a new stage of development.

The above data and analysis are all from the “Analysis and Analysis of Production and Sales Demand and Investment Strategic Planning of China's Construction Hardware Industry in 2018-2023” issued by Prospective Industry Research Institute.

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