Sanitary Ceramics Output Declines; Bathroom Fixture Makers Poised for Faster Growth in H2

China’s National Building Materials and Home Furnishing Prosperity Index (BHI) indicates that in January–June 2012, large-scale building materials enterprises recorded sales output of RMB 2.5 trillion, up 16% year over year, with growth decelerating by 25.2 percentage points. Industrial added value rose 12.1% year over year, down 8.4 percentage points in growth rate, and total profits reached RMB 140.28 billion, a year-over-year decline of 9%. Because the building materials sector spans many product categories, performance varies across economic segments. Ceramics production and sales particularly reflect the state of China’s export environment and rigid demand from real estate. BHI data show that from January to June, large enterprises produced 4.23 billion square meters of ceramic tiles, up 1.5% year over year. Sanitary ceramics output reached 71.37 million units, down 13.5% year over year. Export delivery value for architectural ceramics was RMB 4.431 billion, up 9.39%, and from January to May, architectural ceramics achieved total profits of RMB 5 billion, up 44% year over year. Despite simultaneous softness in domestic and external demand, China’s ceramics industry—tempered by intense market competition—has accelerated product upgrades and maintained a degree of growth, though momentum has clearly slowed versus last year. Tile export growth has stabilized, largely because producers rapidly shifted export destinations to sustain volumes. For sanitary ceramics, export volumes fell while prices increased, reflecting a shift toward higher-value product mixes. Looking ahead to the second half, the combination of affordable housing construction and continued real estate controls is expected to partially offset risks to ceramics growth. Whether the sector can break out of its current stalemate depends on end-market demand recovery and monthly export momentum. The final three months of the year are expected to see faster growth if demand and exports improve.

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