By China Adhesives and Tape Industry Association
Challenges facing China’s adhesive and tape industry in a new stage of development
1. There are many adhesive and tape producers in China. But most of them are small firms, and product categories are quite limited. Hence weak economic strength, weak anti-risk capability and a relatively low industry concentration. Some companies develop relying on low-end manufacturing or low-cost competition. This could lead to vicious competition. Further, few enterprises have paid enough attention to brand building. Without related long-term plans, enterprises could hardly maintain market competitiveness in a long period.
2. Products with relatively high technical content, adhesive and tape have been failing to draw attention from R&D institutions, universities or R&D departments of enterprises, which generally prioritize production and sales. The lack of cooperation among the parties abovementioned results in a low conversion rate of R&D achievements.
3. More stringent policies – China rolled out to protect environment and ensure production safety – exert greater pressure on adhesive and tape enterprises, especially manufacturers of solvent-based products, which are greatly impacted by policies to reduce VOCs, and are partially replaced by eco-friendly products. Hence, while increasingly more adopting low-toxicity, low-volatility solvent, enterprises hope eventually to transition into water-based, solvent-free, or hot-melt products. Meanwhile, equipment, technologies and waste recovery systems all need to be upgraded to help firms better adapt to stricter policies.
4. Deceleration of the world’s economy, weak global demand and drastic fluctuation of international oil prices all bring uncertainties to China’s adhesive and tape industry.
Targets of domestic adhesive and tape industry in the 14th Five-Year Plan period (2021-2025)
1. From 2021 to 2025, domestic adhesive output will be up 4.2% annually to 8.71 million tons, and sales up 4.3% annually to RMB125.1 billion, both at the end of 2025, when tape output will be up 4.5% annually to 35.3 billion spare meters, and sales up 4.2% annually to RMB59.5 billion. Output value of high-value-added adhesive and tape will account for over 40% of the industry’s total in 2025, changing the current situation that high-end products are insufficient but low-end products are in surplus. New growth will gradually no longer rely on scale expansion, but on improvement of quality and profit.
2. Demand for adhesive and tape from downstream areas – e.g. automobiles, rail transit, new infrastructures, new energy, consumer electronics, household appliances, medical equipment and modern logistics – will be greatly propelled. Enterprises are encouraged to expand scale and improve competitiveness by means of policy support, merging, reorganization, etc. By the end of 2025, the number of companies with annual sales of more than RMB2 billion is expected to reach 10-15, and that of firms with annual sales of RMB1 billion or above to reach 30-50. In addition, three to five groups competitive in the world will be established.
3. Some products will be recommended, like water-based, hot-melt, and solvent-free products all with low VOCs content. Some products will be curbed – such as solvent-based adhesive made by neoprene rubber, styrene butadiene thermoplastic rubber, polyurethane or polyacrylate – and related new, reconstruction and expansion projects will be restricted. Production of products not meeting criteria regarding harmful matter content and emissions of VOCs will be prohibited. Solvent dosage and energy consumption per unit of products are expected to decrease.
4. Enterprises will play a leading role in establishing innovation platforms to improve product performance, research new applications, and improve technologies. Leading firms will team up with research institutes to make breakthroughs in core technologies related to adhesive and tape, which will both be significantly spurred by the nation’s actions to construct new infrastructure projects, new-type urbanization projects, transportation and water conservancy projects, etc. Further, companies will be encouraged to conduct international cooperation and transnational operation. Industry concentration will be improved via measures like the merger and restructuring of enterprises.
5. Service and business models will be upgraded. More specifically, selling and after-sales service will be integrated. Cross-border e-commerce, big data information platform, and industry-wide supply chain will be greatly promoted. Green and sustainable development concepts will be continued. Eco-friendly technologies and products will attract more attention. Enterprises at home and abroad are encouraged to invest in resource recycling projects.
Industrial development trends, emerging markets and necessary technical breakthroughs in the future
Development trends
1. Adhesive and tape enterprises will seek scale development, become more specialized, pay more attention to brand building and spend more on technical R&D.
2. More functional and high-end products (engineering, conductive and electronic packaging adhesives for example) will be produced, given development of NEVs, intercity high-speed rail, urban rail transit, consumer electronics and 5G related infrastructures.
3. Product structure of adhesive and tape will be optimized continually due to increasingly more stringent supervision on VOC emissions, toxic/harmful substances, etc. Traditional adhesive and tape will gradually be replaced by those with low VOCs (e.g. water-based, hot-melt and solvent-free products).
