Specialty and Fine Chemicals

Specialty chemicals, performance chemicals, and fine chemicals are often used interchangeably. It improves the performance of an end product or manufacturing process. These includes adhesives, cleaning materials, agricultural, food additives, lubricants, surfactants, textile auxiliaries, elastomers, and flavors. Specialty and fine chemicals find wide application across various end-use industries such as aerospace, automobiles, cosmetics, construction, textile, polymers, and food. Increasing industrialization and urbanization have led to revival of the economy and flourishing trade. Population explosion, especially in Asia Pacific in turn fuels demand for consumer goods, food, and infrastructure. A variety of specialty chemicals are used for production of agrochemicals, construction chemicals, cosmetic products, food additives, textile, polymer, and plastics, among others. North America is expected to dominate the market. Moreover, emerging economies in Asia Pacific are characterized by rampant growth of end-use industries in turn fueling growth of the specialty and fine chemicals market. The growth of specialty chemicals is largely driven by growth of agricultural, construction and automobiles industries. Moreover, development of environment friendly products such as TERGITOL L Series surfactants by The Dow Chemicals Company offers ample opportunity for specialty and fine chemicals market.

Surge in Pharmaceuticals, Agrochemicals and Construction Activities Augmenting Market Growth

The pharmaceuticals industry is expected to be one of the major end users of specialty chemicals. The rapid growth of the population, especially the geriatric population characterized by high susceptibility to various diseases in turn fuels growth of the global pharmaceuticals industry. This creates a highly conducive environment for growth of the specialty and fine chemicals market.

Furthermore,positive growth outlook of other end-user industries such agrochemicals, construction, and automobiles industries argues well for growth of the specialty and fine chemicals market.Growing inclination of the global populace towards eco-friendly products is influencing manufacturers to develop bio-based chemicals. These are especially preferred in agrochemicals and fertilizers used to increase crop yield.The agricultural sector is constantly growing to keep pace with burgeoning population growth. Specialty and fine chemicals find wide application in fertilizers and pest control products, augmenting growth of the market.

Construction chemicals are used in construction activities such as residential project, commercial complex and industrial applications.Construction chemicals minimize the quantity of cement and water used in construction activities. Asia Pacific is one of the lucrative market for specialty chemicals, due to its fastest growing economy and rapid urbanization fueling demand for advanced and modern infrastructure. To meet the ever growing demand construction industry uses various construction chemicals such as concrete admixtures, adhesive & sealants, and flame retardants. Polymer is the basic raw materials used by the construction industry.

The automobile industry is one of the lucrative sectors for specialty chemicals. Polymers, paints, plastics, adhesive, fibers, and sealants are used in bulk amount by the automobile industry. China, Japan, India, and the U.S. are major automotive hubs, in turn making their hotspots for players in the specialty and fine chemicals market. Asia Pacific is positioned to be a major revenue contributor towards the global market due to rampant growth of emerging economies such as India and China and supportive government initiatives in the region. For instance, the Government of India, highlights the Auto Mission Plan (AMP) on its Make in India initiative to increase its passenger vehicle market by 2026 to 9.4 million units. India also witness US$15.79 billion Foreign Direct Investment (FDI) from 2000 to 2016 as per Department of Industrial Policy and Promotion (DIPP). This creates a highly conducive environment for growth of the global specialty and fine chemicals market.

Challenges – Strict Environmental Regulation

The synthetics based specialty and fine chemicals have negative impact on the environment, which affects the ecosystem and human beings. Various environmental protection agencies have enforced numerous environmental regulation on use of chemicals across various industries.This may hinder specialty chemicals market growth during the forecast period. The European Union in October 2003, banned use of atrazine due to its ubiquitous and unpreventable water contamination. Stringent environmental regulation forces the end use industries to shift towards bio-based chemicals, which is anticipated to restrict the growth of specialty and fine chemical market due to major shift in technology involved. Moreover, the Chinese Ministry of Environmental Protection enforces penalties on manufacturers linked with high carbon emissions, which has led to shut down of many chemicals manufacturing units in the country.

Specialty and Fine Chemicals – Regulatory Scenario:

  • 2016, The Russian Government and National Parliament, State Duma, planning to enforce a new federal law whose primary focus is to regulate in house specialty chemicals industry. The new law will regulate around 800 specialty chemicals in Russia.
  • June 22, 2016, Frank R. Lautenberg Chemical safety for the 21st century Act to strengthens and modernizes the Toxic Substances Control Act (TSCA). This act requires the EPA to evaluate chemicals on its benefits, health risk, and exposure limit, among others.
  • January, 2015, The Chinese Ministry of Environmental Protection enforces strict penalties on manufacturing which results shut down of many specialty chemicals manufacturing companies.

Key players in the market includeAkzo Nobel N.V., BASF SE, Ashland Inc., Clariant AG, Evonik Industries, The Dow Chemical Company, Huntsman Corporation, DuPont, Arkema S.A., Bayer AG, Chevron Philips Chemical Company, Syngenta AG, Albemarle Corporation, Chaitra Corporation, Eastman Chemical Company, Solvay, INEOS Group AG, among others.. The highly fragmented market is experiencing a trend of strategic mergers and acquisitions to enhance profitability. For instance, in March, 2017, The Dow Chemical Company and DuPont merge 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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