Specialty Chemicals Market Size, Share & COVID-19 Impact Analysis, By Type (Agrochemicals, Dyes and Pigments, Construction Chemicals, Specialty Polymers, Textile Chemicals, Base Ingredients, Surfactants, Functional Ingredients, Water Treatment, and Others) and Regional Forecast, 2021-2028

The global specialty chemicals market size was USD 627.7 billion in 2020 and is projected to grow from USD 641.2 billion in 2021 to USD 882.6 billion in 2028 at a CAGR of 4.7% during the 2021-2028 period. The sudden decline in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over. The global impact of COVID-19 has been unprecedented and staggering, with specialty chemicals witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a decline of 2.8% in 2020.

Specialty chemicals are used by a plethora of manufacturing industries such as textiles, oil and gas, ink additives, construction, food, and cosmetics. The chemical composition and effectiveness of these compounds determine their use. With the world becoming increasingly concerned about health and safety, the growth in sales of industrial and institutional cleaners (I&I), disinfectants, and sanitizers have expanded at a swifter rate than usual. According to a report by The Gulf Petrochemicals and Chemicals Association (GPCA), the demand for hand sanitizers and disinfectants in January 2020 increased by 1,400% compared to December 2019. This demand growth has made specialty chemicals manufacturers ramp up their production.

Sluggish Industrial Activities amid COVID-19 Pandemic to Decline Growth of the Market

Increasing environmental concerns and the negative impact of the COVID-19 pandemic are the restraints hampering the growth of this market. The halt in transportation and travel across nations has led to inventory shortages that have further declined sales of chemicals. The COVID-19 pandemic has affected almost all industries. The chemical industry had already been dealing with sustainability issues in 2019, such as trade restrictions, economic sanctions, reduced profits, and others. The COVID-19 pandemic, along with the decline in oil prices, has put additional pressure on the chemicals sector. However, the effect varied across different segments.

Key Players are Supporting Healthcare Sector by Providing Essential Products

As the pandemic progressed, the industry attempted to take initiatives to meet the medical supply needs caused by COVID-19, such as ramping up production and products used in cleaning agents, hand sanitizers, and safety gear. The demand for surfactants, for example, experienced soaring growth during these tough times. Many chemical companies altered their production plants and ramped up the production of these essential products to support healthcare services and government agencies. For instance, LyondellBasell made a donation of IPA, a vital component for sanitizers. Huntsman also delivered sanitizers for charitable purposes and INEOS constructed two new factories to make sanitizers for universal access to health authorities. These are just a few examples of how chemical manufacturers have stepped up to help the fight against the coronavirus. On account of these mitigation strategies incorporated by leading players, the specialty chemicals market is expected to recover between 2021 and 2022.

SPECIALTY CHEMICALS MARKET TRENDS

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Higher Demand for Daily Essential Chemicals to Aid Market Growth

While the market is anticipated to rebound in 2021, the influence and route to recovery will be diverse, given the number of end industries each segment caters to. Market participants are looking to expand their businesses and create a one-of-a-kind blend of novel specialty chemical manufacturing units. As an example, in January 2021, Huntsman announced that it has agreed to acquire Gabriel Performance Products, a North American manufacturing company dealing with specialty additives and epoxy curing agents, with the goal of expanding its product portfolio. Another such example is LANXESS which signed an agreement with INTACE SAS, a French biocide company, in January 2021 to expand its business and achieve a competitive advantage as one of the world's leading manufacturers of antimicrobial biocides and fungicides for the packaging sector.

Many industry players have collaborated to create groundbreaking amenities and innovations by applying advanced resources such as artificial intelligence, which are slated to begin new avenues in the market. These chemicals offer a chance to overcome profitability obstacles in the GCC countries, particularly in light of the low crude price environment, while also mitigating China's growing self-sufficiency in commodities.

SPECIALTY CHEMICALS MARKET GROWTH FACTORS

Surging Demand for Personal Care Products to Strengthen Growth of the Market

As the effects of the COVID-19 pandemic sweep across the globe, leading manufacturers are observing a considerable increase in the demand for hygiene products such as hand sanitizers, liquid soaps, disinfectant sprays, and germ safeguard wipes. Over the past 12-18 months, chemical companies have noticed an expansion in the consumption of specialty items. They have now assessed their production plans in light of current circumstances and are speedily scaling up and streamlining their production capacities. Therefore, this rising adoption of cleaners and disinfectants has given a quiet boost to the market.

Furthermore, according to a United Nations report, there were 962 million people aged 60 and above in 2017, with the number expected to almost double by 2050. These older folks suffer from advanced age and health conditions such as hair loss and skin deterioration, which will fuel the adoption of cosmetic chemicals, favoring the market. This factor has led to considerable growth in the demand for surfactants and personal care chemicals, driving the growth of the market.

