Home / Industries / Speciality Chemicals

Speciality Chemicals

Know your Industry better through us!
Helping Industry participants develop a deeper understanding of the global economy.

Speciality Chemicals Related Content


Challenges the Specialty Chemicals Industry Faces

https://straitsresearch.com/photos/special ss.png

The specialty chemicals industry has always been dominated by large players from western economies, with Western Europe and North America as the key producers and consumers for a long time. However, as years passed, traditional and closed economies began opening up to the world, and globalization took place. The trend has proven to be of great advantage for China, which has vastly expanded its manufacturing capacity to fulfill its chemical industry demands. Furthermore, developing economies have to their power several factors, the primary among which are abundant natural resource reserves and the availability of inexpensive labour.These factors have triggered a price war among the leading players in the market and the emerging companies vying for larger shares.

Specialty chemical manufacturers produce smaller quantities in batches compared to commodity chemical manufacturers that produce large amounts in bulk. Specialty chemical manufacturers use the batch process and require a regular change of operating conditions, raw materials, processes/operations, and equipment to cater to the changing customer demands. Besides, constant regulatory changes by agencies such as the FDA, OSHA, HCS, and REACH, among others, keep specialty chemical manufacturers on their toes. Moreover, the prices of raw materials for production have been significantly increasing, further adding to the list of challenges players in the industry face. Overall, rising raw material prices, stiff competition from emerging companies, and stringent regulations are compelling companies to find alternatives to reduce the overall cost of operations.

Latest Thinking

Expansion of the Industry to Include Services

Players in thespecialty chemicals industry exclusively focus on manufacturing and customization as per customer demand. Leveraging this, they can also start providing aftersales services and consultation to the existing clients, which will increase client retention. Also, key players have been working toward switching their customers to self-service models with online platforms forsales, support, and order management for more satisfying customer experience. The integration of the internet of things (IoT) and artificial intelligence (AI) in their operations will also drastically reduce the manufacturing and inventory costs of these companies.

https://straitsresearch.com/photos/Speciality Chemicals



We provide customized research solutions through a holistic approachto help our clients achieve their goals. Our solutions cover the inclusions listed below.




Customizations are imperative for clients while trying to obtain information or data regarding the specialty chemicals industry markets, and our solutions are designed to cater to businesses' unique needs on a case to case basis. The segmentation and scope for each report are decided after extensive discussion with our clients to ensure that they get the relevant quantitative data combined with qualitative commentary.

For example, one of the emerging players in thespecialty chemicals industry was unsure of how to make its value chain less capital-intensive. The client was involved in the Polyethylene Terephthalate Market, and our report guided the company on allocating the appropriate capital to every level of the value chain. In another instance, an investor sought information on the potential end-users of Bitumen Emulsifiers.


Our Clientele
  • Momentive
  • Perstorp AB
  • SIL Chemicals Limited

Covid-19: What happened and the What next

Impact of COVID-19  on Specialty Chemicals Industry


The COVID-19 pandemic has compelled economies to shut down their industries to restrict or contain the spread of the virus, which has halted production and increased the volume of inventories, leading to an overflow of supplies in the absence of demand. International borders have been closed,albeit allowingthe exportof essential commodities, and stakeholders have been renting additional space to store the surplus material.

https://straitsresearch.com/photos/Speciality Chemicals.jpg


Migration of Labor& Shutdown of Manufacturing Plants

Covid-19 Effects on the Industry

https://straitsresearch.com/photos/1 sp.png

Chemical factories need labor designing, machine handling, container handling, and transportation, among other operations. The closing of regional and international borders hashalted businesses worldwide,resulting ina mass labor migration. Therefore, factories are observinga decline in production activities; however, once the situation is under control, resuming production at previous capacity will take time. Moreover, if a new workforce is hired, their training will incur additional expenses and eventually delay manufacturing.

China is one of the most crucial players in the specialty chemicals sector and the epicenter of the novel coronavirus. Players in the country have either completely shut shop or are operating at partial capacities, depending on the extent of the outbreak in the region. For instance, the province of Wuhan saw a complete shutdown of all manufacturing while other areas are operating at 25–30%.

Post-Pandemic, China to Address its Internal Demand Before Exporting

Companies that source raw materials from China are expected to face raw material shortages due to the considerable disruption the Chinese supply chain has suffered. Besides, local Chinese suppliers will ideally be directed to fulfill the internal demand before exporting. While China is among the leading suppliers and exporters of raw materials for the specialty chemical sector, it is also a competitor in the industry.

Slow Growth of Construction Activities Likely to Result in the Industry’s Stagnancy

The construction industry is one of the largest employers around the globe; however, in recent years, the industry has been observinga slow-growth trend due to the looming recession and the trade war between China and the U.S. The construction sector spends around USD 10 trillion per year in construction-related goods and services. However, in contrast to the manufacturing industry, the construction industry has been growing at an average of just 1% over the past two decades. This is attributable to the stringent regulatory and inspection policies and the increasing land prices, making residential buying significantly expensive. The construction sector comprises players thatprimarily focus on the construction of residential and commercial buildings, industrial buildings,or are into civil construction. Some of the firms are also engaged in specialized development, which involves trade such as plumbing, electrical, and mechanical work, all of which come under the construction sector. This shows the internal fragmentation of the industry, which gives way to various industry dynamics. These factors highlight the need to adopt different construction industries' different strategies, and the absence of a one-size-fits-all approach is what is slowing down the growth of this industry.