4. Industrial chain profit will gradually move downstream, mainly attributable to sufficient capacities of raw materials – e.g. acrylic acid (ester), isocyanate, polysiloxane, butadiene styrene rubber and petroleum resin – and new capacities of EVA resin, electron-grade epoxy resin, olefin polymer, waterborne polyurethane/neoprene rubber, etc. This will help improve profitability of the whole adhesive and tape industry.
Emerging markets
1. Adhesive used in NEV lithium batteries, and vehicle interior/lightweight structure – Lithium batteries are crucial to NEVs, and smooth operation of the electric drive system depends on many factors, like adhesive, a core factor. Related products mainly include thermal conductive silicone, modified acrylate structural adhesive, two-component polyurethane structural adhesive, functional epoxy adhesive, anaerobic adhesive and high-temperature resistant hot-melt adhesive.
Solvent-free, hot-melt and water-based adhesive will be increasingly more used in vehicle interior. Vehicle lightweight structure poses higher requirements for structural adhesive (such as modified acrylate structural adhesive and polyurethane structural adhesive) in aspects of environmental corrosion resistance, durability, etc.
2. Adhesive used in bridge infrastructures, high-speed rail and rail transit – Engineering adhesive mainly involves Bar glue, chemical anchorage glue, potting glue, etc. During production of rail vehicles, adhesive will be used to seal glasses and paste floor cloth, rubber seat, interior roof and wallboard or used for locking thread and avoiding electrochemical corrosion.
3. Adhesive used in furniture, home decoration and prefabricated buildings – In these areas, solvent-based adhesive is required to be replaced by eco-friendly products, such as water-based and hot-melt adhesive, given safety and environment protection issues. However, most current water-based and hot-melt adhesive cannot reach consumer requirements. Hence, an urgent need of innovation in upstream polymer synthesis field to provide new, high-performance base materials, which will greatly improve quality of water-based and hot-melt adhesive.
The government is actively promoting prefabricated buildings, which are required to account for more than 30% of new buildings in 2025 from over 15% in 2020. Therefore, demand for related silicone sealant, and silane modified polyether and polyurethane sealant will increase.
4. Adhesive and tape used in green packaging, medical equipment, health and sports & leisure products – Environmental protection policies and strict criteria on emissions of VOCs spur consumption of solvent-free polyurethane adhesive and water-based adhesive in the area of plastic flexible packaging. Progresses in economy, health awareness and living standards stimulate development of medical device and consumable, sports and leisure product industries. Accordingly, consumption of related adhesive and tape will grow.
5. Adhesive used in micro-electronics – Related adhesive involves semiconductor IC packaging adhesive (e.g. LED packaging adhesive, chip glue, etc.) and PCB board-level assembly adhesive (e.g. adhesive for camera module assembly, heat-conducting glue, etc.).
6. Adhesive used in lithium batteries, 5G infrastructures and communication electronics – Burgeoning smartphone, tablet PC and NEV markets propel consumption of lithium batteries. But at present, varieties of special adhesive for lithium batteries are limited, product performance is poor, and domestic demand for high-end products relies on imports. Hence, enterprises are encouraged to research water-based adhesive products, which are eco-friendly, low-cost, non-ignitable, and superior in weather resistance, film forming and safety.
Construction of 5G infrastructures and development of communication electronics bring new opportunities to domestic adhesive enterprises. Related adhesive involves high-end epoxy resin adhesive, modified acrylate adhesive, UV adhesive, etc.
7. Eco-friendly, high-performance, pressure-sensitive adhesive and industrial adhesive tape – Growth of general-purpose adhesive tape industry (involving BOPP adhesive tape, PVC electrical adhesive tape, etc.) will decelerate, after developing rapidly over the past five years. On the contrary, adhesive tape (e.g. double-sided adhesive tape, thermal conductive/electromagnetic shielding tape, protective film, etc.) used in industrial production or consumer electronics will play a bigger role in product differentiation competition.
As for pressure-sensitive adhesive, solvent-based products face greater pressure from the nation’s environmental policies, and environmentally friendly products will become development trends in the next five years. Related products mainly include pressure-sensitive adhesive for ultra-thin film, transparent electromagnetic shielding film, etc.
Necessary technical breakthroughs in the future
Although domestic adhesive and tape producers have dealt with shortage of bulk raw materials, their demand for special polymers (such as MS resin, organic silicon polymer, polyolefin, etc.) and additives (e.g. emulgator, thixotropic agent, wetting agent, etc.) still rely on expensive imports.
To maintain competitiveness, expanding scale and increasing efficiency of production units are important ways for domestic adhesive and tape firms, which in the next five years will actively establish intelligent, fully automatic plants, upgrade production technologies and improve product quality testing technologies.
