A Manifestation Shift from Commodity to Speciality Chemicals

Speciality chemicals are chemical compounds that have a variety of applications in industries such as textiles, ink additives, construction, oil and gas, cosmetics, and food. Single-chemical formulations are entities whose composition has a significant impact on the performance of the customer's product that are instances of Speciality chemicals. The function and performance of these compounds are utilized to determine their application. Continuous R&D has aided in the development of products with optimal and innovative characteristics, resulting in the appearance of a rising arrow on the industry's growth chart. In March 23, 2017, SONGWON Industrial Co., Ltd., a leading Speciality chemicals manufacturer, announced the opening of a new Technology Innovation Center in Korea. Fineotex Chemical Limited, based in Mumbai, India, has signed a Memorandum of Understanding (MOU) with the Synthetic & Art Silk Mills' Research Association (Sasmira) Institute to build a state-of-the-art Research & Development Center. This will further influence industry expansion. In addition, due to the COVID-19 pandemic, the demand for hand sanitizers and disinfectants grew by 1400% percent in January 2020 compared to December 2019, according to a survey by The Gulf Petrochemicals and Chemical Association (GPCA). As a result of the increased demand, Speciality chemical manufacturers have increased the production of chemicals required in the applications.

Due to a paradigm shift in manufacturing activity and consumption growth, the Asian markets have benefited during the previous few decades, particularly in the area of Speciality chemicals. Asia has evolved into a net exporter of a wide range of Speciality chemicals that were formerly imported from the European Union and North America.

China has risen to become the world's main supplier of Speciality chemicals. However, with China's economic slowdown and the trade war between the United States and China, India is steadily emerging as a major participant in the Chemical market. During the projected period, the Speciality chemical industry, particularly in India, is expected to rise rapidly. The Indian Speciality chemicals business is highly fragmented, with the majority of enterprises being small to medium-sized. Furthermore, India's Speciality chemicals industry has benefited from an extraordinary surge in the usage of water treatment chemicals. The Speciality chemicals market in India accounts for 22% of the total chemicals and petrochemicals market, according to the India Brand Equity Foundation. In 2019-22, demand for Speciality chemicals is predicted to grow at a 12 percent compound annual growth rate (CAGR).

Ultramarine and pigments successfully commissioned the Sulphonation factory in Nellore, Andhra Pradesh, India, in January 2020, to produce surfactants and Speciality chemicals. In October 2020, Grasim Industries and Lubrizol Advanced Materials (a Speciality chemical firm) reached a final deal to manufacture and supply chlorinated polyvinyl chloride (CPVC) resin in Gujarat. The first production is planned to start in late 2022.

Furthermore, anti-pollution measures in China are also creating opportunities for the Indian Speciality chemical industry. Since January 2015, China's government has enacted stronger environmental protection legislation. They have made it mandatory to construct wastewater treatment plants and imposed a green tax on them in order to keep pollution to a minimum. Their bottom line suffered as a result of this. Furthermore, chemical companies required Capex to scale up their operations and build such factories. By the end of 2020, the Chinese government had made it mandatory for mid-to small-sized chemical enterprises to relocate to dedicated special chemical parks far away from habitat. As a result of these problems, China's chemical sector has slowed. Furthermore, the trade war between the United States and China, as well as COVID 19, have aided the cause of international players selecting India as their next production destination for Speciality Chemicals.

The pandemic and the focus on localizing pharmaceutical supply chains boosted Speciality chemical enterprises that had been eyeing the intermediates sector for a few years. Pharmaceuticals are attracting the attention of Speciality chemical companies aiming to diversify their business from agrochemicals and technical textiles. Following the coronavirus epidemic, they are seeing a jump in demand for intermediates or raw materials utilized in the production of active medicinal compounds.

The demand to develop intermediates in pharma, especially since the epidemic has increased. Favipiravir, an antiviral medicine developed to treat influenza, is one of the drugs that has recently attracted a lot of attention, particularly in India. Favipiravir, for example, was first sold in Japan as an anti-influenza medicine. The Medicine Controller General of India (DCGI) just granted emergency permission to this drug. Favipiravir was originally used to treat SARS-CoV-2 in Wuhan, the pandemic's epicentre. The medicine was then approved for emergency use in Italy as the epidemic expanded to Europe, and it is now used in Japan, Russia, Ukraine, Uzbekistan, Moldova, and Kazakhstan. Saudi Arabia and the United Arab Emirates have just granted approval. Following that, commercial launches were made in Turkey, Bangladesh, and, most recently, Egypt. In June 2020, the DCGI in India approved favipiravir for mild and moderate COVID-19 infections.

Therefore, several companies, are expanding their operations and have begun developing intermediates for favipiravir, a covid-19 drug. For instance, in April 2020, Ube Industries, Ltd. began manufacturing and supplying the essential intermediates that make up the active pharmaceutical ingredient (API) core skeleton for FUJIFILM Toyama Chemical Co., Ltd.'s influenza antiviral medication Avigan Tablet (favipiravir). Furthermore, in May 2021, Vivimed Labs Limited, a Speciality Chemicals, and Pharmaceuticals firm got approval from the Government of India to produce and commercialize Favipiravir tablets of 200 mg and 400 mg under the Vivimed brand Favulous in India. Therefore, the demand to develop intermediates in pharma, especially since the epidemic has increased. However, the transition to pharmaceuticals isn't that difficult, but achieving the industry's high regulatory standards will be a substantial challenge.