Absence of Skilled Labor in Specialized Construction

The specialized construction industry is highly fragmented and forms a significant chunk of the construction sector in terms of volume. It observes thehighest growth rate in the emerging economies of Brazil, India, Malaysia, and Thailand, among others. The challenge in these economies is their dependence on labor for construction operations and the absence of skilled workers to perform various actions. Governments have announced a total lockdown, which has led to the mass migration of laborers as these aremostly immigrants from other states or countries.Hence, the absence of labor has led to a halt in almost all construction work, which will eventually lead to a decrease in the demand for construction materials. However, even after lockdown restrictions are lifted, it will take a  certain amount of time before the laborers come back, if at all. These uncertainties, too, cast a spell of doubt on the growth rate of the construction material.

https://straitsresearch.com/photos/2 sp.png

Europe’s Self-Sufficiency in Terms of Raw Materials

The agriculture and farming sector will be affected severely in the pandemic. The situation, however, is not uniform across the world. Europe is relatively self-sufficient in terms of raw agricultural products and food, and food grain and meat have been stockpiled foreseeing inaccessibility during the prolonged lockdown period. The self-sufficiency ratio of food grains and animal products in Europe is well over 100% for primary products.

https://straitsresearch.com/photos/2 sp.png

Source: Statistical Yearbook Agriculture, 2019 (Eurostat)

https://straitsresearch.com/photos/3 sp.png

Source: BLE 2020

Unproductive Harvests in Asia, Central and South America, and the Caribbean

In other regions, such as Asia, Central, South America, and the Caribbean, agricultural processes are not automated. The harvesting season in these regions begins from April and stretches till the end of the monsoon. However, most of the period is expected to go unproductive owing to the lockdown and the closing of domestic and international borders. These developments will clamp down the demand for an array of agrochemicals, such as fertilizers, insecticides, and pesticides, among others.

The U.S. and Europe to Emerge as Alternative Marketplaces for Agrochemicals 

The demand for agrochemicals will be affected on account of China’s market dominance in this industrial sub-segment. China’s share in global pesticide export was 15% in 2017, while Germany held a 13% share, andFrance and the U.S. held an 11% share each. Globally, the primary importers were Brazil, Germany, and France. The coronavirus pandemic has shifted the focus toward a search for supply chain alternatives.

There were also significant sanctions by the Chinese government, which mandated Chinese industries involved in manufacturing chemicals to reduce their pollution levels. This forced Chinese manufacturers to decrease their production levels and increase their prices to keep the profit margins high. The search for alternative sources for procuring agrochemicals, reduced production levels to mitigate pollution levels, and the coronavirus crisis, together,areanticipated to dampenChina’s dominance in the market, providing the U.S. and the European countries a chance to recoup the market share.

https://straitsresearch.com/photos/6 sp.png

Hygiene: The Selling Point for Cosmetic Products 

The household and personal care segment are among the largest end-users of specialty chemicals. In recent times, the demand for sanitizers has increased by leaps and bounds, engendering a trend among consumers who prefer safe and hygienic cosmetics. One of the leading players in this industry speculated that the demand for color cosmetics would decline, while skincare and hygiene would shoot up. Safety, shelf-life, and cleanliness will be among the most critical parameters to choose the cosmetic product. Europe is a primary exporter, whereas Asia is one of the significant importers for beauty products. However, due to the global lockdown, most of the economies are anticipated to adopt protectionist policies to avoid trade and thereby the need to open borders.

However, the duration of the global lockdown has driven most economies to strengthen their internal supply chain. This is likely to lead towards economies adopting protectionist policies and might result in restricting the growth of the cosmetics industry.

Weak Demand for Color Cosmetics to Result in Accumulation in Warehouses and Ultimately, Expiration and Mass Wastage 

While opening up international borders will increase the risk of exposure to COVID-19, the absence of global trade will result in unemployment, and a subsequent decline in consumer income. The International Labour Organization (ILO) has stated that around 25 million jobs will be lost due tothe novel coronavirus, compelling consumers to focus their purchasing on buying essential products and thus, eliminating the need for cosmetics that fail to address hygiene or sanitation aspects. This will lead to the stocking up of cosmetics, which will eventually lower their prices. On the other hand, most cosmetics become useless once they cross their shelf-life and have to be either recycled or disposed of as waste. The increasing waste amount will result in economic losses and raise water pollution levelsdue to the chemicals seeping into rivers and other water sources.

Source: OECD    

The Need for Speciality Chemicals to Treat Wastewater

Wastewater management is another end-user of specialty chemicals. The disposal of several commodities and consumer products leads to an increase in waste levels. Waste dumped in landfills releases chemicals that seep into the water sources,which intensifies the need for wastewater treatment. The sudden upsurge in demand for specialty chemicals in wastewater treatment will translate to an increase in their prices shortly.

Despite the Foreseeable Global Economic Revival, the Present Automotive Sector’s Slowdown is an Upfront Concern

Demand in the automotive sector has been observing a decline. Commercial vehicle sales were on the rise, and passenger cars' sales reduced by five million units. The halt in trading activities will decline new commercial vehicles’ sales as well. Also, consumer sentiment will witness a blow, and the global population will reassess their spending habits. Moreover, obtaining loans will not be more comfortable for ordinary consumers, as banks and underwriters are likely to turn stringent inapproving loans.

Automobile manufacturing has been severely affected due to social distancing norms as factories face a labor shortage in production, which is impacting the demand for specialty chemicals from the industry. However, the International Monetary Fund (IMF) suggests that the global economy is likely to bounce back by the next year, which will positively influencethe demand for specialty chemicals.

https://straitsresearch.com/photos/1 SC.png

Source: OICA

A proactive approach by government institutes and businesses covering pointers such as protecting jobs, reducing taxes, and lending benefits to small micro and medium organizations will help get economies back on track.