Overview:

• World adhesive tape demand is growing faster than global GDP (4.3% over 3.5%); thus tapes are gaining market share in their global environment
• Asia, particularly China, will be the dominant player in the world pressure sensitive adhesive (PSA) market
• At over 70%, Asia Pacific’s share of carton sealing tapes (CSTs) is higher than the world average
• 2 booming areas for specialty tapes demand in China are the automotive and electronics markets
• With increasing production, interesting sources of raw materials are appearing in Asia
• New coaters of specialty tapes are popping up, a trend which is good news to machine producers
• The more mature markets of North America, Western Europe and Japan will continue to account for more than one-third of total demand in 2020
• In Western Europe, rebounding construction activity following a long period of decline will boost the use of masking and other tapes
• Italy remains Europe’s leading manufacturer, supplying much of the market in both Western and Eastern Europe
• In Western Europe, regional adhesive tape production will rise a modest 1.2% annually to 6.3 bsm in 2018
• Western Europe will have the market edge with specialty tapes, gradually replacing solvent-based adhesives with environmental, waterborne and hot melt types.

View the complete slide presentation (for members only)

Afera’s Turin conference presentation series

PSA industry update according to Freedonia’s latest study

Following through on Afera’s yearly mission to present an adhesive tape study highlighting the most important market data and trends affecting the adhesive tape business, Matthias von Schwerdtner, corporate vice president of the business unit on specific industrial markets – direct division at tesa SE and an Afera Marketing Committee member, presented Freedonia’s findings in its latest study World Pressure Sensitive Tapes released in 2016.

Mr. Von Schwerdtner explained that this is a view into “the big picture” according to Freedonia. For many in the tape business, it is useful to look at the markets in which we are operating and to understand why we may be under- or outperforming in certain areas. Because Afera has covered this particular study in the past, members have the benefit of using it as a benchmark in their business planning.

The bottom line: Tape manufacturers, together with their converting partners, are trying to penetrate more markets, and the data shows that they are succeeding. As Asian players will become increasingly prominent, Western European manufacturers are focusing on a mix of tape technologies, marking a significant trend toward producing specialty tapes. Lower than the global average, 60% of Western European production will be carton sealing tapes (CSTs).

Asia, particularly China, will be the dominant player in the world PSA market

It should be no surprise that the next generation of the tape business will be dominated by Asian, particularly Chinese, players. Follow the markets where tape is being increasingly utilised, where new applications for automotive and electronics are in constant development: One-third of all new cars in the world are being produced in China, and most handheld electronic devices are produced in China and neighbouring countries.

Demand for tapes in Asia and China is growing immensely, so there are many new competitors popping up in the Asian and Chinese markets. These new factories add to increasing production in Asia and China, and with this, interesting new sources of raw materials are appearing.

The biggest influence that Mr. Von Schwerdtner sees on the Chinese business market, besides the tape market itself and the end user market, is increasing domestic regulation. China is working to comply with local environmental restrictions in order to control air pollution somewhat. In terms of its huge workforce, China is trying to regularise labour laws and to increase salary levels. Because of this, some production is migrating from China to neighbouring countries.

PSA tape demand: tapes are gaining market share in their global environment

Global demand

The second line of the “World Pressure Sensitive Tape Demand” chart above shows world gross domestic product (GDP) growth at a rate of 3.5% annually, and the world PSA tape demand trend is slightly above this at 4.3%. Actually, said Mr. Von Schwerdtner, we could say tapes are gaining market share in their global environment. Tape is becoming more relevant.

PSA tape demand growth in Western Europe is slightly slower than the global average. This is due, to some degree, to increased production in Asia and increased imports to Europe from Asia. As can be seen in the chart, China’s demand growth is beating the world average at 5.4%.

Demand by value and volume

The bottom of the above chart indicates that the average price per square metre of tape sold is going up. This is probably due to the fact that an increasing number of specialty tapes are being developed and produced. Not only CSTs and masking tapes but high-end tapes are being sold increasingly, the latter into a multitude of applications. This denotes the trend of increasing numbers of industries and applications looking to tape for solutions. Tape manufacturers, together with their converting partners, are trying to penetrate more markets, and the data shows that they are succeeding.

Freedonia shows a growth in demand volume over the next 5 years of about 10 billion square metres (bsm). In value terms, this is $14 billion extra growth between 2015 and 2020. This denotes a shifting to a higher value per square metre of tape.

Breaking down the 10 bsm of growth, there is probably one new plant which produces an average of 200 million square metres (msm) of tape a year. So that would mean that 15 new coaters will be set up, plus several hundred smaller coaters producing specialty tapes. This is good news for machine producers, as there is increasing demand to build new plants, along with many new converting businesses, because there is also demand for other plants in the value chain that can convert the tape product into final usable applications and solutions.

