Market Trends of saudi arabia adhesives Industry
Plastic packaging with a share of 85% in overall packaging production will foster the packaging industry
- The demand for quick and on-the-go packaged items is increasing due to busier lifestyles, greater spending power, and related factors in the country. In today's competitive FMCG market, companies must use attractive packaging and offer innovation in their packaging to stand out from their competitors and maintain their brand in the market.
- Consumers and manufacturers prefer paper and paperboard packaging for their products instead of plastic packaging. This factor is likely to result in increased use of paper-based packaging and its adhesive usage. In 2021, paper and paperboard packaging contributed 15% of total packaging, which was 13 million tonnes of packaging, and it is expected to register a growth of 3.87% during the forecast period.
- Due to the COVID-19 pandemic, the country-wide lockdowns and temporary shutdown of manufacturing facilities caused several issues, including disruptions in supply chains and imports and exports. As a result, the country's packaging production declined by -4.7% in 2020 compared to the previous year, significantly affecting the market.
- Packaging production is majorly driven by plastic in the country, as plastic packaging accounted for 73.2 million ton, amounting to around 85% of the packaging produced in 2021. With the advancement of plastic recyclability, the plastic segment is likely to maintain its growth and record a 4.13% CAGR during the projected period.
- The growing interest in public health issues during the post-pandemic period, along with the emerging e-commerce activities across the nation, is likely to boost the growth of the food processing industry, which will further drive the packaging demand over the coming years.
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Rising demand for vehicles to foster the growth of automobile production
- Saudi Arabia had a GDP of USD 28,760 per capita, with a growth rate of 7.6% Y-o-Y in 2022. The automotive industry contributes around 2% to the country's GDP, and Saudi Arabia has the largest car market in the Gulf Cooperation Council (GCC). The production of automobiles in the country is mainly affected by the oil prices in the international market.
- The Saudi Arabian automotive market is predominantly import-based due to the limited automotive production in the country. However, the country has been trying to increase the non-oil economy and has welcomed the establishment of automotive production units in the past decade.
- Automotive production increased by almost 69% in 2019 compared to 2018. The oil prices were low in 2018, which resulted in a decline in the production of vehicles, but in the same year, Saudi Arabia's government introduced a 5% VAT (Value Added Tax) on exports of oil, which increased the oil prices in the international market. The country aims to grow its non-oil economy and increase automotive production.
- Automotive production is expected to increase by 30% in 2022 compared to 2021, owing to increased demand from other regions of the Middle East and Africa. The Greater Arab Free Trade Agreement (GAFTA) gives the country access to trade with 17 countries in the Middle East and African region, resulting in a growth in sales. The private sector has already invested in downstream industries to utilize the raw material advantage of oil and has begun producing oil filters, circuit boards, batteries, cabling, sensors, adhesives, paints, composites, trims, and seats. These factors are likely to increase the production of automobiles over the coming years,
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Government initiatives to improve connection in-between global destinations will boost the aircraft demand
- Youthful age population is likely to drive the demand for footwear production
- Public and private investments for various residential projects to propel construction sector
- Growing e-commerce industry and supportive investments will drive the furniture industry
