The advanced materials industry has been observingtremendous growth since the last few years. Novel technologies offer manufacturers new ways to innovate, compete, and increase their profit margins even as they encounter several challenges,such as highprices, volatile raw material, and energy costs, stringent regulations, and other evolving risks. The high price is a critical challenge that players in the industry face. Nanomaterials, for instance, cost more than USD 1,000 per gram. High price hampers demand in price-sensitive applications, such as aerospace and defense, which is the largest consumer of advanced materials. The expenses associated with technologies, skilled manpower, R & D, and compliance in manufacturing add to the cost of advanced materials.
The advanced materials industry is observing the emergence of new materials and new application areas and continuously advancing manufacturing processes. In 2020–2021, dozens of new materials are expected to be commercially available in the market. In such a scenario, decision-making regarding business and expansion becomes critical and challenging, especially without reliable, insightful data. For instance, the global graphene market, in 2016, was valued to be less than USD 20 million, while R&D spending on graphene was more than USD 500 million. At present, the global graphene market is recording a growth rate higher than 35%. This imbalance between market valuation and research spending highlights the need for accurate data on the various products belonging to the advanced material sector.
The adverse effects of advanced materials on human health and the environment have emerged as a crucial concern. As of 2020, the Canadian Center for Occupational Health and Safety (CCOHS), European Commission's (EC) Scientific Committee on Consumer Safety (SCCS), and Dutch National Institute for Public Health and the Environment (RIVM), among others, have released guidelines/rules/fact sheets regarding the impact of advanced materials on human health as well as the environment. Thus, along with high prices, R&D expenses, and the lack of skilled professionals, specialty chemical manufacturers also have to deal with challenging regulatory frameworks.
What next for the Industry
Advancements in scientific principles, algorithms, modeling, simulation, and high-end computing aid in developing better-engineered systems and materials at a lower cost than traditional approaches. Digital manufacturing enables manufacturers to digitally monitor and simulate the performance, appearance, and even physical characteristics of materials. Companies, such as Dassault Systèmes, which provide software solutions to manufacturers, record immense revenue growth due to the higher adoption of such advanced technologies in manufacturing advanced materials such as composites, polymers, electronic materials, and other high-value-added metals. These manufacturing methods are likely to drive the products' output while also trying to significantly reduce operational costs.
Another critical attention is theburgeoning demand for advanced materials, such as carbon fiber, ceramics, and other composites in Asia-Pacific. Initially, the higher prices of these materials restricted trading activities in the Asia Pacific, but China, Japan, and South Korea changed the scenario. Asia-Pacific is considered a late adopter of advanced technologies and advanced materials and is the third-largest market in advanced materials. However, the region is the fastest-growing market for advanced materials and expected to record higher than a 15% CAGR for different materials in the upcoming years. China and Japan lead the regional advanced material market. The expanding electric vehicles market in China is expected to fuel the demand for advanced materials in the years to come.
Aerospace and defense, automotive, construction andbuilding, packaging, and healthcare are among the many industries that use advanced materials, and the list of end-users continues to expand. Renewable energyis one of the new application areas of advanced materials. New composite rich alternatives are transforming the wind energy sector, and a few of the companies operating in the advanced material industry have experienced revenue growth of more than 50% for wind energy applications. Likewise, next-generation solar modules are based on the newer manufacturing technology that uses nanomaterials, such as carbon fullerenes and quantum dots.
The advanced materials industry is dynamic, and our solutions have helped clients modify their value chains and enhance their supply chain relationships. The industry observes rapid technological advancements. Our estimations and forecasts are developed considering these advancements, recent developments, and the effective regulatory policies that have the potential to affect the industry. Our reports on upcoming markets, such as the Green Packaging Market, provide insights into ongoing R & D and the trends that will likely propel market growth in the coming years.
For instance, one of the leading players in the copper clads laminates market was struggling to find new suppliers to expand its presence in the overseas market. Our solution helped the company find new suppliers and aided it in identifying the high potential markets for expansion.
While the Demand for Advanced Materials from Key Consumers is on a Downward Trend, Upsurge in the Demand from Healthcare is Expected to Keep the Industry Afloat During the Pandemic
Advanced materials are revolutionizing engineering and processes across sectors and industries, especially aerospace, defense, and automotive. Their chemical, physical, and biological properties make them the preferred choice over traditional materials. Advanced materials have been observing immense growth inthe last few years; however,the COVID-19 outbreak is likely to restraint the growth trend for the next few quarters.
Covid-19 impact on the industry
More than a third of the world’s population is under lockdown, and many are suffering from the COVID-19 outbreak,which is ultimately hampering the global economy and industries. The advanced materials industry is no exception in the present scenario. Most of the companies in the sector have either completely shut down facilitiestemporarily or curtailed production in some facilities. A few companies that have ceased or reduced business operations are mentioned below.
