This article aims to address the impact of COVID-19 on surfactants market focusing on industrial applications.

Due to the unprecedented coronavirus health crisis, many countries around the world have employed nationwide lockdowns, and as they are reopening, safety measures such as social distancing continue to apply.  A side effect of these measures will likely be a significant economic downturn. And while many companies were preparing for it long before coronavirus stagnated the global economy, few expected a pandemic could be among its key triggers.

With billions of people in lockdown, consumer consumption patterns have changed significantly. Some of these changes could potentially be part of the “new normal” we see coming. On top of this, the economic downturn will bring an increased unemployment rate and lower disposable income for many consumers. Obviously, this will affect many areas of our economies and industries. Analysts’ thoughts on the depth and the length of the coming crisis differ, but they all agree the entire global economy will be affected, and a contraction of the global GDP is to be expected.

Real GDP growth, % change

Source: IMF, April 2020

Specialty chemicals, in general, and surfactants, in particular, are used in a variety of applications, ranging from detergents to beauty products through to industrial applications such as crop protection, oil & gas, and paints. This variety in applications can act as a damper for the industry when a large-scale crisis is approaching.

Preliminary findings of our research on HI&I ingredients are showing an unprecedented growth of ingredients consumption in household cleaning products. Clearly, hard-surface cleaners and disinfectants flourish during a pandemic’s phase of extreme sanitization. Laundry detergents and dishwashing products are also benefiting from the increased willingness of global consumers to keep their household clean and reduce the risk of infection. While this can’t come as a surprise, the real question in this market segment will be what part of this consumption is going to stay after the health crisis is over. Plus, will the positive effect reflected in the household segment be enough to make up for the negative impact on the industrial & institutional segment?  Indeed, the I&I sector has been hit hard by the health situation. The hospitality sector has been shut down in many countries, and questions remain on the recovery pace. In addition, many factories, offices, or schools have been closed for weeks in various countries in the world, mechanically reducing cleaning needs.

Long-term implications of the current situation on the HI&I sector will be key for surfactants producers to understand, as nearly half of the global consumption of surfactants is coming from HI&I applications.

Another key application for surfactants is personal care applications, which have traditionally been less cyclical than other applications and have weathered recession better. This is one of the reasons this segment is attractive for specialty chemical suppliers. A decade ago, during the 2009 crisis, we observed the resilience of the personal care industry market, and the situation is not expected to be different today.

Behind those two downstream applications, surfactants are significantly consumed in a variety of more upstream industrial applications. Each of these applications is expected to follow specific patterns in the next months, and the impact of COVID-19 is expected to be different from one application to another. For instance, crop protection and food & beverages are among basic needs and are essential applications. As consumers’ expenditures focus on essential needs, these segments could be positively impacted. Other applications such as lubricants, metalworking fluids, construction, and paints & coatings­—very cyclic and GDP-related by nature—are likely to be most affected both in the short and long term. Oilfield & mining could also be one of the applications to see its demand shrink the most, as oil demand decreases together with price (a key factor for unconventional production, which is the largest surfactants consumer).

Expected Impact of COVID-19 on the Demand for Surfactants in Industrial Applications

This behavior will be different from one country market to another, and supply chain disruptions could also be an influencing factor. Nevertheless, the consumption of surfactants in industrial applications is expected to decrease significantly across countries covered in Kline’s latest analysis (United States, Europe, China, Middle East, Southeast Asia, and Brazil). The contraction in demand for surfactants in industrial applications in these countries is expected to be between 0.7% and 2.6 % in 2020 compared to 2019. In the longer term, based on different recovery scenarios, the 2019-2024 CAGR is expected to range from 0.8% to 1.7%. In none of these scenarios the consumption in 2024 is projected to reach the level it would have been without the pandemic, proving that COVID-19’s consequences are expected to last for a lengthy amount of time. The current situation and related uncertainty are, of course, a threat to surfactants suppliers, and being able to navigate those threats will be key in the years to come.

Surfactants Volume Consumption in Industrial Applications, 2019-2024

Kline's Industrial Surfactants: Global Market Analysis and Opportunities report focuses on surfactants in industrial applications, which often offer strong growth opportunities. They are driven by complex, application-related drivers, the identification of which is key for building a successful, targeted business strategy. This month the report was updated with and add-on analysis on impact of COVID-19 on this complex market. Request more information about this study HERE.

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Synthetic latex polymers are essential components of many consumer and industrial products. These aqueous dispersions function as binders but also bring many functional properties to end products. Their broad application portfolio—ranging from paints, adhesives, and construction to tires and leather and many more—makes forecasting the market for them complex.

The synthetic latex polymers market, as studied by Kline for close to 50 years, broadly depends on a combination of industrial output trends and consumer market trends in each country or region. More specifically, their markets in individual applications depend on end-use industry factors.

The COVID-19 pandemic has caused disruptions in industrial activities and consumer markets in many countries globally. As the virus continues to spread, governments worldwide have imposed quarantine and travel restrictions to curb it. This comes at a high cost to the economy as many workplaces remain closed, factories do not run, and the supply chain is still blocked. It is also inadvertently causing disruptions in the demand trend of synthetic latex polymers worldwide.

Global Synthetic Latex Polymer Consumption by End Use, 2019

The impact of the pandemic varies across the different application segments of synthetic latex polymers. Even though paints, adhesives, and construction together make up close to two-thirds of global consumption, there are around 18 sizeable application markets overall for synthetic latex polymers, and the impact on each of them is different.

The construction industry is expected to be badly hit by the pandemic; when it recovers, public sector construction activities are likely to improve more than the private sector in most countries. Paints and coatings will be negatively affected by the pandemic as new construction halts and consumers are less keen to redecorate. The adhesives market will also be affected; however, the packaging sector may be able to offset some impact due to packaged deliveries for increasing online orders.

Some application markets which were originally suffering will take a deeper hit because of the pandemic. As newsprint and magazines halt their print and distribution temporarily, the paper industry, for example, will not only be heavily damaged but will also be slow to recover due to increased competition from digital media. Carpet, leather, and molded foam markets will also suffer to a greater extent, as these commodities are non-essential or luxury in nature, and purchases may be delayed for long periods.

Amid a decline in most industries, some synthetic latex polymers markets will witness a surge. The gloves market is witnessing a huge rate of increase in demand, and supply is falling short. Meanwhile, disposable nonwovens, notably wipes, are experiencing considerable growth as the importance of hygiene and cleanliness increases.

Some other application sectors that follow the trend of economic activities of the country or regional market, such as tires, glass fibers, polishes and waxes, and printing inks, are likely to be negatively impacted and will recover as economies rebound.

As different countries go through different levels of impact and recovery from the pandemic, the global market will absorb the worst impact in 2020. The year 2021 is likely to see a recovery from the healthcare crisis, but economies may take longer to recover. Globally, the consumption of synthetic latex polymers is likely to witness a significantly slower growth than originally estimated for the five-year period between 2019 and 2024. The best-case scenario will still be below the original forecast as the COVID-19 crisis changes the world economic curve.

Global Synthetic Latex Polymer Consumption Forecast, 2019-2024

As the synthetic latex polymers market is highly dependent on local and regional dynamics, it is important to study each of the major regional markets through consumption trends in different application markets. Kline’s report on Synthetic Latex Polymers: Impact of COVID-19 on the Global Market provides an insight into market forecasts in different scenarios.

Shilpi Mehrotra is a project manager for Kline’s  Synthetic Polymers Market research series. Request more info.

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