HOT MELT ADHESIVES MARKET ANALYSIS

The global hot melt adhesives market size is expected to reach US$ 18.87 Bn by 2031, from US$ 11.18 Bn in 2023, exhibiting a compound annual growth rate (CAGR) of 6.8% during the forecast period. Hot melt adhesive is an adhesive that is used across packaging, automotive, nonwovens, product assembly, tapes and labels, woodworking, paper bonding, and electronics sectors due to its adhesion properties. It is a thermoplastic polymer containing more than one polymer and additives such as pigments, resins, and stabilizers.

Global Hot Melt Adhesives Market Regional Insights:

• Asia Pacific is expected to be the largest market for hot melt adhesives during the forecast period, accounting for over 48% of the market share in 2023. The significant growth of e-commerce services in the region, along with swiftly rising demand for nonwoven products, is the key factor boosting market growth in the region.
• North America accounted for over 21% of the market share in 2023. The packaging sector in the region is anticipated to be the key factor for the market growth owing to the presence of some of the largest packaging manufacturers, including International Paper, Ball Corporation, and Owens-Illinois.
• Europe accounted for over 20% of the market share in 2023. Increasing construction activities, a growing automotive sector, and increased online product delivery services across developed countries in Western Europe, including Italy, the U.K., Germany, France, and Spain, will positively influence the market growth in the region.

Figure 1. Global Hot Melt Adhesives Market Share (%), By Region, 2023

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Analyst’s Views:

Key drivers supporting the market's growth include growth in the packaging and nonwoven industries, where hot melt adhesives find widespread application. Increased usage of hot melt adhesives in various products ranging from baby diapers to packaging tapes will boost demand. However, stringent environmental regulations regarding Volatile organic compounds VOC emissions may impede market expansion to some extent. Rapid industrialization, rising population, urbanization and improving economic conditions in countries such as China and India are driving demand from key end-use industries in the region. North America and Europe are also sizable markets driven by well-established end-use industries. Innovation and new product development focusing on sustainable and eco-friendly adhesives will be crucial for manufacturers to thrive in the long run.

Global Hot Melt Adhesives Market Drivers:

Increasing demand from the furniture industry

The global demand for high-quality and durable furniture has seen a steady rise in recent years. As furniture manufacturers aim to offer furnishings that can withstand the wear and tear of daily use over longer periods of time, they are increasingly relying on hot melt adhesives in their production and assembly processes. Hot melt adhesives provide strong, permanent yet reusable bonds between different materials used in furniture, like wood, metals, plastics, and laminates. Their ability to rapidly bond diverse substrates within seconds without any heat curing or drying time makes them ideal for fast and automated furniture assembly lines.

Research by the United Nations Industrial Development Organization (UNIDO) estimates that developing countries saw average annual furniture demand growth of over 5% during 2020-2022, led by rising incomes, urbanization, and changing consumer preferences for modern, aesthetically appealing, and functional home furnishings.

Growing packaging industry

The packaging industry has seen tremendous growth over the past few years and is expected to further expand significantly going forward. Rising e-commerce activities, increasing demand for convenient and sustainable packaging, and a growing focus on product safety and quality have been propelling innovative packaging solutions. As packaging needs continue to evolve with changing consumer trends, preferences, and sustainability goals, packaging manufacturers are increasingly adopting advanced materials and technologies to meet these dynamic market needs.

Hot melt adhesives have emerged as a popular choice for packaging applications due to their advantages over other adhesive types. They can be applied easily on the production line at room temperature and instantly form strong bonds between different substrates. They reduce production time and costs compared to solvent-based adhesives by eliminating drying time. Their precise and automated application allows uniform adhesive coating even on complex package designs. They also produce minimal volatile organic compounds, creating environmentally friendly packaging formats aligned with the sustainability objectives of brands.