Demand by region

Of the 43.3 bsm of tape produced in 2015, 50% was already produced in Asia. Out of that again, 31.1% was from China.

Africa/Mideast, Eastern Europe, Central and South America’s production data is stable and will not change very much in the future, while Asia will gradually capture market share of the other regions.

Mr. Von Schwerdtner emphasised that he believed that Western Europe, under the umbrella of Afera, will continue to study, innovate and build on its relevance to the world stage in specialty tapes.

In terms of compound annual growth rates (CAGR), Asia Pacific is growing markedly above the world average, while Western Europe is below. During 2010-2015, Western Europe grew at a CAGR of 1.3%, as the market was still recovering from the global economic slowdown.

Regional outlook on demand

The Asia Pacific region will continue to grow above average by increased manufacturing output, especially in the food and beverage market serving the growing population in the region. The Chinese market alone equals the size of the U.S. and Western Europe markets combined. It will remain the largest market by a wide margin despite some ongoing economic slowdown.

The Africa/Mideast region will register the fastest growth through the forecast period but still will account for less than 5% of global demand by 2020. Some estimates predict a future end user market in Africa of 2 billion people. Right now, we see huge investment in manufacturing in this region, but it is not yet a significantly emerging market.

The more mature markets of North America, Western Europe and Japan will continue to account for more than one-third of total demand in 2020; however, growth opportunities in these markets will be more restrained. In the U.S., modest gains in manufacturing output will support sales of carton sealing tapes, as will increases in motor vehicle production and construction activity. In Western Europe, rebounding construction activity following a long period of decline will boost the use of masking and other tapes.

Japan’s economic growth will remain slow, but the country will continue to be a significant producer and consumer of specialty tapes, such as those used in motor vehicle and electronics assembly.

Demand by product type

Of the 43.3 bsm of adhesive tape produced globally in 2015, 67% of this was CST. Mr. Von Schwerdtner pointed out that the rest of the tapes produced, 14.3 bsm, if divided by 100 msm per coating plant, suggest the existence of several hundred plants producing specialty tapes. Those active in the tape industry are aware of plant quotas, and with demand growing, we know that more plants will pop up.

Keeping in mind that average growth globally is in the range of 4.3 to 4.5%, CSTs demand is forecast to grow 4.1% per annum to nearly 36 bsm.

Masking tapes, including both commodity and high performance types, are expected to increase 4.7% per annum to nearly 4.6 bsm.

While CSTs will continue to account for the majority of demand, a number of specialty tape types, including medical and double-sided tapes, are expected to register faster growth:

• Electrical and electronic tapes (excluding double-sided tapes, which are covered separately) are projected to grow 3.8% per annum to 2.3 bsm
• Double-sided tapes are projected to grow 5.7% per annum to nearly 2.5 bsm, faster than the overall average for the global tape market
• Medical tapes demand, including surgical, medical equipment, and sports medicine and athletic tapes, is projected to rise 4.9% per annum to 1.4 bsm.

PSA tape supply/production

Yesterday

In 2003, Asia Pacific accounted for 40% of world PSA production. Only a few years ago in 2013, this stood at 50%. Tape production in more advanced economies declined between 2008 and 2013: Western Europe slowed, and growth in the U.S. was at less than 1%.

Whereas once North America and Europe together out-produced Asia. China is now the world’s largest tape manufacturer, supplying to Asia Pacific, Eastern Europe and North America. Taiwan and Indonesia also produce tapes mainly destined for export markets. Italy is Europe’s leading manufacturer, supplying much of the market in both Western and Eastern Europe.

Today

The Asia Pacific region will expand its share of global output from 56% in 2015 to nearly 60% in 2020. China and the U.S. will remain the 2 leading global producers of tape, with China now the largest by a wide margin.

Italy has seen much of its traditional market stagnate or decline in recent years, as demand in Western Europe has stalled for the most part, and Eastern Europe remains an underdeveloped market for PSA tapes.

Taiwan has seen one if its traditional export markets, China, boost domestic production. Some Taiwanese suppliers to the Chinese market have shifted production to mainland China, retaining their share of the market.

China, India and Indonesia, 3 very populous countries, will continue to see strong growth in tape production, although India’s production remains low relative to the size and growth of the domestic tape market.

Japan’s tape industry will remain important despite seeing little growth through 2020, due to a sluggish domestic market and increased production in neighbouring countries that were once more import-reliant.

Supply/production by player

As mentioned earlier, if you break down the amount of total tape produced, it is evident that thousands of firms are active in the global PSA tape industry, including converters. Still, the global market is led by a few dozen firms, the largest of which are active in most of the world’s major geographic markets. 3M, Nitto Denko, tesa and Lintec controlled nearly 20% of the global PSA tape market in value terms in 2015, each with over $15 billion in sales. Mr. Von Schwerdtner pointed out that, interestingly, the largest manufacturers produce much more than adhesive tape.

