The global specialty chemicals market size was worth USD 615 billion in 2021. It is expected to reach USD 915 billion by 2030, growing at a CAGR of 4.5% during the forecast period (2022–2030).
Specialty chemicals are sometimes known as performance or effect chemicals. Among the many common examples are essential oils, gelatin, castor oil, and collagen. Specialties are chemicals manufactured in smaller quantities and serve only a few applications, as opposed to fine and commodity chemicals (according to the European Chemical Industry Council) (CEFIC).
Growing demand for high-performance and function-specific chemicals in end-use sectors such as oil & gas, pulp & paper, personal care & cosmetics, and others is likely to be a significant market growth factor. As consumers primarily drive the industry, innovation and R&D are some of the vital growth opportunities. Manufacturers' focus on providing novel and custom-made product offerings for target applications and meeting individual customers' demands has encouraged R&D expenditure, resulting in developing innovative chemicals and expanding the market product portfolio.
The growth is highly consumer-driven, led by categories such as electronics chemicals, personal electronics, and pharmaceuticals. Increasing demand for processed food & beverages in developed countries has driven the demand for flavoring agents. Increasing consumer inclination towards new flavors & fragrances in food products is expected to drive the specialty chemicals market over the forecast period.
Chemicals such as sodium hypochlorite, hydrochloric acid, and others are widely employed in manufacturing industrial and institutional cleaners. The growing use of these cleaners in various industries impacts the market significantly. The growth of the industrial & institutional cleaners' market in key regions, including Asia-Pacific, North America, and Europe, amid the high demand for disinfectant and cleaning products for combating COVID-19, is expected to drive the market further.
Pharmaceutical additives are employed in Over-the-Counter (OTC) drug formulations and other pharmaceutical products to impart specific qualities to the formulations. They find applications in various end-use industries such as personal care products, cosmetics, etc. Continuous growth in these sectors is expected to benefit industry participants.
Specialty chemicals are consumed in almost every industrial sector. Among end-use industries, more than half of the globally produced specialty chemicals go into food & beverages, soap, cleaning, cosmetics, construction, and electrical & electronics industries. The specialty chemicals market is expected to possess high growth potential in the emerging markets over the coming years due to industrialization and rising consumer-driven economies. In terms of growth of the categories, several categories of specialty chemicals, including specialty coatings, electronic chemicals, nutraceuticals, and flavors and fragrances, are expected to witness rapid growth owing to a positive outlook for their corresponding end-use markets.
Technological advancements within the oil & gas industry include rapid research & development activities conducted by multinationals such as Royal Dutch Shell, British Petroleum, and Total SA. Companies have been focusing on delivering high-performance chemicals for oil field applications, chemical processing, and more that enhance oil recovery, production, and maximize the recovery of oil and gas reserves. However, fluctuating crude oil prices and availability in the global market threaten specialty chemical formulators operating worldwide.
Expansion of refining capacities in the Middle East, China, India, and Brazil is expected to ensure raw material availability for producing specialty chemicals required for numerous applications. Developing new products such as food additives, catalysts for the manufacture of fine chemicals, corrosion inhibitors, flame retardants, textile chemicals, and others by market players such as Shell and ExxonMobil are expected to expand the application scope. REACH regulations for restricting chemicals are anticipated to drive the specialty chemicals market growth over the coming years.
Crude oil is an integral component in manufacturing specialty chemicals, which is further refined into various petrochemical products used as input for manufacturing specialty chemicals. The rise in crude oil prices reduces the profit margins of refineries. An increase in the cost per unit of the finished product for the consumers affects the consumer spending capacity and the overall growth rate of an economy. The global specialty chemicals market is facing a significant degree of uncertainty amid the outbreak of COVID-19 and consequent containment measures taken to limit the spread of the pandemic.
Factors such as plunging demand for oil, tumbling oil prices, reduction in rig count, and diminishing investments in the oil & gas industry are expected to impact the specialty chemicals market. The fall in crude oil prices has led to a corresponding decline in the prices of numerous downstream products utilized as input feed for the production of various specialty chemical products. Fluctuations in the prices and supply of oil & gas drastically affect the ability of the specialty chemical producers to procure feedstock at economical rates. This impacts the overall cost of the final products, which, in turn, increases the market's volatility.
The need for safe chemicals and rising environmental concerns in numerous applications, such as consumer goods, printing, and textiles, have led to increased innovation in specialty chemicals. Manufacturing companies are investing heavily in R&D and focusing on maintaining product portfolios boasting novel and enhanced products that are cost-effective, safe, and offer improved functionality or performance.