Some companies have also opened manufacturing facilities to produce essential products to join the fight against the COVID-19 pandemic. Before the outbreak,the capacity utilization rate for advanced material was 70–94% depending on the product, but the epidemic has reduced it to below 50% with continuously decreasing demand.
The U.S., China, and Europe, among the world's most important trading centers, are also the worst affected regions in the pandemic. These three togethercontrol more than half the trading activities in almost every industry and sector. They cumulatively consume more than 50–60% of the total advanced materials, depending on the specific product; hence, reducing demand from these consumers is expected toprofoundly affect the advanced materials industry.
Source: International Monetary Fund
Note: In the above table *Europe includes only Germany, France, Italy, and Spain.
The U.S., China, and Europe cumulatively account for more than 60% of the demand for advanced material from automobile applications; hence,sluggish growth of the automotive industry in these regionshas severely influenced the global advanced material market.
The Chinese province Hubei’s capital Wuhan, where the pandemic originated, is a prominent production hub for China’s automotive sector. In December 2019, COVID-19 had begun to impact the country’s industry, and, in late February,it disrupted the supply-demand gap in the global automotive industry, chiefly the U.S. and Europe. China observed the most significant drop in automotive sales in February. In the U.S. and Europe, assembly line closures are further clamping down the economy. In mid-March, automobile production was ceased entirely in the U.S., and car sales in the country dropped by around 47% YoY to about 1.1 million for March, the lowest volume in the decade. Chevrolet and Toyota are the most affected brands in the U.S., and sales for both of the brands declined by more than 65,000 units. The situation in most affected countries, including Spain and Italy, remains critical, and vehicle sales are down by almost 75% YoY in March.
Advanced materials are extensively used in aerospace and defense, automotive, architecture, energy, infrastructure, marine, and sports and recreation, among other sectors. COVID-19 has negatively impacted most of its end consumers,especially automotive, support, and aerospace and defense,ultimately affecting the growth of the advanced materials industry. The trend is expected to continue until the end of 2021.
The impact of COVID-19 on the global automotive industry has been severe, and it commenced with automotive part shortages from Chinese export. Volkswagen Group, one of the largest automotive manufacturers with brands such as Audi, Bugatti, Lamborghini, Bentley, Porsche, Seat, Ducati, and Skoda, announced the closure of some of the facilities considering lowering sales figure and inadequate supplies. Apart from Volkswagen Group, several other vital automotive manufacturers such as Renault, Fiat Chrysler, Honda, Nissan, Toyota,and Suzuki either curtailed their production or entirely closed facilities across the world.
Advanced materials play a crucial role in electric vehicle (EV) manufacturing and are consumed in the body parts as well as battery manufacturing. Theyare imperative to the success of EVsin terms of weight reduction and battery performance improvements. Thus, EVs are considered among the most potential consumers of advanced materials. Most ofEV production facilities have either closed down or are unable to utilize their full production capacity due to raw material and staff shortage. For instance, recently, on March 23, 2020, Tesla halted operations at its car manufacturing plant in California in response to the pandemic.
Apart from the automotive industry, aerospace and defense are among the largest consumers of several advanced materials and are severely affected by the COVID-19 outbreak.The sector witnessed strong growth in 2018 and descent in 2019, while 2020 is expected to register the slowest growth in a decade.The global lockdown has led to labor shortages, disrupted production cycles, and minimum passenger traffic. Additionally, the demand for spare parts has also reduced as the closure of business operations has led to lower maintenance and repair activities. However, advanced materials also possess applications in the healthcare sector, which is less likely to be affected during the COVID-19 outbreak.
Nanoparticles, ratiometric fluorescent, aptasensors, and graphene are a few of the advanced materials useful in identifying pathogens' identification and analysis. Advanced materials are also used to develop sensor technology, one of the appropriate ways to detect viruses on a broad level. On the other hand, composites are one of the primary raw materials used to manufacture medical devices and equipment. Several advanced material manufacturing companies have opened their production facilities to produce essential items or raw materials, including composites for the manufacturing of critical medical devices. Some of the companies serving the healthcare sector during the pandemic are mentioned below.
The International Association of Advanced Materials (IAAM) works closely with the World Health Organization (WHO) to develop advanced medical technology and high-tech healthcare to control the swiftly spreading COVID-19. Recently, in February 2020,the IAAM organized a program to create aconsortium for advanced medical research. Similarly, the European Glass Fiber Producers Association talks with the European Commission and works to ensure the continued manufacturing of glass fibers to produce essential goods. Thus, glass fiber manufacturers, distributors, and related stakeholders in Europe are working primarily to serve the medical sector.