Global Basic Chemical Industry
The global market for basic chemicals serves a range of sectors, producing rubber chemicals, synthetic textile fibers, monomers and polymers, methyl methacrylate aluminum, polymer additives, and a wide range of industrial chemicals.
Basic chemicals are classified in different market subsectors depending on their use, production process and specific physical properties.
Market Segments
- The world acetic acid market is expected to exceed 12 million tons by 2017, according to research from Global Industry Analysts. Acetic acid, otherwise known as vinegar, has applications in various downstream industries including pharmaceuticals, textiles, food processing and chemicals. The market is dictated in part by government regulations. Tighter regulatory policing of the chemical sector worldwide has affected the industry more than others due to its huge environmental impact with regard to wastes and emissions. The acetic acid industry is undergoing change in terms of technological approach, with manufacturers opting to concentrate their efforts more on process innovation than on product innovation. Technological innovation is thereby becoming the most important aspect for manufacturers trying to win a competitive edge. Certain industry players have devised ways of incorporating technology in their production facilities to boost production capacity. Regionally, Asia-Pacific is dominating the market in terms of both production and consumption, holding a majority stake in the overall market. The Asian market is forecast to witness almost 4.5% yearly growth through 2017. Expansion in this region will be driven by strong growth in China.
- Manufacturers in the global inorganic basic chemicals market make a wide range of inorganic basic chemicals including silicon, silver nitrate, and calcium carbonates. Inorganic basic chemicals are normally derived from minerals. Industries relying on the inorganic basic chemicals sector include petroleum, pharmaceutical, water purification, and consumer personal care. The industry does not encompass the manufacture of nitric acid, titanium dioxide, and ammonia, reports IBIS World.
- Global Industry Analysts predicts the global fermentation chemicals market will generate revenue of more than $48 billion in 2015. Market growth will be fuelled by demand for environmentally friendly chemicals. The US is the world’s largest market for fermentation chemicals, and the EU comes in second. The Asia-Pacific region promises the fastest rate of growth in the fermentation chemicals sector, with forecast annual growth of 6% through 2015. China represents a particularly vibrant regional market in terms of manufacturing as the country has low production overheads and a high level of local demand. Fermented alcohol constitutes the leading fermentation chemicals market segment, with ethanol set to becoming the fastest emerging fermentation chemical, taking over the place previously occupied by methyl tert-butyl ether (MTBE) from the gasoline category. This is due to ethanol’s cost-efficiency, compliance with regulations and environmentally-friendly nature.
Regional Market Share
- Russia represents the world’s leading ammonia producer and exporter, reports IndexBox. Around 80% of world ammonia consumption is used in fertilizer production, while more than 40% is used to produce urea. Less than 15% is used in the production of ammonium nitrate, and less than 5% is used in direct land applications.
- China leads the global market in phosphorite production, with almost a 37% share in 2010, reports Research In China. China’s phosphorous chemical industry has witnessed strong growth in recent years due to significant downstream demand. The country holds the top spot in terms of the production of traditional phosphorous chemical products like STPP, yellow phosphorus and phosphate fertilizer. Overcapacity is one problem facing the industry, with yellow phosphorus capacity around 2 million tons in 2010 and output of less than 900 kilotons.
Market Outlook
Demand for basic chemicals in Asia is expected to drive the global basic chemical market in the future. The industry will likely see increased investment due to industry-wide trends such as rising oil prices and diversification of petrochemical feedstock. The industry’s current consolidation activity will continue, fuelled by the need to create economies of scale. Leading players in the basic chemicals industry have also been following a trend of relocating to low-cost locations, which is expected to continue as companies seek to cut budgets.
As demand for chemicals is affected by global GDP and industrial production, economic recovery will have a positive impact on this sector. For example, the automotive and construction sectors each represent around 10% of chemical demand. As activity in these sectors continues to recover, there will be a knock-on effect on the global basic chemical industry.
Leading Industry Associations
- International Council of Chemical Associations www.icca-chem.org
- Chemical Producers’ Association of Canada www.ccpa.ca
- Chemical Industries Association (UK) www.cia.org.uk