Global Hot Melt Adhesives Market Opportunities:

Product development for new applications: The global hot melt adhesives market has great opportunity for product development for new applications. With rapid advances in technology and changing consumer behavior, hot melt adhesives are finding new uses across diverse industries. One major area is flexible packaging, which is seeing rising demand for packaged food and consumer goods. Hot melt adhesives allow packaging films to be laminated at high speeds for multi-layered and customized packaging formats. Their heat-seal properties provide stronger and more reliable bonds than solvent-based alternatives. This burgeoning industry needs adhesives that can withstand higher temperatures from battery packs and efficiently bind different materials like composites. Hot melt adhesive manufacturers investing in research and development (R&D) tailored for EV applications will have first-mover advantage in this evolving sector.

Market expansion in developing countries: The developing countries in Asia and Latin America offer a huge opportunity for growth in the global hot melt adhesives market. With rising incomes and growing industrialization, these economies are expected to see significant increases in demand from key end-use industries that utilize hot melt adhesives.

Packaging has been one of the fastest-growing application segments of hot melt adhesives globally. As consumerism rises in the developing world, coupled with growing e-commerce, packagers in these regions are expanding their operations and upgrading their technologies to handle higher volumes. This will drive the need for sophisticated and high-performance hot melt adhesive solutions. According to the United Nations Conference on Trade and Development (UNCTAD) reports, countries like China, India, Brazil, Mexico, and Indonesia saw a double-digit growth in their domestic packaging sales between 2020 and 2022 time period. The packaging usage is expected to further increase in the coming years to meet the demands of burgeoning middle-class population in these countries.

Growth of e-commerce sector: The rapid growth of the e-commerce sector across the globe presents a huge opportunity for the hot melt adhesives market. As consumer preference for online shopping increases enormously, there has been a substantial rise in parcel and package deliveries. According to UNCTAD statistics, the total global business-to-consumer B2C e-commerce sales grew by 4.6% to reach US$ 26.7 trillion in 2020, despite disruption caused by the COVID-19 pandemic.

Global Hot Melt Adhesives Market Trends:

Innovation of bio-based hot melt adhesives

The innovation of bio-based hot melt adhesives is having a significant influence on the global hot melt adhesives market. As sustainability and environmental protection become increasingly important, companies are developing more eco-friendly and biologically derived hot melt adhesive options.

Bio-based hot melt adhesives are made from renewable plant-based resources rather than petroleum sources. Examples of plant-based feedstocks used include vegetable oils, starch, and cellulose. By utilizing agricultural waste or purpose-grown crops, these bio-based options allow manufacturers to reduce reliance on fossil fuels and create more sustainable products. Some early bio-based products only contained small percentages of renewable content, but technology advances have made it possible to formulate hot melts with over 90% bio-based components.

Consolidation activities among key players

The global hot melt adhesives market has been witnessing increasing consolidation activities among key players in recent years. Major companies have been acquiring smaller firms to expand their product portfolio and geographic reach. For instance, Henkel AG & Co. KGaA, commonly known as Henkel, a Germany-based multinational chemical and consumer goods company, acquired Duro-Last in 2021 to strengthen its position in single-ply roofing membrane adhesives market in North America. Similarly, Arkema S.A., a publicly listed, multi-national manufacturer of specialty materials, acquired Fixatti in 2022 to complement its Bostik business in hot melt adhesives for packaging applications in Europe.

Such consolidation moves allow companies to integrate complementary technologies and leverage combined research and distribution capabilities. It helps them launch new product lines catering to evolving industry demands more efficiently. The hot melt adhesive formulators can now offer customized solutions across wider array of markets like packaging, hygiene, construction, etc. For example, after acquiring Ashland's composites business in 2020, Hexion was able to broaden its reinforced materials portfolio with addition of new unsaturated polyester and vinyl ester resin technologies.

Global Hot Melt Adhesives Market Restraints:

Stringent regulations regarding VOCs emissions: Strict regulations on volatile organic compounds (VOC) emissions across various regions are posing a serious challenge for the growth of the global hot melt adhesives market. Stringent environmental norms in developed markets like North America and Europe have mandated hot melt adhesive formulators to reduce the VOC content in their products. Since hot melt adhesives contain organic solvents that release VOCs during production as well as usage, manufacturers have to invest significant efforts in research and development of low- and no-VOC formulations.

