The Dimer Acid Market is forecast to reach US$1.8 Billion by 2027 after growing at a CAGR of 6.4% during the forecast period (2022-2027). Dimer acids (also known as dimerized fatty acid) are stearic acid-based or dicarboxylic acid that is prepared through the process of dimerizing unsaturated fatty acids that is usually acquired from tall oil, mostly on clay catalysts. Dimer acid is primarily used in a wide range of applications such as Alkyd Resins, Adhesives, Paint & Coatings, Surfactants, Polyamide Resin, Oilfield Chemicals, Lubricants, Fuel Oil Additives, and others. An increase in demand from the construction and packaging industry can act as a major driver for the market. On the other hand, fluctuating prices of raw materials can act as a major constraint for the market.
COVID-19 Impact
There is no doubt that the COVID-19 lockdown has significantly reduced construction, and production activities which in turn, has resulted in the country-wise shutdown of construction sites, shortage of labor, and the decline of supply and demand chain all over the world, thus, affecting the market. Studies show that the outbreak of COVID-19 sharply declined the production of raw materials in 2020 due to a lack of operations across multiple countries around the world. However, a slow recovery in new development and construction contracts has been witnessed across many countries around the world since 2021. For instance, the Indian government had made an announcement of the World One Tower construction project worth US$ 321 million which is to be built in Mumbai and is currently undergoing development in 2021.
Since the use of Dimer Acid plays a major role in the modern construction industry, a slow and steady increase in building and construction activities will require the use of Dimer acid for construction materials like adhesives, paints, coatings, and other resins required for construction applications. This will eventually lead to an increase in demand for Dimer Acid which indicates a slow and steady recovery of the market in the upcoming years.
Dimer Acid Market Segment Analysis – By Type
Hydrogenated Dimer Acid held the largest share in the Dimer Acid Market in 2021 and is expected to grow at a CAGR of 6.5% between 2022 and 2027. This is mainly because hydrogenated dimer acids help improve the overall level of corrosion resistance, hydrophobicity along with the light and heat stability of the final product in comparison to standard and distilled dimer acid. Moreover, the use of hydrogenated dimer acids also plays a major role in producing the final product with a relatively lower glass transition temperature. In addition to this, hydrogenated dimer acids tend to provide comparatively higher gloss and enhanced substrate adherence to the printing inks. Due to these properties, hydrogenated dimer acids are commonly used in the production of hot melt adhesives and flexographic printing inks. Hence, these factors are most likely to increase their demand in the upcoming years.
Dimer Acid Market Segment Analysis – By Application
The Adhesives segment held the largest share in the Dimer Acid Market in 2021 and is expected to grow at a CAGR of 6.7% between 2022 and 2027. This is mainly due to the increasing demand for adhesives from the construction and packaging sectors in multiple regions across the world. According to a recent study published by The European Adhesive and Sealant Industry in 2020, the adhesives sector saw an increase in the production of adhesives across multiple regions. Asia-Pacific saw an increase of 36.8%, Europe by 34.5%, North America by 23.1%, the Middle East by 1.3%, and Africa by 1.1% in 2020. This, in turn, increased the demand for Dimer Acid that belongs to a class of dicarboxylic acids, since it is primarily used for the production of these adhesives, thus, leading to the growth of the market in the upcoming years.
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Dimer Acid Market Segment Analysis – By End-Use Industry
The Construction Industry held the largest share in the Dimer Acid Market in 2021 and is expected to grow at a CAGR of 6.7% between 2022 and 2027. For instance, according to Volvo CE, the construction sector saw an increase in the production and manufacturing of construction materials across multiple regions since the fourth quarter of 2020. South America saw an increase of 12%, Asia by 39%, Europe by 20%, and China by 28% in 2020. All of these factors increased the demand for construction materials like adhesives, paints, coatings, and other resins required for construction applications across the globe. This, in turn, increased the demand for the use of Dimer Acid required for the production of these construction materials, thus, leading to the growth of the market in the upcoming years.
