Specialty chemicals are produced by a complex, interlinked industry. In the strictest sense, specialty chemicals are chemical products that are sold on the basis of their performance or function, rather than their composition. They can be single-chemical entities or formulations whose composition sharply influences the performance and processing of the customer’s product. Products and services in the specialty chemicals industry require intensive knowledge and ongoing innovation. Commodity chemicals, on the other hand, are sold strictly on the basis of their chemical composition. They are single chemical entities, which are generally readily interchangeable between suppliers.
The specialty chemical segments are categorized either as market-oriented products (used by a specific industry or market, such as electronic chemicals or oil field chemicals) or functional products (groups of products that serve the same function, such as adhesives, antioxidants, or biocides).
The largest specialty chemical segments in 2016-17 were electronic chemicals, industrial and institutional cleaners, specialty polymers, surfactants, and construction chemicals, accounting for 35% of the industry’s global sales. Approximately 55% went into only four end-use industries – soap, cleaning, and cosmetics; food and beverages; electrical and electronics; and construction. Other important end-use industries include motor vehicles, paper and pulp, plastic products, printing and publishing, and oil and gas mining.
Historically, North American, Western European, and Japanese firms have dominated this business. With trade liberalization, the spread of process technology, the breakdown of numerous economic barriers, the rapid growth of the newly industrialized Asian economies, and rising standards of living in many developing countries, the centre of gravity of the global chemical industry is shifting toward the Middle East, where cheap petrochemical feedstocks are available, and Asia, where labour costs remain relatively low and economic growth is high. Increasingly, North American, European, and Japanese specialty chemical producers look to developing regions for growth. Many have established manufacturing facilities in Asia, and at the same time, Chinese and Indian manufacturers have become key players in several specialty chemical markets.
In general, higher growth rates for the global market reflect the positive outlook for China, Other Asia, and other emerging markets, where manufacturing activities – notably automobile and electronic production – are expanding significantly.
Several specialty chemicals segments are projected to grow faster than the average 3% annual growth forecast for all specialty chemicals during 2018-21. Growth prospects for some of these segments – notably nutraceutical ingredients and electronic chemicals – are favourable because of the positive outlook for the corresponding end-use industries. Segments such as nutraceuticals, cosmetic chemicals, and flavours and fragrances owe their auspicious prospects to rising levels of disposable income in the developing world and renewed consumer spending in North America, Western Europe, and Japan.
Market directed specialty chemicals o Semiconductors and IC process chemicals o Toner raw materials Functional specialty chemicals o Petroleum refining and chemical process catalysts o High performance anticorrosion coatings o Engineering thermoplastics
Major end-use industries
o Printed circuit board chemicals and semiconductor packaging materials
o Thermal printing chemicals
o Emission control catalysts
o Thermosetting powder coatings
o Radiation curable coatings
o Specialty films
o High performance thermoplastics
Market directed specialty chemicals
o Semiconductors and IC process chemicals
o Toner raw materials
Functional specialty chemicals
o Petroleum refining and chemical process catalysts
o High performance anticorrosion coatings
o Engineering thermoplastics