World demand for adhesives is forecast to rise 4.2 percent per year to 16.6 million metric tons in 2004, according to the study "World Adhesives" by the Freedonia Group, Cleveland. Over the same period, market value will increase 5.7 percent per year to $24.6 billion, based on average price increases of 1.6 percent per year to $1.48 per kilogram. These price increases reflect in part higher prices for key petroleum-derived raw materials such as solvents, resins and tackifiers.
In addition to price increases among individual adhesives, total market value will continue to benefit from long-term shifts in overall product mix, which is gradually but steadily moving away from commodity adhesives such as animal glues and low-solids, solvent-based formulations toward more environmentally benign formulations such as hot melts and emulsion polymers.
As in related segments such as coatings and sealants, product reformulations in the adhesives industry are aimed at reducing volatile-organic-compound emissions, among other priorities. However, market value is constrained by the market's large-volume commodity segments, such as starch adhesives, which cost about $0.40 per kilogram.
Packaging Pushes Demand
One primary factor behind rising demand for adhesives is the favorable growth forecast for the paper and paperboard packaging industry, which will primarily benefit starch adhesives, hot melts and emulsions. Rising demand in packaging markets is attributable to the continuing industrial and economic development of the world's developing economies, particularly in Latin America and Asia. The export-intensive economies of these regions are generating significant new demand for paper and paperboard packaging, particularly for corrugated paperboard boxes and cartons, which is by far the largest volume application for adhesives.Solid gains also are forecast for adhesives used in the production of tapes and labels. In particular, growing demand for double-sided tapes in industrial bonding applications will expand adhesives demand per square meter of tape/label shipments.
After a below-average performance over the last decade, demand for adhesives in the construction market will see above-average gains, benefiting from a strong recovery in global residential fixed-investment levels. In addition to stronger construction spending, adhesives continue to expand their range of applications in the construction arena due to their labor-saving advantages, ease of use and improved performance characteristics over conventional fasteners.
Strongest Gains in Asia, Especially China
North America and Western Europe accounted for more than half of global adhesives demand in 1999, although annual gains in both of these mature markets will lag the global average. However, suppliers in these regions have been at the forefront of development efforts aimed at improving the environmental compatibility of their offerings, including the greater use of hot melts and emulsion adhesives. The market's strongest annual gains will arise in Asia, particularly China.Finally, the turnaround projected for "Other Regions" is attributable to a modest recovery in Eastern Europe, which supports small but expanding adhesives markets in the Czech Republic, Hungary and Poland, as well as solid gains in Latin America.
Four Suppliers Rack Up 32% of Sales
The global adhesives industry encompassed roughly 4,000 companies in 1999, including four companies with annual adhesives revenues of more than $1 billion: Henkel (Germany), National Starch and Chemical (part of ICI, U.K.), H.B. Fuller (U.S.) and Bostik Findley (the newly formed adhesives unit of TotalFinaElf, France). Representing the merger of Elf's ATO Findley unit and TOTAL's Bostik unit, Bostik Findley's pro forma 1999 adhesives sales totaled $1.1 billion, ranking the new firm behind Henkel but comparable to both National Starch and Fuller. Together, these four suppliers accounted for 32 percent of total adhesives sales in 1999. Henkel, along with its U.S.-based Loctite subsidiary, is the clear leader, with an especially strong position in specialty and engineering adhesives and an overall market share of 14 percent, more than double its next largest competitor.Other leading adhesives suppliers include 3M (U.S.), Rohm and Haas (U.S.), Konishi (Japan), ITW (U.S.), ThreeBond (Japan) and Reichhold (Dainippon Ink and Chemicals, Japan).
For more information on Study #1335 entitled "World Adhesives," contact The Freedonia Group, Inc., 767 Beta Drive, Cleveland, OH 44143-2326; call Connie Gangloff at 440-684-9600; fax 440-646-0484; e-mail cgangloff@freedoniagroup.com; or visit the Web site www.freedoniagroup.com. Or Circle No. 60
