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This report focuses on the supply/demand and business aspects of the higher-value
synthetic adhesives and sealants as opposed to the long-established commodity
products, typically of natural origin such as animal and plant-derived adhesives.
Further information on the supply/demand and business aspects of adhesive natural
polymer active ingredients including dextrin, starch and casein, and water-soluble
polymer active ingredients including polyvinyl alcohol, methylcellulose, carboxymethylcellulose,
polyvinylpyrrolidone and others can be found in the SCUP report on Water-Soluble
Polymers.
Polymer dispersion/emulsion adhesives are the largest category because of
their versatility and moderate price, followed by solvent-based adhesives.
Consumption of solvent-based adhesives is declining in developed countries
primarily because of VOC emission regulations, but is growing strongly in developing
countries such as China.
Silicone products dominate the sealants market, followed by polyurethane products.
Polysulfide sealants are losing market share to these products and to commodity
sealant products. Silyl-modified polyether sealants have expanded beyond their
Japanese production base to the larger markets in North America and Western
Europe.
The following pie charts show world consumption of adhesives and sealants
by type and by region on a volume basis.
World Consumption of Specialty Adhesives and Sealants—2005
The global market for specialty adhesives and sealants was valued at over
$11 billion dollars in 2005.
Specialty adhesives and sealants compete more on performance than price, as
compared with general-purpose or commodity products, although major adhesive
and sealant producers may produce a full range of products including specialty
and general-purpose products; their products are typically branded. Producers
command a premium for specialty products, while general-purpose products typically
also benefit from branding, with more of a premium than less prominent brands
or generic products.
Significant increases in petroleum-derived feedstock prices have been particularly
hard on commodity adhesive and sealant producers, which operate with smaller
margins and have a greater share of production cost in raw materials. While
specialty producers have cited feedstock prices as reasons for recent price
increases and surcharges, producers with valuable brands have exercised pricing
power and have increased margins in the current economic environment.
Consolidation in the adhesives and sealants industry has built depth in vertical
integration and broadened product lines in some major companies such as Henkel
and General Electric, while other companies have closed, or have spun off poorly
performing or less related business or reduced the array of products offered,
as have H.B. Fuller and Borden Chemical. However, the industry remains highly
fragmented, with numerous small and medium-sized companies with a relatively
high level of customization and service, particularly in the highest-value
adhesive and sealant segments.
The diversity of the adhesives market can create a challenge for large adhesives
companies that operate several businesses across a variety of end uses. These
companies seek cost advantages of scale and often target large market segments.
This allows smaller niche players to be very successful by choosing a narrow
segment and providing superior customer-specific service. Such service focus
is particularly important where producer oversight is needed to ensure correct
selection and use of the product.
In the sealants industry, a greater proportion of producers have backward
integration, particularly in the case of Dow Corning, GE Silicones and Rhodia,
in silicone polymers and silicone sealants, although Rhodia sold its forward
integrated cartridge business to Henkel in late 2005.
Environmental regulations continue to increase as more VOC emission sources
are targeted for reduction or elimination. Some producers have switched from
targeted solvents to other solvents only to find they must switch again with
new regulations, or have changed to lower- or no-emission technologies. Waterborne
products continue to push into commodity markets, but their penetration into
specialty segments has slowed because of the formulating difficulties and performance
challenges in the solventborne segments. Although the consumption of solvent-based
adhesives is continuing to decline in North America, Western Europe and Japan,
this category is growing steadily in China and the rest of Asia, following
the growth of relocated industries such as shoe manufacturing. Overall, hotmelt
technologies have seen the greatest growth globally, because they offer very
low or no emissions, work on a variety of substrates, and are easy to apply.
Also, new low-temperature and reactive hotmelt products have expanded the possible
end-use areas for these adhesives.
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