Southeast Asia is set to keep its status as one of the world’s most important markets for synthetic latex polymers, thanks to its immense growth potential.
With a combined economy growing faster than many other Asian countries and a population spread across 11 countries, the region is one of the most diverse in terms of geography, culture, politics, and economy. In addition, all of its economies are at different stages of industrial development; this translates into a fragmented synthetic latex polymer market, defined by different consumer choices and spending behaviors.
Impact of COVID-19
The COVID-19 pandemic impacted production, trade, and tourism across all countries of Southeast Asia. Disruptions started in 2020 and continued through 2022, with demand suffering across most end-use industries, except for glove dipping and printing inks and overprint varnishes, which saw significant growth.
“The glove dipping application is the predominant consumer of synthetic latex polymers in Southeast Asia,” says Ekata Sharma, Project Lead in our Chemicals & Materials practice. “The region is home to the world’s largest synthetic glove manufacturing plants, with Malaysia being the world’s largest producer and exporter of these gloves. The glove dipping industry was the most positively influenced by the pandemic in 2020 and 2021, as demand for gloves — including synthetic — surged worldwide in the healthcare and personal hygiene sectors. This led to expansions by many existing and new synthetic glove manufacturers in Malaysia. Overall, the demand for synthetic latex polymers in this application in Southeast Asia increased around 30% in 2021 over 2019 levels.”
But as more countries progressed toward the endemic stage globally, demand for gloves declined sharply in 2022. It was further weakened by a supply glut and higher inventory with customers who had stockpiled in 2021. Further, increased production costs, plus strong competition in the export markets from low-cost gloves from China, added to the industry’s challenges. The result: after the pandemic-induced boom, the industry started to stabilize in 2022.
Recovery in the other negatively affected end-use markets began in 2021 thanks to a rebound in the economy; it continued through the first half of 2022, amid the challenges of raw material shortages, the unavailability of containers, high crude prices, and increased production costs. However, the prolonged pandemic, high inflation, strict Chinese border control, and weak demand from the region’s key export markets, such as the United States and Europe, led to a slowdown in the second half of 2022 and into 2023.
Despite its recent challenges, growth potential for Southeast Asia’s synthetic latex polymers market remains high, with an expected CAGR of 3.2% till 2027. The region, long recognized for its political stability and cost-competitiveness, will continue to attract foreign and domestic investments, especially in the areas of textiles, footwear, and packaging.
“At the country level, governments remain pro-investment and supportive of modernizing industries and increased output,” notes Sharma. “Further investments to improve infrastructure and housing will fuel growth in the construction and paint and coatings industries. The growing e-commerce market will continue to underpin the growth momentum of packaging adhesives. The region is also seeing a sustainability drive — a shift from plastic packaging toward paper — which will offer opportunities in printing inks and overprint varnishes and adhesives applications.”
Vietnam will remain the epicenter of volume growth due to its rising middle class and Indonesia with its large consumer base.
For more insights on the subject, be on the lookout for Kline’s upcoming Synthetic Latex Polymers: Southeast Asia Business Analysis and Opportunities. The report provides a comprehensive assessment of the market of several different polymer chemistries, comprising the water-based emulsions market in a range of end-use application industries. It also analyzes opportunities and challenges that synthetic latex polymers suppliers must understand for growth in Southeast Asia.