Adhesive growth heads to BRICS

12 October 2012 09:36  [Source: ICB]

Adhesives are the unseen products that quite literally hold everything together. They are used in just about every consumer and industrial market, from automotive to packaging. As emerging economies become more industrialised, the consumption of adhesives and sealants will continue to increase.

A dynamic group of emerging nations is the "BRICS" - Brazil, Russia, India, China and South Africa, which have a similar level of growth and industrialisation. "These five countries account for 24% of world demand for adhesives and sealants," says Dave Nick, president of US consultancy DPNA International. At the same time, they constitute 43% of the global population and 30% of its GDP. "They represent a new order for the economy," he says.

PBurch/Tulane University Publications A gecko's foot makes contact on a molecular level

Their growth in adhesives and sealants consumption is some distance ahead of that in mature economies. Nick estimates an average of 5.2%/year growth within BRICS countries (from 4.5%/year in Brazil to 6%/year in both India and China). The estimated growth for non-BRICS nations is 3.2%/year. Just as revealing is the gulf in per capita adhesives consumption: in Russia, it is nearly 3kg (6.6.lb)/person; in India, it is not yet 0.2kg/person.

DPNA's study of the adhesives market in the BRICS reveals a small discrepancy between the share by volume (24%) and the share by value (22%). Nick says this is due to the type of product generally sold in the region.

"BRICS countries tend to be using lower value products," he says. But, he adds, this is beginning to change. Some leading multinationals have begun production in Brazil and are eyeing markets like India. "As demand increases, the multinationals will be looking for opportunities to make more modern products in these countries," he says. Production such as automotive assembly increases the need for these products. "Local adhesives manufacturers will try to license the technology from multinationals, or encourage them to build plants," he adds.

Most sophisticated adhesives are imported, but the proportions can vary widely: imports into India account for around 30% of the market, but it is closer to 20% for China, says Nick.

BRAZILIAN CHARM

While China seems to lead most growth tables at the moment, another important market is Brazil. "The last 10 years have seen 6% annual GDP growth in Brazil," says Scott Detiveaux, senior consultant at US consultancy Orr & Boss. He says Latin America accounts for 7-8% of global adhesives demand - of which Brazil's share is almost half. "That's 3-4% of the global market [for Brazil], though on a per capita basis, it's still quite low," he says.

He believes that demand in Brazil will swell from the current 345m lb to around 445m lb by 2016. There are two issues driving this growth. The first is its historic recent growth, but "a more important issue is the rise of the middle class in Brazil and the increase in disposable income," he says. This has a separate effect to simple GDP growth and is helping to fuel adhesives demand. "It's not just about growing the economy: it's also about purchasing power," says Detiveaux. The effect is increased sales of consumer products - not just the cars and electronic devices, but also the associated packaging.

Detiveaux points to three major sectors that are driving demand in Brazil: paperboard and packaging (the largest); transport; and construction. Brazil will enjoy a 4-5%/year increase in car production in the next five years. It has also instigated massive infrastructure spending - which does not include hosting duties of the next World Cup and Olympic games.

"Brazil is not the biggest market right now, but it's going in the right direction. Demand in North America and western Europe is flat, or declining. You can beat your brains out for market share in these places, or go to these new economies," he says.

MATURE COMPARISON

Growth in the mature markets is much slower. According to the US-based Adhesive and Sealant Council's 2011 market report, the North American market for adhesives and sealants is $11.1bn (€8.56bn). Of this, $9.4bn was for adhesives and $1.7bn for sealants. These figures, combined with those from Feica (the European Adhesive and Sealant Industry Federation), indicate a current global market of $42bn.

Growth in North America is expected to be a modest 2.2%/year to 2013, says the ACS. As with most mature economies, growth rates are expected to be dwarfed by those in developing regions. But mature economies still have a powerful hand; they still control the technology high ground and will continue to drive innovation.

"Innovation will likely be driven by the unmet needs of large [original equipment manufacturers], and users of adhesives and sealants such as Procter & Gamble, who push the boundaries of formulation and strive for different end use requirements or products that exceed industry specification. High end solutions in the aerospace segment may also be an area to watch closely," says Detiveaux.

ADHESION: THE FUTURE

Further ahead, innovation is likely to lead in surprising new directions. Conventional adhesives will stick pretty much anything to anything else. But even powerhouses like superglue are not effective in all environments. They struggle in the vacuum of space, for example, or under water. For this reason, scientists are looking to develop adhesives that work using new mechanisms, such as by mimicking the gecko's foot - which leaves no sticky residue behind.

The pads on their feet are composed of millions of tiny "hairs", which make such intimate contact with the floor or ceiling that molecular attractive forces come into effect.

"Usually, you can never get close enough contact with a surface for this to happen," says Noshir Pesika, assistant professor in the chemical and biomolecular engineering department at Tulane University in the US. He will present details of his research at the forthcoming Adhesive and Sealant Council (ASC) conference.

Pesika has used photolithography - normally used in the production of microchips - to create special adhesive surfaces that mimic the gecko's foot. He has produced tiny polyurethane (PU) structures with microscopic structures on the surface, which stick through "attraction" only. He estimates that his structures are around 100 times weaker than a real gecko's foot. But he says that a 1 foot x 1 foot (30cm x 30cm) pad of his material could support the weight of a human.

New technology avoids sticky residue by using microscopic adhesive surfaces

"So far, we've made structures that are about 1.5 inches square," he says.

He points to a number of potential markets: space travel, where the vacuum of space can destroy conventional products; and in aqueous environments - which could include the inside of the human body.

Pesika envisages a final product in the form of a tape, but where the sticky surface is protected until it is needed.

Launching a commercial product is likely to be some way off and many challenges remain. "To commercialise this, it would have to be made in a continuous process, rather than the batch process we're currently using," he says.

While this sort of technology might hold the future, in the short term it is more likely the rise of the BRICS nations will be more influential. The deepening relationship between its five members - which might conceivably be swelled by countries such as Turkey or Indonesia - creates a new power base.

"They're still trading with the west, but are also trading among themselves," adds Dave Nick, president DPNA International. "They are also ready to set up a BRICS bank, which could lend to members in local currency."

Author: Lou Reade

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