Zinc Oxide (ZnO) is an inorganic compound that is usually available in powder form. It is insoluble in water and has a wide variety of industrial applications. The compound was earlier used as an ingredient in medicated lotions for skin irritations and related uses. However, it has been adopted by other industries due to its other benefits as well.
Zinc oxide is used in semiconductors, tires, construction materials, ceramic and glass, and in cigarette filters. Another industry that has incorporated zinc oxide in its products is cosmetic and personal care products industry. Zinc oxide is used as the main ingredient in sun-protection crèmes and lotions that include makeup products, nail products, baby lotions, foot powders, and bath soaps.
The compound is also used as a bulking agent and colorant in many other chemical and organic products.
Artificial production and supply of zinc oxide is itself a global market that caters to diverse industries. Recently, the zinc oxide market price has also increased in a matter of a few years due to its high demand from various industries. The global zinc oxide market is growing at a Compound Annual Growth Rate (CAGR) of 6 percent and it is expected to attain a market value of $4.70 billion by 2022.
The APAC region is expected to drive the demand and supply segment in the near future due to capacity additions at various stages. In terms of supplier power, North America has high market maturity whereas the APAC and the European Union are markets with lower maturity. On the other hand, APAC and the European Union are the markets with higher buying potential where as the North American region has relatively lower buyer power.
Some of the top global players in the industry include US Zinc Co. Ltd., Umicore, Chem Trade, Silox SA, and Hakusui Tech Co. Ltd.
Reasons Why A Business In Zinc Oxide Will Be Profitable In The Coming Years
Currently, the global zinc supply is in surplus and it is going to remain steady for the next 2-3 years. APAC is a fragmented market-zone but it is also the largest supply market and holds the maximum market share. APAC holds 58 percent global market share followed by China, North America, and Western Europe that account for 16 percent, 12 percent, and a 17 percent market share respectively.
Therefore, it is evident that the use of zinc oxide will rise in the respective regions due to high economic growth in automotive, and ceramics and glass industries. Such a rise in the demand for zinc oxide on a global level has triggered some shifts in the market such as increased prices, supply crunch for some industries, and business opportunities for new businesses and entrepreneurs.
- In countries such as India, China, and Brazil, the automotive sector is booming alongside other sectors such as innovative consumer electronics and cosmetic products. The demand for zinc oxide in the respective regions is also expected to grow at a CAGR of 5 percent until 2022.
- As a result, the prices for zinc oxide are certainly going to skyrocket in the upcoming years which will ultimately profit the zinc oxide manufacturers and suppliers at various levels.
- However, this trend will not be beneficial for end-user industries as the Consumer Packaged Goods (CPG) sector will likely have to go through a supply crunch for some time and the automotive industry will see skyrocketed demands. Since the CPG industry buys a low volume of zinc oxide, they do not have the negotiating power for signing contracts and they will likely have to pay higher prices and face supply availability issues in tight situations. Similarly, rising demands for zinc oxide in the consumer electronics and ceramics segment is set to eat up the supply share of rubber and chemical industries.
- Upcoming businesses can target cosmetic, automotive, or construction material industries as end-users and they can achieve their business objectives by choosing either one of the options namely, zinc oxide manufacturing or supply. The industry is facing a supply surplus on a global level and it is likely to remain in the landscape for at least 2 years. Entrepreneurs can choose to supply zinc oxide to the end-users (industries) by entering into a contract with the manufacturers. Suppliers have partial freedom that grants flexibility to their operations. Contrarily, manufacturers have to look after numerous aspects, and maintaining the cash flow is one of them. Global markets often witness fluctuations in supply and demand and therefore, entering the industry through the supply route is a better option that allows suppliers to be averse of certain potential risks.
Zinc oxide is one of the few chemical compounds that are widely used across the industries which is a major reason for high market growth in the emerging economies. This is an ideal scenario for new businesses as the mature markets are saturated with a supply glut and emerging markets are filled with blooming future opportunities.