Strong Demand from the Construction Industry to Boost Growth of the Market

The expanding number of development projects around the globe will drive the growth rate in this sector. According to the Global Construction Review Survey, the global construction industry will be valued at USD 8 trillion by 20230, which will be mainly driven by China, India, and the U.S.

This is due to the fact that these chemicals help to improve the structural and decorative properties of a building while also extending its life. They also reduce the need for repairs and help concrete structures retain their strength. Construction chemicals, such as surface treatment chemicals, foaming agents, and coatings, are some of the most critical components of the construction process. As a result, they account for a sizable portion of this market. With the construction industry expected to rejuvenate post-pandemic, it is expected to propel the specialty chemicals industry growth.

RESTRAINING FACTORS

Declining Automotive Production to Restraint Market Growth

Chemicals are important in the automotive industry because they are essential in the smooth functioning of a vehicle, besides improving its feel and comfort. Motor oil, for instance, attracts heat away from an engine's combustor and allows its mechanical components to operate smoothly. Rubber blacks are used in wheels and brake pads as performance additives. However, the competition from the availability of less expensive conventional counterparts of specialty chemicals is a major hindrance to this market.

In addition to the above, the COVID-19 pandemic has caused unprecedented upheavals in the auto industry in terms of production and demand. According to a report published by OICA (Organization Internationale des Constructeurs d'Automobiles), major automotive production globally was around 17.9 billion units, during the first quarter of 2020 and making it to 31.1 billion units in the second quarter, and 52.1 billion units in the third quarter, which was nearly down about 23.1%, 32.4%, and 22.9 % respectively, from the past year. On a similar note, automobile sales in the markets of Europe, Brazil, Japan, India, China, and the US fell by 27.3%, 14.7%, 24.6%, 30.9%, 10.0%, and 17.0%, respectively. The lowering of automobile production, alterations in raw material costs, as well as strict government regulations, is anticipated to stymie the specialty chemicals market growth.

SPECIALTY CHEMICALS MARKET SEGMENTATION ANALYSIS

By Type Analysis

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Increasing Demand for Food Security to Aid the Dominance of Agrochemicals Segment

The specialty chemicals market is classified on the basis of type into agrochemicals, dyes and pigments, construction chemicals, specialty polymers, textile chemicals, base ingredients, surfactants, functional ingredients, water treatment, and others. Out of these, the agrochemicals segment is believed to account for roughly one-eighth of the market’s share and is projected to be the fastest-growing segment during the forecast period. The growing population base, combined with the rising food demand, is increasing the adoption of agrochemicals for improved crop production and protection, fueling the growth of the market. Furthermore, growing awareness amongst farmers about the use of agrochemicals in agricultural fields also fuels the market’s growth. Moreover, as urbanization and industrial development speed up, agricultural land decreases, leading to a higher demand for agrochemicals to significantly raise crop yield per acre of land, thereby propelling the growth of the market in the upcoming years.

On the flip side, there has been a surging demand for dyes and pigments owing to their manifold end-use applications. The demand for smart paints and coatings that can counter the effects of weather on building construction is expanding, thus boosting the demand for dyes and pigments in recent years. Furthermore, the demand for printing inks has also expanded in the previous half a decade on account of the increasing efforts of countries such as India, Brazil, Thailand, Indonesia, and China to increase literacy amongst citizens and improve their taxation system. Owing to this factor, the dyes and pigments segment has gained momentum in the global market. However, due to the pandemic situation, there has been a drop in the manufacturing process of paints and coatings in 2020 as a result of the global building industry slowdown. Nevertheless, the situation is expected to improve in 2021, regaining the market's growth.

REGIONAL SPECIALTY CHEMICALS MARKET ANALYSIS

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The market size in the Asia Pacific region stood at USD 291.2 billion in 2020 and the region is expected to dominate the specialty chemicals market share during the forecast period. This can be attributable to the large chemical production base concentrated in China and India. China has emerged as the hub for the production of chemicals owing to the easy availability of raw materials and cheap labor. On a similar note, the Indian market is also highly split, with the majority of companies being small to medium-sized. However, one of the main constraints is the limited feedstock supply and a large proportion of smaller-scale players unable to compete with Chinese companies. This is a key reason behind the smaller share being held by the country as compared to China.

North America is a major consumer of biocides, cosmetic chemicals, corrosion inhibitors, institutional cleaners, lubricating oil additives, and synthetic lubricants, which account for a sizable portion of the market. The expanding demand for construction chemicals from the U.S. and Canada on account of an increase in investments in infrastructure projects has also enabled North America to secure constructive market growth. As a result, this region is regarded as a promising destination for specialty chemical manufacturers owing to the profitable investment opportunities provided to foreign players.