The majority of specialty chemicals and polymers support the sustainable development goals of the United Nations Development Programme (UNDP). The adoption of new environmental standards and product specifications has the potential to boost the growth of the specialty chemicals market. For instance, in wastewater treatment, rising concerns of water scarcity and demand for clean water are significant trends driving the use and demand for water treatment chemicals. Factors such as rising oil prices, demand for environmentally friendly products, dwindling supplies of non-renewable resources, and population growth create tremendous opportunities for specialty chemicals and polymers.
The global specialty chemicals market share is segmented by product and region.
Product-wise, the global specialty chemicals market is segmented into Specialty Polymers, Institutional & Industrial Cleaners, Electronic Chemicals, Rubber Processing Chemicals, Flavors & Fragrances, Construction Chemicals, Food & Feed Additives, Cosmetic Chemicals, Oilfield Chemicals, Mining Chemicals, Pharmaceutical & Nutraceuticals Additives, Plastic Additives, Printing Inks, CASE (Coatings, Adhesives, Sealants & Elastomers), Specialty Pulp & Paper Chemicals, Specialty Textile Chemicals, Catalysts, Water Treatment Chemicals, Corrosion Inhibitors, Flame Retardants, and Others.
The Construction Chemicals segment dominates the market and is expected to grow at a CAGR of 6.5% during the forecast period. Specialty construction chemicals comprise specialty concrete, cement, and mortar, which form structures and join components. Prominent players in the specialty construction chemicals market include Evonik, BASF SE, Tricom LLC, and Exxon Mobil Corporation. Manufacturers are highly focused on technological advancements to provide unique product offerings. For instance, Evonik offers a complete line of SILANE water-repellent systems based on silane technology for masonry and concrete surfaces. Adhesives, sealants, and specialty coatings are also a vital part of the construction industry, which is expected to benefit the construction market in the future.
Water Treatment Chemicals are the second-largest segment. Specialty water treatment chemicals include organic polymers such as quaternary ammonium polymers (flocculants and coagulants), polyamines, and polyacrylamides; ion exchange resins such as styrene-divinylbenzene polymer, polyacrylate, and polymethacrylate resins; and other formulated products such as foam control agents, biocides, scale inhibitors, and corrosion inhibitors. These chemicals are mainly used in applications such as ultrapure water purification, heavy metal residues & organic impurities removal, water softening, boiler condensate polishing, boiler feed water demineralization, sludge dewatering, cooling, boiler system maintenance, and others. Industrial development, wastewater recovery, and advancements in recycling technologies coupled with the ever-increasing demand for freshwater are expected to drive this segment. The rising inclination toward sea-water desalination for catering to freshwater demands will further boost the segment growth.
Electronic Chemicals are the fastest-growing segment. Electronic chemicals are used at different stages in manufacturing electronic products such as semiconductors, printed circuit boards, and displays. They are used in advanced chemical purification technologies such as gas adsorption, filtration, ion exchange, and distillation to minimize the level of contaminants in high-purity process chemicals. The rising demand for electronic products worldwide is propelling the demand for specialty chemicals as they play a vital role in manufacturing electronic chemicals. The massive adoption of technologies such as AI and IoT globally has generated a vast demand for intelligent devices, which, in turn, is expected to fuel the demand for specialty chemicals over the forecast period.
Region-wise, the global specialty chemicals market share is segmented into North America, Europe, Asia-Pacific, Central and South America, and the Middle East and Africa.
Asia-Pacific holds the largest market share and is expected to grow at a CAGR of 7.7% during the forecast period. The growing population in India and China, coupled with the rise in income level and purchasing power parity, has led to the high demand for specialty chemicals. In addition, a rapidly growing number of food & beverage start-ups, especially in India, is projected to boost the specialty chemicals market during the forecast period. The need for cosmetic chemicals in cosmetic and personal care applications also drives the market. Furthermore, the shifting consumer preferences toward personal hygiene, oral care, and skincare drives the personal care industry and, in turn, the specialty chemicals market.
Europe emerged as the second-largest market for specialty chemicals, growing at a CAGR of 5% during the forecast period. The region is characterized by several developed countries, such as Germany, France, the UK, the Netherlands, Switzerland, and Russia. Advancements in the manufacturing sector, especially automotive & transportation, chemical, and food, have propelled the growth of specialty polymers, electronic chemicals, rubber processing chemicals, flavors & fragrances, adhesives, coatings, plastic additives, and food additives in the region.
North America is the third-largest region. It is the major consumer of corrosion inhibitors, printing inks, surfactants, food additives, biocides, cosmetic chemicals, industrial and institutional cleaners, lubricating oil additives, and oil field chemicals. The consumption of these products in developed countries is likely to pave the way for the Specialty Chemicals market in North America. One of the major drivers is the growth in the end-user industries, such as the construction and chemical manufacturing industries, as specialty chemicals are used in making paints & coatings. Growth of the electronics & electrical, and construction industry is anticipated to increase demand for electronic and construction chemicals, which is thus expected to fuel specialty chemicals demand over the coming years.
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