South America Surface Treatment Chemicals Market

South America Surface Treatment Chemicals Market Analysis

The South America Surface Treatment Chemicals Market is expected to register a CAGR of greater than 3.5% during the forecast period.

The sporadic outbreak of the COVID-19 pandemic in 2020 and the first half of 2021 profoundly impacted manufacturing operations, with prices collapsing and demand falling in South American countries. Transportation, construction, and industrial activities had been drastically curtailed due to imposed government bans and restrictions. However, with the contraction of pandemic impacts in the latter half of 2021, commercial and public transportation revived from lackluster, the construction sector witnessed the launch of new projects while industries enhanced their capacity utilization with the return of workforce and the increasing number of orders from the downstream sectors. Though still falling behind the pre-pandemic levels owing to the pressure due to a protracted growth rate, these industries are expected to pick up a faster pace in two-three years, thereby creating a stronger demand for the studied market in the forecast period.

• Over the medium term, the expanding automotive sector in South America is the major driving factor augmenting the market's growth. Furthermore, the increasing adoption of chemical plating in industries relying on metal substrates is expected to surge the consumption of surface treatment chemicals in the forecast year.
• On the flip side, the adverse impacts of surface treatment chemicals on the environment that are raising concerns among environmental advocates is the key factor anticipated to restrain the market growth.
• Nevertheless, the growing awareness and the consequent demand for bio-based and chromium-free surface treatment chemicals are likely to create lucrative growth opportunities for the market.
• Brazil is expected to dominate the market during the forecast period. This growth is attributed to the ample developments in the region's automotive, industrial, and construction sectors leading to bullish demand for surface treatment chemicals applications.

South America Surface Treatment Chemicals Market Trends

Increasing Demand from the Automotive and Transportation Industry

• The automotive and transportation industry is the major end-user industry for surface treatment chemicals which are primarily used on vehicle body parts to impart long-term corrosion protection and facilitates facile paint adhesion.
• The growing market for lightweight vehicles has inducted the use of a mix of metals in vehicle bodies that demand specialty conversion coatings treatment. The industry is also a huge market for substrate cleaners in new vehicle manufacturing and repair. The surface treatment chemicals are largely used in components like aluminum wheels, diesel injection systems, bumpers, chassis, and powertrains, for cleaning, bonding, painting, and machining applications.
• The aerospace sector thrives on its optimal functioning and maintenance with the use of a range of surface treatment products such as cleaners, corrosion inhibitors, and paint strippers for airframe and aero-engine applications.
• The automotive industry has shown a remarkable improvement with the decline of the COVID-19 pandemic in South America. For instance, the production of vehicles in the country reached about 2,248,253 units of vehicles in 2021, which increased by 12% compared to 2020, as per the statistics by OICA. Argentina also registered a whopping 69% growth in automotive production in 2021, supported by the production of cars and commercial vehicles, which accounted for 1,84,106 units and 2,50,647 units, respectively.
• Brazilian products, such as airplanes, helicopters, structural segments, engines, aircraft/engine parts, onboard systems and equipment, and air traffic control systems, are developed locally and exported globally. Embraer is at the heart of the aeronautical cluster, which has grown to be one of the world's largest commercial airplane manufacturers and leaders in the regional aviation segment. Embraer is in São Paulo, an aerospace cluster focused on applied scientific and technological products with more than 130 companies.
• The Argentine air force has procured advanced fighter aircraft, helicopters, and transport aircraft and plans to upgrade the army's airlift capabilities further. The country has even joined the Brazilian KC-390 program to develop a medium-lift transport aircraft, with the Brazilian firm Embraer, as the primary contractor for the same, which is further expected to drive the market studied.
• In Colombia, electric vehicles are becoming a more viable option. The Ministry of the Environment has also produced the National Electric Mobility Strategy (ENME), which aims to have 600,000 electric vehicles on the road in the country by 2030.
• Peru has been showcasing strong economic growth during the last five years, and it is set to have one of the leading automotive industries in Latin America. This has been possible mainly due to the open market strategy of Peru. The country has established new free trade agreements (FTAs) with the Association of Southeast Asian Nations (ASEAN), Asian countries, and North America.
• Considering all the above factors, the usage and demand of surface treatment chemicals for automotive and transportation applications are expected to grow in the forecast period.

