Bulk Chemicals

Bulk chemicals, commonly known as commodity chemicals are produced in a larger quantities to meet ever-growing demand across various industries.Bulk chemicals are manufactured using batch process and continuous process. Large volumes of raw materials such as crude oil and natural gas are used in production of bulk chemicals. The bulk chemicals or commodity chemicals are traded as organic chemicals and inorganic chemicals.The bulk chemicals market is highly fragmented, with a large number of large global players and small regional players. Asia Pacific is the largest market for bulk chemicals,spearheaded by China, India, and Japan Bulk chemicals find wide application across industries such as agriculture, construction, and automobile. Burgeoning growth of these industries in highly populous emerging economies of India and China, along with rampant economic growth in these countries is expected to fuel growth of the global bulk chemicals market in the foreseeable future.

Bulk chemicals or commodity chemicals are used in healthcare, food processing, chemicals, fertilizer, construction, and automobiles industries, among others. Price instability of crude and natural gas due to technology shifting towards renewable energy and disparity in supply and demand are expected key challenges for growth of the global bulk chemicals market. Integration of advanced automation systems such as SCADA, DCS, PLC, among others would help significantly increase production, without a major spike in additional costs. This is projected to create a highly lucrative growth opportunity for players in the market.

Rising demand for chemicals in the construction industry across the globe is projected to be a key driver for the bulk chemicals market. Moreover, increasing crude oil production and consequent decrease in prices of the same, is expected to augment market growth. Growing GDP and rapid urbanization in Asia Pacific, primarily in China, Japan and India, in turn creates a highly conducive environment for market growth. Furthermore, increasing government investment in infrastructure development, especially in India and China propels growth in demand for bulk chemicals. According to India Brand Equity Foundation (IBEF)—part of Department of Commerce, Ministry of Commerce and Industry, Government of India—the Indian government plans to invest US$ 376.53 billion in infrastructure development through 2020.Moreover, the Indian government plans to establish special economic zones (SEZs) in the port-based chemical parks across the country. The market in Middle East countries,mainly Saudi Arabia, UAE, Iran, and Iraq is also growing due to large petroleum reserves and high production in these countries. The UAE is primarily focused in improved and modern infrastructure development to boost tourism across the region. The region also witnesses major investment in the manufacturing units of bulk chemicals by global players such as SABIC, The Dow Chemical Company, and BASF SE. Thus, this region is positioned as a key exporter of bulk chemicals to other regions.

Bulk Chemicals Challenges – Reduce Environmental Impact

Effective and eco-friendly mode of waste disposal is a key challenge faced by chemicals manufacturing companies. All waste water, gases, and semi-solid waste can only be disposed to the environment after undergoing a series of treatments. The Ministry of Environment and Forest (MoEF) of India, on December 23, 2010, implemented water prevention and control pollution act 1974 and air prevention and control pollution act 1981. This lays out a stringent regulatory framework for manufacturers and users regarding production, import, export, and storage of hazardous chemicals. This significantly increases costs associated with production, which in turn affects profitability of manufacturers in this highly competitive market, in turn inhibiting market growth.

Decentralized production of bulk chemicals is an opportunity for players to enter into local markets. Such production of bulk chemicals in small quantities would utilize local resources and translate into low operating costs and cheap labor, especially in emerging economies of Asia Pacific and Latin America, in turn increasing profit margins. Also, proximity to end users decreases time-to-market and significantly reduces cost involved in handling and transportation—a crucial factor for hazardous chemicals.Forward integration by bulk chemical manufacturers is another lucrative growth opportunity for players in this market. 

Bulk Chemicals– Regulatory Scenario:

  • United States Environmental Protection Agency
  • The Frank R. Lautenberg Chemical Safety for the 21stCentury Act, on December 17, 2015.
  • The Toxic Substances Control Act (TSCA) Modernization Act of 2015, on June 23, 2015
  • Registration, Evaluation and Authorization and Restriction of Chemicals (REACH) and Classification, Labelling and Packaging (CPL) regulations
  • Regulations regarding fertilizer production
  • Regulations regarding detergents production
  • Regulation regarding explosive production
  • Regulation regarding drug precursors production
  • Resource Conservation and Recovery Act (RCRA)
  • Chemical Waste Disposal Law Govern by U.S.Environmental Protection Agency

Bulk Chemicals – Key Global Conferences:

  • Strategic Approach to International Chemicals Management (SAICM)
  • In Dubai, government, intergovernmental and non-governmental organization held an International conference on chemicals management, on February 4th to 6th, 2006.
  • Summit Meeting on Chemical Regulations (SMCR) in Asia Pacific in 2011
  • Transparency in sharing of regulatory updates and enforcement measures, to provide and promote safety and sustainability of chemical industry in the Asia Pacific region.

Key players in the bulk chemicals market include BASF-SE, The Dow Chemical Company, Sinopec, SABIC, ExxonMobil, Formosa Plastics, Lyondel Basell Industry, DuPont, Ineos, Bayer, Mitsubishi Chemicals, Royal Dutch Shell, LG Chem Ltd., Braskem, Air liquid, Akzo Nobel, The Linde Group, Sumitomo Chemicals, Mitsui Chemicals,Evonik Industries. In recent times, the market has witnessed a trend of consolidation through strategic mergers and acquisitions. For instance, in March, 2017, the European Union approved the proposed merger of Dow Chemical and DuPont as part of a US$ 62 billion deal. The companies would subsequently break into three separate publicly traded companies that would focus on agriculture, material science, and specialty chemicals...

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