As per our study, Europe is expected to witness moderate growth in the market. Europe accounted for the third-largest share in the market strongly backed by the chemical industry in the region. Western Europe is the world's largest consumer of nutraceuticals, fragrances, and flavors. It is also one of the region's most important exporting divisions of electronic chemicals, which has resulted in the magnification of this market. Furthermore, the extraordinary rise in the use of water treatment chemicals has aided the progress of Europe's specialty chemicals industry, thus spurring the demand for specialty chemicals.

In Latin America, manufacturers may benefit from the increased production activities in emerging economies such as Brazil. The rapid expansion of construction activities in Latin American countries will also benefit the market.

The demand for oilfield chemicals in Middle Eastern countries is expected to drive market growth. In the GCC region, the specialty chemical sector has enormous potential for multi-fold economic expansion. Giant chemical companies in the GCC are well-positioned to use their knowledge in the production process to establish new and better ways to broaden their downstream existence. For instance, according to the report by the GPCA, construction chemicals accounted for 0.8 MMT in 2020 and are projected to reach 0.9-1.0 MMT by 2025. It also asserted that the packaging industry in GCC countries is poised to increase from USD 1 billion in 2020 to USD 1.5 billion in 2025, owing primarily to the expanding packaging needs in the region.

KEY INDUSTRY PLAYERS

Leading Companies Focus on Acquisition and Expansion Strategies to Garner Market Share

To capture the smallest of whitespace and promote financial adeptness, organizations are working on infrastructure upgrades and technological advancements in their production plants. The demand for food additives, along with paper and plastic additive applications, has led them to further improve the reliability of their offerings and maintain long-term service contracts with raw material suppliers or end-users. Intensive R&D for feasible, cost-effective product development and the adoption of new technologies are some of the market players' prominent operational strategies. Furthermore, R&D for bio-based chemicals has gained significant traction in recent years as a result of shifting end-user perceptions and favorable regulatory mandates.

Companies have already started taking initiatives and started their own campaigns catering to the need for chemicals in different sectors and fueling the growth of the market. One such example is Novozymes, an industrial enzymes giant, which took an initiative by collaborating with the cleaning start-up Aks2tal and the Danish municipality of Gladsaxe to test the former’s probiotic cleaning product, named Microvia Pro. Microvia Pro is a solution for the post-COVID struggle for the excessive need for deep cleaning. All this new revolution by the key players remarkably boosts the market. From May 3, 2021, it will be available in multiple Gladsaxe offices and canteen areas.

LIST OF KEY COMPANIES PROFILED IN SPECIALTY CHEMICALS MARKET:

• Solvay AG (Belgium)


• Evonik Industries AG (Germany)


• Clariant AG (Switzerland)


• Akzo Nobel N.V. (Netherlands)


• BASF SE (Germany)


• Kemira Oyj (Finland)


• LANXESS AG (Germany)  


• Croda International Plc (UK)


• Huntsman International LLC (US)


• The Lubrizol Corporation(US)


• Albemarle Corporation (US)


• Other Key Players

KEY INDUSTRY DEVELOPMENTS:

• In February 2021, Lonza announced the sales of its specialty chemicals business in order to focus on its pharmaceuticals business. Bain Capital and Cinven purchased the business for a value of US$ 4.66 Bn.


• In July 2021, Platinum equity announced the acquisition of Solenis, a specialty chemicals manufacturer from Clayton, Dubilier & Rice, and BASF for a value of US$ 5.25 Bn and merged it with Sigura Water. The merger will allow Sigura to scale up its water-treatment products and chemicals supply to food packaging and paper industries to meet rising market demand.


• In May 2021, SK Capital, a private investment firm focused on the specialty materials, chemicals, and pharmaceuticals sectors, announced the acquisition of Canadian coatings company, Canlak Inc. and US-based Valentus Specialty Chemicals. The firm plans to merge the two businesses to form a North American wood coatings company, Canlak Coatings. The new entity is projected to offer a comprehensive portfolio of wood coating solutions for sports, commercial & residential flooring, cabinetry and furniture manufacturing sectors.


• In July 2021, the two specialty chemicals business line of H2O Innovation Inc., PWT and Genesys amalgamated together to form the H2O Innovation Specialty Chemicals Group. The corporation will expand the manufacturing capacity of the company’s Cheshire (UK) facility.

REPORT COVERAGE

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The global specialty chemicals market research report provides a detailed analysis of the market and focuses on crucial aspects such as production technologies, leading companies, and application segments. Also, it offers insights into market trends, and price trends, and highlights vital industry developments. In addition to the factors mentioned above, the report encompasses various factors that have contributed to the market’s growth in recent years. The competitive landscape section covers detailed profiles of leading key players operating in the global market.

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