Transitioning to newer product varieties that comply with shifting emissions thresholds requires expensive upgrades to manufacturing facilities as well as procurement of advanced application equipment. This is increasing the overall cost of operations for hot melt adhesive producers. According to the Environmental Protection Agency, the VOC emissions limit from wood furniture manufacturing and other wood product surface coating operations was reduced from 250 grams per liter to 200 grams per liter between January 2020 and January 2021 in the U.S. Similarly, the Clean Air Act passed in the European Union in 2019 has capped the maximum allowable VOC concentration in adhesives and sealants to less than 5% by January 2023.

Counter Balance: Development of Low VOC Formulations: Investing in research and development to create adhesives with lower VOC emissions can help companies comply with regulations while maintaining product performance.

Volatility in raw material prices: The hot melt adhesives industry relies on various petroleum-based raw materials in its production processes, such as polyethylene, ethylene-vinyl acetate, and polyamide resins. However, the prices of these raw materials have been extremely volatile in recent years. As petroleum is the primary feedstock for producing many raw materials, fluctuations in global crude oil prices directly impact the input costs of manufacturers. In 2020-21, as the COVID-19 pandemic reduced demand, international crude oil prices fell to near historic lows before recovering. This created a deflationary environment, benefiting hot melt adhesive producers.

However, in 2022, as economies reopened, supply chain disturbances emerged due to Russia's invasion of Ukraine. As both countries are major oil & gas exporters, their conflict injected massive uncertainty into energy markets. By March 2022, international crude oil prices had surged over 35% from a year ago to around $100 per barrel. This spike in feedstock costs squeezed the margins of hot melt adhesive producers worldwide. They struggled to immediately pass on high input costs to customers due to pre-existing contracts and competitive pressures. Additionally, the economic uncertainty dampened demand in packaging, construction, automotive, and other key end-use industries that hot melt adhesives serve.

Counterbalance: Diversification of Raw Material Sources: Companies can mitigate the impact of price fluctuations by diversifying their sources of raw materials, to overcome this restrain. This can help reduce dependency on a single source and provide more stability in procurement. And entering into long-term supply agreements with raw material suppliers can provide stability in prices and supply, reducing the impact of short-term price fluctuations.

Figure 2. Global Hot Melt Adhesives Market Share (%), By Application, 2023

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Recent Developments:

• In July 2022, H.B. Fuller partnered with Enimac to strengthen e-commerce packaging. H.B. Fuller Company is a major U.S.-based adhesives manufacturing company supplying industrial adhesives worldwide. The company has long received praise in ethical investment circles for such things as careful handling of toxic waste and the nature reserve built around its headquarters.
• In September 2021, Jowat AG launched a new hot melt adhesive called Jowat-Toptherm 851.99, which is characterized by a broad spectrum of adhesion and outstanding qualities, coupled with a very low viscosity that allows processing temperatures starting from 99°C (210°F). This low processing temperature makes Jowat-Toptherm 851.99 an exceptional choice for packaging.

Top Companies in the Global Hot Melt Adhesive Market

• Henkel AG & Co.
• KGaA, H B Fuller
• Sika AG
• Arkema Group
• Ashland Inc.
• The 3M Company
• Jowat AG
• Sipol SpA
• Palmetto Adhesives Company
• Sealock Ltd

*Definition: Hot melt adhesives are thermoplastic bonding materials that are applied in a molten state and solidify upon cooling, resulting in a strong bond. They are generally 100% solid formulations based on thermoplastic polymers, with no water or solvents involved. These adhesives can be used to bond a wide range of substrates, including cardboard, metal, glass, leather, wood, ceramics, plastic, rubber, fabric, and foam. Hot melt adhesives are known for their fast-acting nature, versatility, and ability to be applied in various forms, such as glue sticks, pellets, bags, cakes, drums, bricks, slats, and pillows. They are commonly used in industries such as packaging, bookbinding, carton-making, graphic arts, tapes and labels, product assembly, and the automotive industry due to their efficiency and reduced environmental impact compared to solvent-based adhesives.