Jeremy Hunter states that the global adhesives and sealants market is expected to grow at a CAGR of 3.86 percent over the period 2012-2016. Also China and India are the biggest consumers of adhesives due to rapid industrialization and infrastructure growth.
Adhesive, the term visualizes the glue stick, the tape or the sticky semi liquid tube that we have been using for crafts or household requirements ever since we were kids. But this semi liquid bonding material has found a common place in everyone’s life today, which is way ahead when it comes to application and usage, than we might know about it. The shoes that you wear, the baby nappies, the wrapper of your favourite wafers, the ready to eat meal that you pick, everything has a binding story with adhesives.
Adhesives have swiftly formed a giant market and holds large number of shares in many relevant industries. On the global podium, Adhesives has fairly strong power which is used in almost every manufacturing sector right from flexible packaging to textiles and have gained widespread popularity across sectors- renewable energy, auto, aviation, construction, FMCG, healthcare amongst others. The global trends of industrial adhesives point towards steady growth. However, growth in the emerging markets continues to build much faster than the developed economies due to rapid pace of industrialization and rise in manufacturing/industrial output. The consumption of adhesives and sealants will continue to increase.
Global Market Outlook
The Global Adhesives and Sealants market to grow at a CAGR of 3.86 percent over the period 2012-2016. The key driver for adhesives and sealants market is raising trend in various end user segments to use eco-friendly or green adhesives and sealants or those with low VOC (volatile organic compound). Further, technological advancement in production capabilities and enhancing properties of adhesives and sealants will be fuelling the growth. The ever-increasing need for high standard performance across all modern applications is driving the growth of adhesives and sealants. This also results in the development of newer and improved application and performance properties. Adhesive and sealant systems that are fast, easy, and low cost are in demand.
Asia-Pacific and India: a market place of Adhesives & Sealants
China and India are the biggest consumers of adhesives and sealants due to rapid industrialization and infrastructure growth.
In fact, this region remains the fastest growing region for adhesives and sealants on a global basis through to 2015. Asia-Pacific remains the dominant market followed by Europe due to increase in applications for labels. In terms of individual countries, India is a fast growing market due to heavy automotive sector and wide range of industries present in the market.
The packaging, construction, and non woven industries are growing at a high rate in China and India driving the demand of adhesives and sealants.
Asia-Pacific now holds a 34% share of total demand, with Europe second at 32% and North America a close third at 27%. Latin America still commands a minor 4% share, with the rest of the world at 3%.
Most sophisticated adhesives are imported, but the proportions can vary widely: imports into India account for around 30% of the market.
With growing purchasing powers and rapid development in retail sector, India is poised for huge growth within the retail sector. With only 5% of food currently packaged, and FDI allowed moving into retail in the country only last year, the opportunities in flexible packaging are clearly enormous. The Indian Flexible Packaging Market 2011 shows India represents a US$ 3 billion market that is expected to continue growing at around 15% a year until 2015.
Another sector that is flourishing industrial adhesives segment is shoe industry owing to the fact that India is the world’s second largest producer of shoes and the third largest market for it. Indian economy is showing upward trend which is benefiting the automobile industry at large. Light vehicle sales are expected to double from 3.6 million in 2013 to 7.8 million units in 2018. The rising service load will stress the current automaker workshop infrastructure and customers may have to look to aftermarket chains for a quick fix.
New innovations – the drivers of the growth
Pressure Sensitive Adhesives: New gen technology with the increasing capabilities of pressure sensitive adhesives in tapes and labels, high demand in automotive sector and growing health concerns, strict laws on energy efficiency and growing environmental concerns on Green House Emissions, the global market will witness a strong growth in the future growing at a global CAGR of 5.8% from 2013 to 2018.
This new technology finds its application in industries such as medical, marine, automobile, cosmetics, health care, sanitary and aerospace. These adhesives formulated from acrylics, silicone or rubber also find applications in RFID labels, smart labels, flexible labels, etc. The increase in disposable income, increased tapes requirements and demand for proper medical products are the primary reasons for the rise in demand of pressure sensitive adhesives. Asia-Pacific countries, due to its huge appetite for consumptions of these adhesives are the major growth engines for this market.
The key property of a pressure sensitive adhesive (PSA) is that it is always sticky at room temperature.
Water-based adhesives: Eco friendly technology
The consumers have been more aware of the impact of the industry on the people that live and work in that environment more than ever. More and more manufacturers are waking to the fact that the formulations and processes must be environmentally friendly and hazard free. Water-based adhesives is one of the examples which uses water instead of harmful solvents to suspend the adhesives so it is much less irritating to human skin and non-flammable. Constant research and innovation has enabled the adhesive manufacturers to produce Water-Based UV Primers, Water-Based PU Adhesives, Water-Based Rubber Primers and Water-Based Cleaners.
Light weight technology
Weight reduction is the most cost-effective means to reduce fuel consumption and emission of greenhouse gases in the transportation sector. It has been estimated that for every 10% of weight eliminated from a vehicle’s total weight, fuel economy improves by 7%. This also means that for every kilogram of weight reduced in a vehicle, there is about 20 kg of carbon dioxide reduction. However, the most important challenge in application of lightweight materials is their high manufacturing cost.
Key Market Players
Market players are concentrating on expanding their product portfolio and offer it to the consumers at competitive prices. The major market players are focusing on R&D activities to innovate products under the stringent regulations for clean environment.
Challenges ahead of adhesive industry
While the industrial adhesives segment provides high growth potential in India, it is also faced with challenges, particularly in procurement of important raw materials and technology absorption. Non-availability of feedstock is the key challenge which the industry at large needs to address.
One of the major market challenges that most of the technology driven companies face in India is acceptance of new technologies by the customers. This is either due to the inability to integrate the technology into the existing system or the upfront cost of investment.
(The author is President, Henkel Group India.)