Supply/production details per region

Asia Pacific

Demand in Asia Pacific is expected to increase 5.3% per annum to 28.3 bsm in 2020, comprising more than 50% of the market. While this represents a deceleration from previous periods, largely due to slowing economic growth in China, gains will remain robust by global standards. Asia Pacific’s share of CSTs, at over 70%, is higher than the world average.

Western Europe

In Western Europe, regional adhesive tape production will rise a modest 1.2% annually to 6.3 bsm in 2018. Italy will remain the largest producer. Western Europe will have the market edge with specialty tapes. Solvent-based adhesives will continue to be replaced by environmental, waterborne and hot melt types.

Demand is expected to increase to 2.2% per annum to 6.8 bsm in 2020, making up 12.7% of the PSA tape market. While anticipated growth is well below global average, it will present a significant improvement over previous periods in which growth barely exceeded 1%.

As Asian players will become increasingly prominent, Western European manufacturers are focusing on a mix of tape technologies, marking a significant trend toward producing specialty tapes. Mr. Von Schwerdtner added that this is the best thing that Europe can do: “We can be competitive—we can stay in the game—if we innovate as an industry.” Lower than the global average, 60% of Western European production will be CSTs.

PSA tape markets

Automotive

Global motor vehicle production is expected to grow 3.5% per annum, reaching more than 100 million units by 2020. One-third of those will be made in China. While vehicle output fell in some major countries like Brazil and Japan, this was more than offset by gains in markets such as North America and the Asia Pacific region.

Building & construction

Evenly distributed between the residential and non-residential building sectors, world expenditures on building and construction are projected to expand 3.6% per annum through 2020. More than 55% of these global expenditures will be made in Asia Pacific.

Electrical & electronic

Global demand for electrical and electronic tapes (excluding double-sided tapes) is expected to grow 3.8% per annum, reaching a total volume of 2.3 bsm in 2020. For electronic tapes, gains will be fuelled by markets such as computer and personal digital equipment and by the fast pace of new product development.

Medical

Catering to an aging and health-conscious population, world demand for medical tapes, which include surgical tapes, medical equipment tapes, and sports medicine and athletic tapes, is expected to grow 4.9% per annum, reaching a total volume of 1.4 bsm in 2020.

Double-sided

World demand for double-sided tapes is expected to grow 5.7% per annum, reaching a total volume of nearly 2.5 bsm in 2020. While these tapes account for only a small share of the market volume, they occupy a much larger share of the market in value terms. Their higher performance, more complex construction and a greater variation in adhesives used make them significantly more costly than most single-sided tapes. This is also good news for suppliers of specialty coating equipment.

PSTC Market Research: How our associations are creating value for our businesses

What can we do as an industry collective? Interestingly, the Pressure Sensitive Tape Council (PSTC), Afera’s North American industry counterpart, in an effort to provide further value and support for its members, has commissioned a market research study with TRC/Brakethrough Research with the key objective of looking where to expand the markets for adhesive tape. This entails identifying the largest pockets of “headroom” for conversion to PSA tape from competing solutions.

Mr. Von Schwerdtner emphasised that Afera, through its worldwide partnerships with other national and regional associations, standardisation and regulatory bodies, renowned research institutions and consultants, offers the perfect platform on which to bring together the entire adhesive tape value chain to learn about technologies, innovations, markets and public affairs. To the benefit of the European industry collective, Member Companies—tape manufacturers, suppliers and converters—convening for Afera’s meetings and events decide what key areas of business and industry need particular research or focus. The bottom line is that identifying new markets and applications for tape—growing the European market for adhesive tapes—is feasible and benefits all of us.

About Matthias von Schwerdtner

Matthias von Schwerdtner holds a Bachelor of Science in Economics from the London School of Economics and Political Science (LSE). He began his career as a trainee in controlling at Beiersdorf AG in 1990 and joined tesa SE, a Beiersdorf Company, in Sales Development in 1992. After working for tesa in a variety of functions in Hamburg, Mexico City and Singapore over the next two decades, Mr. Von Schwerdtner became Corporate Vice President of the Business Unit Specific Industrial Markets – Direct Division at tesa SE in Hamburg, where he currently functions. He is married with 4 children.

Questions and comments?

Matthias von Schwerdtner
Corporate Vice President, Business Unit Specific Industrial Markets – Direct Division
tesa SE
matthiasvon.schwerdtner@tesa.com
+49 172 5189 322
Hugo-Kirchberg-Straße 1
22848 Norderstedt
Germany
www.tesa.com