Specialty Chemicals
What are specialty chemicals?
Specialty chemicals are typically defined as those chemicals which are sold based on their performance properties or functionality rather than purely their chemical composition. The pricing dynamics of specialty chemicals and commodity chemicals typically differs in that specialty chemicals are less easily substituted and market prices are less driven by raw material or other production costs.
Specialty chemicals suppliers also typically offer their customers additional services such as co-product/formulation development and greater technical sales support.
How can etasca help?
The etasca team has extensive commercial and technical experience across the chemicals value chain – covering all specialty chemicals market segments and process technologies. We’ve worked with the largest speciality chemical producers worldwide.
Interested? contactus@etasca.com
billion USD
Estimated global specialty
chemicals market value
%
CAGR
forecast growth
through to 2030
Commercial considerations:
Europe is one of the leading regions for specialty chemicals production due to its highly integrated chemicals facilities, proprietary process technology and strong production know-how.
- However, the rising spread between energy costs in Europe versus other regions and lower domestic end-market demand growth has impacted local producers’ earnings.
European and North American specialty chemicals producers are facing increased competition from China which is actively developing its own process technologies and formulating capabilities.
- China is now the largest single consuming nation of specialty chemicals (nearly 30% of global demand).
Specialty chemicals producers continuously need to innovate to avoid the commoditisation of their portfolios.
- Producers manage portfolio commoditisation through investment in product development – improving the performance properties of their products or differentiating through a more solution / service-oriented proposition (e.g., joint product development with customers, enhanced technical sales support etc.).
Specialty chemicals for electronics markets are seeing considerable growth, underpinned by digitisation trends.
- The market for certain electronic chemicals applications, e.g., semi-conductor production are expected to see annual growth rates above 7% CAGR to 2030.
Specialty chemicals have increasingly seen interest from private equity investors due to their lower commodity price risks and the potential for value creation.
- The share of specialty chemicals under private equity ownership in Europe is greater than ever before.
Technical considerations:
Specialty chemicals production often involved complex manufacturing processes – typically produced in multi-stage product processes.
- Specialty chemicals plants require strong technical know-how to operate – challenged by increasingly scarce skilled labour in developed markets.
Specialty chemicals producers typically have complex supply chains – often sourcing ingredients from either integrated assets or from third-parties.
- This increases the risk of disruption in supply or fluctuations in production economics.
- There has been a shift in the sourcing strategy in favour of domestic / regional feedstock suppliers to address recent production issues driven by supply chain disruptions and unfavourable import tariffs.
In response to increased environmental scrutiny of their operations, the major global chemicals companies have each set GHG emission reduction targets.
- This will impact the cost of production and potentially earnings. Initiatives include:
− Investment in new assets to enable the recycling of chemicals and the sourcing of recycled feedstock
− Increased sourcing and/or production of bio-based chemicals
− Electrification of production assets
− Sourcing lower carbon utilities.
Specialty chemicals typically generate more proportionate waste streams compared to other chemical products.
- Producers are therefore required to address waste disposal and environmental impacts through more sustainable practices.