Summary of Conference Call on Waterproofing Industry Price Increases Industry Overview - The waterproofing industry has initiated a comprehensive price increase effective from March 15, 2026, with SBS membranes rising by 5%-6% and asphalt-based coatings increasing by over 10% to cover rising raw material costs [1][2]. Key Points and Arguments - **Cost Pressure**: Major companies have asphalt inventories that can last 2-3 months. If raw material prices remain high, a further price increase of 10%-20% may be necessary to cover costs [1][2]. - **Market Dynamics**: The industry is experiencing accelerated market clearing, with leading companies using inventory advantages to delay price increases, which may force smaller, cost-sensitive firms to lose market share or compromise on quality [1][3]. - **Channel Acceptance**: The retail market shows a high acceptance of price increases, while B2B engineering clients face internal cost control constraints, leading to slower price transmission [1][5]. - **Competitive Strategies**: Companies like Oriental Yuhong prioritize profit and cash flow, while Beixin Building Materials, backed by state-owned enterprise status, focuses on market share, intensifying competition [1][6]. - **Profit Expectations**: The initial price increase is expected to contribute only about 1% to profit margins, with future gross margin recovery heavily reliant on subsequent price increases and international oil price trends [1][9]. Additional Important Insights - **Product Price Adjustments**: As of March 15, 2026, some products, particularly those related to asphalt raw material increases, have seen price adjustments of 5%-6% for SBS membranes and 10% for asphalt coatings. Further adjustments are anticipated by late March to early April 2026 [2][3]. - **Impact on Small Enterprises**: Small companies may face significant challenges due to higher procurement costs and limited ability to lower production costs (only 4%-5% reduction possible through quality compromise) [3][4]. - **Product Categories Affected**: Asphalt-based products are most affected by rising oil prices, with traditional asphalt membranes seeing smaller increases (5%-6%) compared to coatings (12%-14%) [4]. - **Market Demand**: Overall demand in 2026 is expected to remain stable compared to 2025, with no significant changes in project initiation despite rising material costs [8][9]. - **Sales Strategy**: Different companies are adopting varied strategies; private firms prioritize cash flow while state-owned enterprises focus on market share, potentially affecting competitive dynamics [6][7]. Conclusion The waterproofing industry is navigating significant cost pressures and competitive dynamics due to rising raw material prices. Price adjustments are being implemented across various product lines, with varying acceptance levels in different market segments. The future profitability of companies in this sector will depend on their ability to manage costs and effectively implement further price increases.