The Growth of Specialty Chemicals Industry in Emerging Markets

September 5, 2017

The specialty chemicals industry is set to grow at an exponential rate owing to factors such as new end-use applications, rise in innovation, demand for efficient and safe chemicals, and growing environmental concerns. Specialty chemicals is a niche segment in the global chemical industry that offers special chemicals and polymers with the capability to improve performance. Specialty chemicals find wide spread application in various industries such as textile, printing, consumer goods and retail, electronic, and oil and gas. North America was the world’s largest market in the specialty chemicals market across the globe. However, with the rise in the demand for niche chemical products in the emerging markets, Asia is set to change the market landscape with major chemical companies shifting their manufacturing base to such locations.

Chemicals Industry – Falling Demand in Developed Markets 

The global chemical industry is matured, highly saturated in the developed countries, and prone to changes in economic conditions, stringent carbon emission policies, and regulatory compliances. Additionally, the chemical industry is plagued with the sudden surge in raw material prices and increasing environmental concerns. The industry witnessed a decelerating growth in developed countries due to the economic downturn, which led to a decrease in production and demand from industries such as automotive, electronics, and construction. However, in emerging markets such as China and India as opposed to developed countries, the chemical industry is witnessing an upward trend, which is a positive sign for the overall market.

Specialty Chemicals Industry – What’s Driving Growth in Emerging Markets?

Specialty chemicals, in simple terms, are high-end versions in the chemical supply chain, used in smaller proportions as compared to their commodity grade counterparts. Specialty chemicals enhance performance, provide specific functionality to the end products, and offer a combination of innovation and customer service. The emerging markets look promising for the specialty chemicals industry as future growth is projected from developing countries such as China, India, Korea, and Brazil. As more and more chemical companies are gradually shifting their production bases to low-cost locations, the demand for specialty chemicals is projected to rise with the growth in competition. But why the increase in demand in emerging markets, you ask? Here’s why.

  • The emerging markets offer new growth opportunities for chemical companies to grow and expand their market share by customizing their product offerings
  • With the growing middle-class population in developing countries and rising industrialization, the demand for improved crop quality drives the demand for cost efficient chemical systems
  • The export scene for the specialty chemicals industry is set to grow by leaps and bounds in the emerging markets as a result of the sudden surge in the demand for niche chemical products across several major industries
  • Emerging markets have low labor costs, efficient manufacturing capabilities, and supportive government policies, which makes it a favorable destination for major global players in the chemical market

Apart from these, governments in developing countries are developing friendly policies that facilitate the growth of the specialty chemicals industry by encouraging global players to invest in these regions, upgrading the chemical industries and manufacturing capabilities, and redesigning the industrial training institutes to build efficient domestic workforce.

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