IMPACT OF COVID-19 ON THE GLOBAL STRUCTURAL SEALANT MARKET
The global structural sealant market has been severely impacted in the past couple of months due to the COVID-19 pandemic. The construction industry, the largest consumer of structural sealants, is one of the hardest-hit sectors in this pandemic. All-of-society quarantines have resulted in a halt of different sized construction sites to effectively apply social distance in a combined effort to limit a further outbreak. Many countries such as China, India, US, and Italy have slowed or shut down their production sectors leading to forecasts of a sharp decrease in production of a wide range of construction materials ranging from steel to cement. Contractors that rely on Chinese-made goods and materials are likely to be faced with higher costs (due to shortages of construction material) and slower project completion, which is further likely to lead to higher prices and more projects being cancelled.
The regional impacts of the pandemic outbreak are highly variable, but as it spreads, the current status in the harder hit areas provide a glimpse of what may be witnessed in the near future. The US construction industry procures around 30% of its construction materials from China, however, some organizations are dependent on China for up to 80% of their materials. With international suppliers and logistics companies, many of which are China-based, shutting down operations in an attempt to contain the outbreak, the US contractors are already experiencing difficulties with their material supply chain, leading to high prices of materials.
However, with more people confined to their homes, home improvement projects are under way and the DIY construction products such as caulks, sealants, and tapes, used for interior home repair and remodeling, are likely to benefit from this short-term trend. In addition, the multi-family residential projects (especially those in progress) will ultimately gain pace after stay-at-home orders are eased and work can renew in earnest.
The automotive industry, which is the second-largest market for structural sealants, saw a significant decline during the pandemic. China saw a 79% drop in the automotive market in February 2020. In Europe, many of the largest automotive groups, including Volkswagen, Fiat Chrysler Automobiles N.V. (FCA), and Groupe PSA, have shuttered most plants across the continent, effectively halting the entire supply chain for the time being.
The pandemic is expected to have a negative impact on the global structural sealant market in the short-term (2020–2021). However, the long-term growth of the market is expected to remain positive.