Market Trends of Asia-Pacific Formaldehyde Industry
The Construction Industry is Expected to Dominate the Market during the Forecast Period
- The construction industry leads in formaldehyde consumption, primarily for construction, remodeling, and furniture production.
- Formaldehyde-based resins are integral in crafting composite and engineered wood products. These products are used in various applications, including moldings, furniture, countertops, cabinetry, shelving, stairs, wall sheathing, support beams, flooring, trusses, and numerous other household furnishings and structures.
- Asia-Pacific, spearheaded by countries like China, India, and Japan, holds a significant share of the construction segment, thus boosting the demand for domestic formaldehyde.
- In 2023, the construction of new homes in China was reduced owing to the demand for properties. As per the data from statistics released by the National Bureau of Statistics, about 693 million square meters of new homes started construction in 2023, registering a 21% decrease compared to the previous year.
- Similarly, Japan's Ministry of Land Infrastructure, Transport and Tourism (MLIT) reported 819.62 thousand new construction houses in 2023, down by 26% from 859.53 thousand in 2022.
- With the weak demand for various construction properties in the region, the demand for formaldehyde may negatively impact the construction industry.
- However, India is poised to claim the title of the world's third-largest construction market. Driven by initiatives like the Smart Cities project and Housing for All, the Indian government is propelling the construction industry forward. The government has been actively boosting housing construction to provide housing for its vast population of 1.3 billion.
- In the FY 2024 budget, the finance minister pledged support for an additional 20 million houses over the next five years under the Pradhan Mantri Awas Yojana (PMAY).
- Given the robust growth of the Asia-Pacific construction industry, the demand for formaldehyde is poised to rise during the forecast period.
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China is Expected to Dominate the Market during the Forecast Period
- China dominated the Asia-Pacific formaldehyde market, with a substantial market and revenue share, and this dominance is expected to continue during the forecast period. Factors such as good adhesive strength and moisture resistance properties of formaldehyde-based resins and continuous demand from the furniture industry are anticipated to drive market growth.
- As per data from the China Association of Automobile Manufacturers (CAAM), China is the world's largest automotive production hub. In 2023, China produced over 30.16 million cars, marking an 11.6% rise from the previous year. Sales figures mirrored this growth, with 30.09 million passenger cars sold, a 12% increase Y-o-Y, according to CAAM data. This trend is expected to support the market studied.
- The Chinese government estimates a 20% penetration rate of electric vehicle production by 2025. Such significant investments are projected to propel the country's automotive industry and positively impact the market studied.
- As per the International Trade Organization, China holds the title of the world's largest construction market. Data from the American Institute of Architects (AIA) Shanghai paints a staggering picture: by 2025, China is expected to erect a cityscape equivalent to 10 New York cities. Despite the recent underperformance, notably in 2023, where China's new residential construction floor space dipped below 700 million square meters, marking the fourth consecutive annual decline from its 2019 peak, the nation's construction industry remains robust, fueled by ongoing urban development initiatives.
- Given these dynamics, the Chinese formaldehyde market is poised for growth in the coming years.
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