Overview of the Specialty Chemicals Industry
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Published: July 2012
The global chemical industry—including the specialty chemicals subsector—resumed growth in 2010 and 2011. During the punishing economic downturn of 2008–2009, overall chemical production contracted—in many cases severely—as demand from major end-use markets like automotive, electronics and construction evaporated. The global economy began to recover in mid- to late 2009 and continued to improve in 2010. A slowdown in the global economy in late 2011 and a likely recession in Europe led to slower growth rates in 2011 compared with 2010. However, growth in China in the high single-digit range offset weaker demand in Western economies. For 2012, it is expected that specialty chemicals will show average growth rates in developed regions as end-use industries further progress.
Major growth areas for the specialty chemicals industry are in emerging regions, primarily China, Asia other than Japan and China, and Central and South America, where average annual volume growth rates of 8.5%, 4.9%, and 4.6%, respectively, are forecast through 2016.
In 2011, the world's five largest specialty chemical segments
- Specialty polymers (engineering thermoplastics, specialty films, high-performance thermoplastics)
- Industrial and institutional cleaners
- Electronic chemicals (IC process chemicals, PCB/packaging chemicals)
- Construction chemicals
had a market share of about 36%; the ten largest segments accounted for 62% of total annual specialty chemicals sales. Each specialty chemicals business segment comprises several subsegments, each with individualized product, market and competitive profiles.
The following pie chart shows world consumption for the top twenty specialty chemical subsegments:
Growth prospects for the following specialty chemicals segments
- Emission control catalysts
- Mining chemicals
- Specialty polymers (high-performance thermoplastics)
- Electronic chemicals (IC process and PCB chemicals)
are favorable because the outlook for the corresponding end-use industries has brightened. Segments such as cosmetic chemicals, flavors and fragrances, and nutraceutical ingredients owe their auspicious prospects to rising levels of disposable income in the developing world and renewed (if less than robust) consumer spending in North America, Western Europe and Japan.
The specialty chemicals industry is in transition. Historically, North American, Western European and Japanese firms have dominated this business. However, with trade liberalization, the spread of process technology, the breakdown of numerous economic barriers, the rapid growth of the newly industrialized Asian economies and rising standards of living in many developing countries, the center of gravity of the global chemical industry is shifting toward the Middle East, where cheap petrochemical feedstocks are available, and toward Asia, where labor costs are low and economic growth is high. Increasingly, North American, European and Japanese specialty chemical producers look to developing regions for growth. Many have established manufacturing facilities in Asia and elsewhere and at the same time, Chinese and Indian manufacturers have become key players in several specialty chemical markets. Nowadays, however, the concept of China as a low-cost producer is gone, since China is shifting from an export focus to meeting the growing domestic needs for higher-value, downstream products. As competition increases and mature products become commoditized, innovation remains one of the few sources of competitive advantage.