As an environmentally friendly decorative material with natural diatomaceous earth as the main raw material, diatom mud has made its mark in the building materials market in recent years. Its market prospects are driven and challenged by multiple factors. The overall situation shows "great potential, fast growth rate and competition". Intensify the characteristics.

 1. The growth of environmentally friendly building materials demand driven by policy
Under the guidance of the "dual carbon" goal and green building policies, the demand for environmentally friendly building materials continues to expand. Diatom mud is in line with the national "Indoor Air Purification Material Standard" and consumers' pursuit of healthy homes due to its functions such as adsorption of formaldehyde, regulating humidity, and anti-bacterial properties. It is expected that in the next five years, the annual growth rate of China's environmentally friendly coatings market size will be about 8%-10%. Diatom mud, as a representative of the sub-sectors, may have a higher growth rate.

 2. Consumption upgrade and health awareness enhancement
Currently, consumers, especially middle- and high-income groups, are intensifying concerns about interior decoration pollution. The environmental performance of diatom mud has become the core selling point. The penetration rate of high-end home improvement market in first- and second-tier cities has exceeded 15%, and has gradually declined to third- and fourth-tier cities. At the same time, with the popularization of the whole house decoration concept, its application scenarios extend from the wall to the ceiling, background wall and other spaces.

 3. Product innovation expands application scenarios
Traditional diatom mud is limited by complex construction and high price (average price of 80-200 yuan/㎡), and is mainly concentrated in the high-end market. But in recent years, technological innovation has broken through this bottleneck:
1. **Functional expansion**: Launch photocatalyst type diatom mud to enhance the aldehyde removal effect; develop waterproof products, suitable for kitchen and bathroom areas.
2. **Construction convenience**: Prefabricated diatom mud sheets reduce construction difficulty and increase the market acceptance of tooling.
3. **Decorative Artistic**: Through texture mold technology, relief, printing and other effects are achieved, forming a competition with artistic paints.

 4. Evolution of market competition pattern
Traditional latex paints occupy the main market share with their cost-effectiveness (20-50 yuan/㎡), but diatom mud companies are breaking through differentiated competition:
- **Industry concentration increases**: Top brands (such as Lanshe and Ojin) seize market share through technical patents and brand marketing, and CR5 has risen from 32% in 2018 to 46% in 2022.
- **Cross-border integration**: Cooperate with smart home companies to develop a linkage system of "humidity regulation + air quality monitoring" to improve product premium capabilities.
- **Emerging channel expansion**: E-commerce platform sales have increased by more than 40% year-on-year, and short video content marketing attracts young consumers.

 5. Potential challenges and future trends
The industry is still facing problems such as insufficient consumer awareness (the survey shows that only 38% of consumers are clearly aware of their functions), and the intensification of regional price wars. The following trends may appear in the next 5 years:
- **Industrial chain integration**: Diatomaceous earth mineral enterprises extend downstream to reduce costs;
- **The standard system is improved**: The introduction of industry standards will eliminate low-quality private label products;
- **Overseas market development**: Southeast Asia, the Middle East and other humid and hot areas have a strong demand for humidity regulation function.

Overall, the diatom mud market is in the transition stage from a growth stage to a maturity stage. It is expected that the market size will exceed 20 billion yuan in 2025. Functional innovation and channel sinking will become the key paths for enterprises to break through.