Ceramic Industry

Tracking Abrasives Demand

June 1, 2010
Advances in developing regions will outperform demand in the U.S., Western Europe and Japan.

Global demand for abrasive products is forecast to climb 5.9% annually through 2013 to $38.2 billion. Advances in developing parts of Asia, the Africa/Mideast region, Eastern Europe and Latin America will considerably outperform demand in the U.S., Western Europe and Japan (see Table 1). Product sales in developing countries will be fueled by healthy economic growth and ongoing industrialization efforts, leading to higher durable goods manufacturing output and fixed investment expenditures.

China, India and Russia will post some of the biggest sales gains. China, which recently surpassed the U.S. to become the largest national market for abrasives, will account for two-thirds of all additional product demand through 2013. Sales advances are also expected to be healthy in Indonesia and Thailand.

Market conditions will be much less favorable in developed parts of the world, dampened by relatively sluggish durable goods manufacturing activity. Abrasives demand in the U.S., Italy and France will expand less than 1% annually through 2013, while annual product sales are expected to decline in Germany, Japan and the UK.

However, higher per capita incomes will result in increased consumer expenditures for a variety of products made using abrasives, providing some offsetting support. The sales outlook is somewhat stronger for Canada, South Korea and Spain due to comparatively healthy growth in manufacturing output in these nations, although market advances will still lag those recorded in industrializing areas.

Types of Abrasives

Overall abrasives demand is dominated by nonmetallic products, which include bonded abrasives, coated abrasives, and loose abrasive grains and powders. Nonmetallic abrasives are expected to register larger sales gains through 2013 than metallic products like steel shot and grit, and wire brushes and wheels.

Durable goods manufacturing is far and away the largest market for abrasives, accounting for more than three-quarters of all product demand. Transportation equipment will record the strongest gains of any major durable goods market through 2013, bolstered by an expected recovery in motor vehicle and motorcycle production from the recession-impacted 2008-2009 period.

Figure 1. 2008 world abrasive raw materials demand by type ($9 billion). (Source: The Freedonia Group, Inc.)

Raw Materials

Worldwide sales of abrasive raw materials are forecast to increase 6.8% per year through 2013 to $12.5 billion, climbing somewhat faster than demand for the abrasive products in which they are used. As durable goods manufacturing processes continue to improve, a shift in consumption will occur toward better-performing, higher-priced abrasive materials like CBN and synthetic diamond in grinding wheels and other bonded products, as well as sol-gels in coated abrasives, to boost overall value gains through 2013.

However, the average cost of advanced abrasive materials is expected to decline as production levels grow and manufacturing techniques are refined, acting as an offsetting influence. In addition, these more-advanced abrasives often have longer lifespans than products made using conventional materials, limiting the total volume of abrasives required and further restricting raw materials market advances.

Abrasive raw material costs relative to the value of abrasives shipments in different areas vary somewhat, depending on the cost of abrasive materials in that area and the relative cost of other resources used in the production process (capital goods, energy, wages, etc.). In developing countries, for example, raw materials typically account for a larger share of finished abrasives shipments in dollar terms than in developed parts of the world, due in large part to the much lower labor rates found in these nations.

A variety of abrasive minerals can be utilized in finished abrasives, including natural minerals such as garnet, pumice and silica sand; manufactured minerals like fused alumina, silicon carbide, specialty silicas and superabrasives; and metallic abrasives such as metal wools and steel grit. Manufactured minerals are the most widely used, accounting for 70% of the 2008 dollar sales total (see Figure 1). Metallic materials are the second-largest product segment, representing 22% of the global market total in 2008, with natural minerals accounting for the remaining demand.*

Manufactured Minerals
Major types of manufactured mineral abrasive raw materials include alumina-zirconia, sol-gel abrasive grains and other alumina-based materials; CBN; silicon carbide; specialty silica; synthetic diamond; and tungsten carbide. Demand for manufactured mineral abrasive raw materials will rise 8.1% annually through 2013 to $9.3 billion, outperforming metallic material and natural mineral sales.

Market increases will be stimulated by the replacement of natural and metallic minerals by manufactured minerals in a number of abrasive applications because of their superior physical properties, greater durability and/or higher level of efficiency. On the other hand, prices of CBN and synthetic diamond are expected to fall, dampening overall value gains through 2013.

Natural Minerals
Along with natural diamond and pumice, types of natural minerals utilized in abrasives applications include emery, garnet, silica sand, staurolite, and tripoli. World demand for natural minerals used as abrasive raw materials is projected to climb at a 5.1% annual rate through 2013 to $860 million, lagging growth in the use of manufactured minerals but outperforming metallic abrasive materials.

Suppliers will benefit from the price advantage they enjoy over most manufactured mineral types, and demand for products such as pumice, a highly effective exfoliate, will be bolstered by increased consumer spending for skin care products as living standards continue to rise. However, the use of natural diamond as an abrasive will be negatively affected by declining prices for synthetic diamond, and the limited performance capabilities of other natural minerals will constrain category sales gains as well.

Metallic Materials
Metallic abrasive raw materials include steel and nonferrous wools, steel shot and grit, chilled or annealed iron shot and grit, and cut wire shot. The global market for metallic abrasive raw materials is forecast to grow 3.0% per year to $2.3 billion in 2013, the slowest pace of increase of any major raw material type.

Growth will be restricted by the ongoing replacement of these materials by others (like superabrasives) that can provide improved performance in a number of applications. However, metallic abrasives will remain the product of choice among users in some markets because of their cost effectiveness, helping spur market gains through 2013.

*The data provided here is for the abrasive raw materials themselves and therefore do not include other input for finished abrasives like cloth, paper and plastic for backing materials, adhesives, or coatings. Raw materials used in cutting tools like abrasive-tipped drill bits, milling cutters and saw blades are excluded as well.

Editor's note: This article is based on information provided by The Freedonia Group, Inc. For additional information, visit www.freedoniagroup.com.