Hydroxypropyl Methylcellulose

Hydroxypropyl Methylcellulose Global Market Outlook

• Among the methyl cellulose derivatives, HPMC is the predominant consumer, accounting for about 85 percent of the market share, owing to its wide downstream applications, like construction and pharmaceuticals.

Market Outlook

Sufficient Capacity Until 2026

• The current global installed capacity and the capacity addition by Dow Chemical are sufficient to meet the global demand of industrial-grade HPMC until 2026

• HPMC supply conditions witnessed a surplus inventories during H2 2022 and H1 2023, amidst rising inflationary pressure, bearish global sentiments, and Russia-Ukraine war. Hence, it has resulted in lower supplier power

Growing Cross-Industry Demand

• Growing demand from cross industry, especially carboxymethyl cellulose, could be a threat, in terms of raw material supply for high purity-grade cellulose derivatives

• The industrial applications of cellulose currently use wood-derived cellulose, which is cost effective compared to cotton linter. Hence, there is no major supply threat for the construction/ceramics industry until 2026

Degree of Substitution

• Small changes in degree of substitution in ceramic injection molding do not affect gelation temperature significantly, but the gel strength is very sensitive to such changes. A small quantity of hydroxypropyl cellulose substitution in methyl cellulose will mainly help to improve the gel strength in binding system during the injection molding process

Hydroxypropyl Methylcellulose Global Demand by Application

• The demand from the construction sector is expected to remain bearish for industrial grade HPMC in 2022 and 2023, due to higher inflationary pressure and risk of recession across multiple nations in 2023. However, high-purity HPMC suppliers need to operate at a higher rate of around 80–90 percent to meet the global demand during 2024-2026.

HPMC Downstream Demand Outlook

• Construction, paints, and adhesives: HPMC is mainly used in construction materials to increase water retention and extend the storage time. The demand from the industrial and construction sectors in Southeast Asia (SE Asia) is anticipated to remain moderate during 2022–2023, due to the Russia–Ukraine war and rising inflationary pressure. However, global demand levels are anticipated to grow at a CAGR of around 3–4 percent Y-o-Y during 2023–2026.

• Pharmaceuticals: The industry is mainly driven by its demand for modified release formulations, its usage as a co-processed excipient, and its growing Hot Melt Extrusion (HME) technology. Since gelatin-based capsules are chemically unstable and have risks associated with animal-derived sources, the industry has started to shift towards HPMC capsules. This is expected to fuel the demand growth of HPMC from the pharmaceutical segment.

• High demand growth for high purity HPMC: Methyl cellulose and its derivative HPMC demand from the pharmaceutical industry is expected to be mainly driven by Europe and the Americas, as the industry is projected to witness a growth rate of around 3.5–4.5 percent until 2026.

Cost Structure of MC and its Derivatives

• Raw material accounts for 59–60 percent of the cost, and indirect cost accounts for 23 percent of the manufacturing cost of MC and its derivatives

• Utility, labor, overhead, and QA costs are the other significant cost components, as they together constitute to around 18 percent of the total cost