Output of Adhesives Increases Rapidly

According to statistics from the China Adhesive Industry
Association, China's total output of adhesives and sealing
agents was 4.272 million tons in 2005 and the sales value was
RMB33.6 billion, an increase of 12.72% and 15.07% respectively
over 2004. Water-based varieties and hot-melt varieties
maintained a high growth. Other varieties developed rapidly. In
contrast, the output of solvent-based varieties dropped
further.
   In terms of market share, urea/phenol/melamine-formaldehyde
adhesives and water-based varieties saw the greatest
consumption and held a market share of 40.02% and 39.35%. The
market share of water-based varieties almost equaled to that of
environmental unfriendly urea/phenol/melamine-formaldehyde
varieties that used to dominate the market.
   According to statistics from the Customs General
Administration, the import of various adhesives, sealing agents
and raw materials in China fell to 171.1 thousand tons in 2005,
a drop of 10.51% from 2004 while the import value was US$616.8465
million, an increase of 15.94%. Exports of various adhesives,
sealing agents and raw materials reached 115.3 thousand tons,
an increase of 14.16% over 2004 and the export value was
US$227.7292 million, an increase of 32.89%. Both the import
price and the export price increased in 2005.
   The adhesive market in China has the following major problems
today. Some synthetic resins used as raw materials for adhesive
production such as EVA (ethylene-vinyl acetate copolymer), SIS
(styrene-isoprene-styrene block copolymer), SBS
(styrene-butadiene-styrene block copolymer), polyester, PA
(polyamide), grafted CR (chloroprene rubber), C5, C6 and
hydrogenated petroleum resin are in very short supply with
rising prices. The imported amount of basic organic monomers
such as vinyl acetate, TDI (toluene diisocyanate), MDI
(diphenylmethane diisocyanate) and silicone is great. The
energy consumption of manufacturing processes in this sector is
high and environmental protection measures are yet to be
improved. The energy utilization rate in chemical products
(including adhesives) is around 15% lower than in advanced
countries. Some medium and small adhesive producers lack
effective control of wastes. The discharge of wastes is beyond
limits, the supervision of environmental protection departments
is not strict and the market is yet to be further standardized.
The overall ability for the development of new products and the
innovation of technologies is low. Some producers have outdated
technology for production and inadequate input in research and
development. The ability for the research and development of new
and high-tech products is low. The introduction of technologies
from abroad is very difficult and has a high threshold. Products
have limited variety and cannot meet the market demands.
   With the rapid development of the automotive, household
electric appliance, construction materials, aviation,
decoration, water conservation, communication, information,
electric metering and electronic/electric sectors in recent
years, the demand for adhesives is getting higher and higher.
There are also more stringent requirements on efficiency and
environmental protection related to adhesives and their bonding
processes. According to the projection made by China Adhesive
Industry Association, the average annual demand growth of
adhesives and sealing agents in China will be around 11% from
2006 to 2008. It is expected that the output of adhesives will
be 5.83 million tons and the sales value can reach RMB48.1
billion in 2008.
   With the improvement of laws and regulations covering
environmental protection, environmental friendly adhesives
will become the mainstream varieties in the development of the
adhesive sector. Water-based varieties, hot-melt varieties,
hot-melt pressure sensitive varieties, solvent-free varieties,
high solid content varieties, room-temperature or
low-temperature (< 60 degrees centigrade) curing varieties,
photo-curing varieties, scrap recycling varieties, reclaimed
varieties and degradable varieties will have development
priority. Products with high quality, high performance, high
added value and multiple functions will become new profit growth
points and new research and development focuses in the adhesive
market, and their growth will reach 12% - 15%. Major raw
materials such as acrylic acid, acrylates, vinyl acetate, MDI,
TDI and silicone monomer will meet the market demand. The
adhesive sector in China will develop towards large-scale and
intensive production.

Output of Adhesives in China in 2005
             (thousand tons)
Variety                                                                                          
Output in 2005    Market share    Output in 2008 (expected)
Urea/phenol/melamine-formaldehyde adhesives
    1 710    40.02%    2 265
　Urea-formaldehyde adhesives    1 500
　Phenol-formaldehyde adhesives    154
　Melamine adhesives            56
Water-based varieties
    1 681    39.35%    2 415
　PVAc (polyvinyl acetate) and copolymerized emulsions    600
　VAE (vinyl acetate-ethylene copolymer) emulsions    115
　Polyacrylate adhesives    950
　Polyurethane adhesives    16
Solvent varieties
    300     7.02%    310
　Polyacrylate adhesives    98
　Neoprene rubber adhesives    160
　SBS resin adhesives    42
Hot-melt varieties
    152     3.56%    219
　EVA resin adhesives         63
　Synthetic rubber adhesives    74
　Others                     15
Reactive varieties
    299.4    7.01%    428
　Polyurethane adhesives    232
　Epoxy resin adhesives     56
　Cyanoacrylate adhesives    5.5
　Modified acrylate adhesives    4.5
　Anaerobic adhesives       1.4
Other varieties
    130     3.04%    193
　Silicone adhesives        121
　Polysulfide rubber adhesives    9
Total
    4 272.4     100.0%    5 830