Dimer Acid Market Segment Analysis – By Geography
The Asia Pacific held the largest share in the Dimer Acid Market in 2021 up to 30%, with China being the one to dominate the market. For instance, China holds the largest market share around the world when it comes to food packaging. According to a recent study published on Interpack, the consumption of food packaging is expected to increase to 447,066 million in 2023. Likewise, it also states that the Chinese packaging companies such as 3D, SIP, and WLCSP alone achieved a revenue of around US$ 5.88 billion with end packaging. Since Dimer Acid is the primary component used in the production of adhesives required for packaging materials, it is expected to lead to the growth of the Dimer Acid Market in the upcoming years.
Furthermore, the Dimer Acid Market is also growing in the Middle East. Dimer Acids are also widely used in the production of construction materials across the world. The FIFA World Cup that is to be held in 2022 in Qatar is expected to generate the huge potential for construction materials used in the country. A company called Larsen and Toubro signed a contract worth US$ 360 million along with its joint venture partner in Qatar, in order to build a 40,000 seater stadium. This project required the use of construction materials like adhesives, paints, coatings, and other raw materials in order to build such a huge stadium. Likewise, other countries such as Kuwait, Morocco, and Iran are also estimated to have grown in the construction sector during the forecast period. All of the above factors will directly result in an increase in demand for Dimer Acid required for the production of these raw materials in these regions, thus, boosting the market growth.
Dimer Acid Market Drivers
An increase in demand from the construction industry is most likely to increase demand for the product
Construction activities are considered to be the pillar of growth for a country and also play a major role in increasing the overall global economy. Since 2019, countries like China and India have come up with multiple construction projects. For instance, the Indian government has also invested in another construction project for building Gujarat International Finance Tec-City which is undergoing development in 2021. The project is valued at a total cost of US$20 billion and is expected to cover a construction area of around 8.5 million square meters which will include 200 skyscrapers. The project also includes the construction of buildings and towers for the powerhouse. Moreover, the government of China approved 26 infrastructure projects with an estimated total investment of 981.7 billion yuan (US$ 142 billion) in 2019. Other countries like Bangladesh also have two ongoing power plant projects estimated at US$17.65 billion in total which is due delivery by 2025.
Furthermore, in 2020, the US announced the commencement of the Second Avenue Subway Construction Project worth US$ 17 billion in New York City which is still undergoing development in 2021. Likewise, Egypt also announced the commencement of the Skywalk Mixed-use Project worth US$ 513 million in 2020 which is scheduled to be delivered by 2026. This 800-unit project includes the construction of offices, commercial units along with a 5-star-hotel.
In this way, an increase in building and construction activities will most likely increase the demand for raw materials such as adhesives, paints, coatings, and other raw materials. Since Dimer Acid that belongs to a class of dicarboxylic acids, are widely used for the production of these construction materials due to the properties that it provides high impact strength, higher flexibility, better corrosion resistance, thermal stability, chemical resistance, and water resistance, this can lead to significant growth in Dimer Acid Market in the upcoming years.
An increase in demand from the packaging industry is most likely to increase demand for the product
Dimer Acid is a dicarboxylic acid that is prepared through the process of dimerizing unsaturated fatty acid that is usually acquired from tall oil, mostly on clay catalysts. It is primarily used in the manufacturing process of Polyamide hot-melt adhesives. These hot melt adhesives are used on wood, paper, metal, and many plastics like PVC, polyethylene, and surface-treated polypropylene for the purpose of providing excellent adhesion, due to their ideal properties. Hot-melt adhesives have high melting points, high thermal stability, and good chemical resistance to a variety of compounds. Hence, the demand for these hot melt adhesives from the packaging industry has been increasing rapidly. This, in turn, will most likely increase the demand for Dimer Acid required for the production of these adhesives, hence, leading to market growth.