Brazil to Dominate the Market

• Brazil is the largest economy in South America and one of the fastest-growing countries in the world. The country has an advanced industrial setup in automotive, aerospace, chemical, iron and steel production, and petroleum processing. Brazil's industrial production index gained 0.7% y-o-y in September 2022 and 1.2% y-o-y in August 2022.
• Brazil is one of the leading automotive manufacturers in South America. During the first nine months of 2021, automotive production in Brazil stood at 16,49,343, a 24% increase compared to the respective stats of 2020. Furthermore, in ten months of 2022, the country produced 19,62,406 vehicles showing a 7.1% hike y-o-y, per the MarkLines Co. Ltd database.
• Furthermore, Brazil has the largest electric vehicle market in Latin America. According to the Associação Nacional dos, Fabricantes de Veículos Automotores, electric and hybrid motor vehicle registrations in Brazil accounted for 34,990 units in 2021, compared to 19,745 in 2020. The remarkably high adoption of electric vehicles indicated its positive demand outlook in the future.
• Brazil is one of the leading manufacturers of aircraft, including business jets. It manufactures a range of aerospace products, which include turboprops, military aircraft, agricultural aircraft, business aircraft, helicopters, and other general aviation aircraft. Deliveries of new and more fuel-efficient single-aisle airplanes to Brazilian airlines, including GOL, are lined up. The order includes the delivery of Boeing 737 MAX aircraft, which created new city pairs between Brazil and the United States. With the order's delivery, operational commercial fleets are likely to increase.
• Brazil has some of the largest manufacturing plants for electronics in South America. The country houses several large electronics manufacturing plants for companies, including Samsung, LG, Foxconn, Dell, Multilaser, Positivo, AOC, Lenovo, and the Leadership Group. The manufacturing of electrical machines, appliances, and materials increased by 7.7% in the last twelve months ending November 2021. The manufacturing of electrical devices, appliances, and materials increased by 6.7% in November 2021 compared to the same month in 2020.
• Brazil's construction industry showed a strong recovery in growth from the pandemic slowdowns during the last two quarters of 2021 and the first quarter of 2022, owing to greater-than-expected investments in transport, residential, and renewable energy infrastructure. According to the statistics provided by Instituto Brasileiro de Geografia e Estatística (IBGE), the value added by the construction industry registered a hike of 9%, 12.2%, and 10.9% y-o-y in Q1 2022, Q4 2021, and Q3 2021, respectively.
• All the factors mentioned above indicate a positive end-user industry outlook in Brazil which is likely to fuel the growth of the surface treatment chemicals market over the forecast time frame.

South America Surface Treatment Chemicals Industry Overview

The South American surface treatment chemicals market is partially fragmented in nature. Some of the major companies are BASF, Henkel Corporation, PPG Industries, Solvay, 3M, and others.

South America Surface Treatment Chemicals Market Leaders

South America Surface Treatment Chemicals Market News

• In August 2022, MKS Instruments acquired Atotech, a global player producing surface treatment and process chemicals, equipment, software, and services for semiconductors, PCBs, and surface finishing. The acquisition will strengthen the position of MKS Instruments in the advanced electronic devices markets globally, including South America.
• In September 2021, Element Solutions Inc. acquired Coventya Holding SAS, a global supplier of specialty chemicals for the surface finishing industry that operates in 60 countries in Europe, Asia, North America, and South America. This acquisition aided Element Solutions Inc. in extending its reach to automotive, construction, electronic, consumer goods, energy, and aerospace/defense end markets.