An increase in demand for oil and gas production activities is most likely to increase the demand for the product
Dimer Acid is primarily used in the production of oilfield chemicals that are used for the process of oil and gas extraction, along with processing and refining activities. For instance, Nigeria announced the start of its project called Dangote Refinery and Polypropylene Plant worth US$ 11 billion which is due to delivery by the end of 2021. The facility is expected to process different grades of crude including shale oil, along with a production capacity of 104,000 b/d of diesel, 153,000 b/d of gasoline, 4,109 b/d of LPG, 73,000 b/d of jet fuel, and 12,300 b/d of fuel oil. Similarly, Russia announced the continuity of its project called Nord Stream 2 Gas Pipeline worth US$10.8 billion since 2020. The pipeline is expected to increase the gas capacity of the Nord Stream route to 110 billion m3 per annum. Furthermore, in 2019, the NGOC announced that it had allocated INR 6,000 crore (US$ 8.2 billion) for the drilling of 200 wells in Assam over the next seven years to increase state output. The wells are expected to be drilled for the next seven years. Likewise, the Ministry of Petroleum and Natural Gas (MoPNG) announced the continuity of its operations of five major ongoing projects worth INR 1.67 lakh crore ( US$ 22.85 billion) since April 2020.
In this way, increasing demand for oil and gas supplies from the industrial, transport, and residential sectors will also significantly increase the demand for crucial oilfield chemicals that make use of dimer acid as a raw material which include corrosion and scale inhibitors, surfactants, wetting agents, and demulsifiers. This will eventually lead to the growth of the Dimer Acid Market in the upcoming years.
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Dimer Acid Market Challenges
Fluctuating prices of raw materials can cause an obstruction to the market growth
Crude tall oil is the primary raw material used in the production of dimer acid that is prepared through the process of dimerizing unsaturated fatty acid. According to recent research published in the Journal of Cleaner Production in 2021, a supply deficit of 0.6% in crude tall oil was observed in 2020. Furthermore, it also states that this deficit is most likely to increase by 8% or 0.18 million tons by 2030 across the globe, owing to the increase in demand for crude tall oil-based biofuels for transportation. Due to this imbalance in a supply-demand chain of crude tall oil, its prices are most likely to hike or fluctuate in the upcoming years. Hence, the fluctuating prices of crude tall oil which are significantly required in the production of dimer acid is likely to confine the market growth.
Dimer Acid Industry Outlook
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in Dimer Acid Market. Dimer Acid Market top companies are:
BASF
Croda International
Oleon NV
Harima Chemicals
Emery Oleochemicals
Florachem Corp.
Arizona Chemicals
Aturex Group
Anqing Hongyu Chemical Co. Ltd.
Novepha Co. Ltd.
Key Takeaways
Construction Industry in Dimer Acid Market is expected to see the fastest growth, owing to increasing demand for Dimer Acid for production of adhesives, paints, coatings, and other construction materials.
Dimer Acid that belongs to a class of dicarboxylic acids, has properties such as high impact strength, higher flexibility, better corrosion resistance, thermal stability, chemical resistance, and water resistance which makes it ideal for the production of various construction materials.
Asia-Pacific dominated the Dimer Acid Market in 2021, with China most likely to drive the market growth. The major reason behind this is the increasing demand for adhesives and plastics from the packaging industry, along with construction activities that require the use of Dimer Acid, thus, boosting the market growth.
The Adhesives segment held the largest share in the Dimer Acid Market since the demand for Dimer Acid has been increasing for this segment due to the ideal properties that it holds.
Acquisitions/Technology Launches
In August 2021, BASF and SINOPEC expanded their Verbund site functioned by BASF-YPC Co., Ltd. (BASF-YPC), which is a 50-50 joint venture of both companies in Nanjing, China. It involves the capacity extension of numerous downstream chemical plants, including a new tert-butyl acrylate plant in order to support the growing Chinese market.
In November 2020, Croda International Plc successfully completed the acquisition of Fragrance Spanish Topco, S.L., trading as Iberchem, a leading global fragrances and flavors company.
Relevant Report:
Polyunsaturated Fatty Acids Market
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