The Speciality chemicals sector offers critical raw materials for a wide range of industries, including construction, packaging, automotive, and medical. In fact, Speciality chemicals are frequently the most important factor in end-use market performance. Producers generate vast and expanded product portfolios in response to consumer preferences and stringent performance standards, which can result in long and complex supply chains. At the same time, external regulatory difficulties and geopolitical threats create market instability. In this critical situation, the sector's strategic priorities of innovation and sustainability remain critical. 

In many businesses, including the chemicals industry, after the COVID-19 epidemic, which demonstrated the necessity to reduce manpower and boost digitization in operations, adopting digital technology has become a strategic requirement. According to a report issued by the European Petrochemicals Association (EPCA) last year, 73 percent of petrochemical companies surveyed said they were "lagging behind" in supply chain digitalization, with their customers rating their lag at 95 percent. Customer behaviour was a major driver in the need to build new supply chain tools, according to the survey results, which were analyzed for EPCA.

Manufacturers of Speciality chemicals are constantly looking for new ways to improve product performance while lowering costs frequently by using fewer or alternative raw materials. By facilitating the transition from laboratory to plant production processes, digital technologies can increase productivity and eliminate errors.

Speciality chemical producers can have access to the tools, services, and solutions as they need to manage their complex operations and achieve unprecedented levels of reliability and profitability. Adopting such technologies will lead to a more holistic approach to generating the best financial return feasible throughout the asset lifecycle. For the past 40 years, the process industries have been on a digitalization path, constantly striving to improve operational performance. Digital technologies open up options that go beyond operations to address important drivers in the Speciality chemicals industry.

The world's increasing need for food and decreasing per capita arable land is creating demand for agrochemicals. Providing food for this rapidly growing population has become a difficult task. In contrast, as a result of industrialization and urbanization, arable land is decreasing. The demand for food and cash crops is expected to rise internationally as per capita income rises and the global population grows. Food demand in the United States, for instance, is predicted to rise by 50-90 percent by 2050, according to the FAO.

The United Nations' Food and Agriculture Organization (FAO) and the International Food Policy Research Institute (IFPRI) have released forecasts for world food demand until 2050. According to FAO forecasts, global food consumption might increase by 70% by 2050, with much of the projected increase in global food demand coming from rising consumer incomes in Asia-Pacific, Eastern Europe, and Latin America.

Furthermore, micronutrient fertilizers, bio-based fertilizers, and Speciality fertilizers are gaining popularity as a result of growing concerns about nutrient efficiency uptake by plants and expanding regulatory health and environmental issues.

Furthermore, the importance of unique compounds in wastewater treatment is also influencing demand for Speciality chemicals. Flocculants, for example, are used in the processes of magnetic neutralisation and charge bridging to remove very tiny particles from wastewater. Chemical coagulants can also destabilise and remove harmful particles from wastewater, such as microorganisms, organic chemicals, and fluoride. The lack of wastewater treatment in most nations is now a major source of concern since the toxic chemicals are discharged into natural water systems by untreated wastewater which can have disastrous consequences for marine ecosystems and human health. According to UN-Water, approximately 80% of wastewater is dumped into the environment without being adequately treated. In such a setting, the use of customized formulations becomes even more important, which is estimated to benefits this industry.

With rising industrialization, Asian countries such as India and China have seen an increase in demand. In Asia-Pacific, there has been an increased investments across construction and infrastructure development projects. As a result, Asia-Pacific is viewed as a desirable location for Speciality chemical manufacturers. Furthermore, the Chinese government has announced large development plans, including plans for the relocation of 250 million people to new megacities over the next ten years, presenting a significant opportunity for the industry under consideration. Over the next seven years, India is expected to invest roughly USD 1.3 trillion in housing, with the construction of 60 million new dwellings. In India, the availability of affordable housing is predicted to increase by roughly 70% by 2025. In addition, the Indian government's 'Housing for All by 2022' initiative is a game-changer for the sector.

As Speciality chemicals are so widely utilized, changes in industrial and consumer product life cycles, as well as new products, are leading to increased demand for variants. Growing concern about the environment has resulted in environmentally friendly measures aimed at lowering pollutants and emission of greenhouse gases. As a result, new chemical uses are emerging, including water-based polymers and paints, biodegradable electronic components, and low-impact food and beverage packaging. Rechargeable batteries, wind, and solar power, among other emerging energy disciplines, show promise for enlarged markets that are further expected to create growth opportunities.

The organisations that chose intelligently how to restructure their portfolios will wind up being the best positioned. There are three critical strategic success factors:

The trend in the chemicals business toward adapting and optimizing corporate portfolios will continue in the future years, as the focus becomes increasingly important to the industry.

Speciality chemicals are used in a variety of industries, including polymers and plastics, adhesives, paints and coatings, lubricants, cleaning materials, and others. Speciality chemicals differ from commodity chemicals as it requires more comprehensive product R&D and innovation, which often translates to higher margins, profitability, and lower Capex. In recent years, a manifesting shift from commodity to Speciality chemicals has been observed. The epidemic has elicited conflicting responses from Speciality chemical manufacturers. Low oil prices reduced raw material costs for various product lines, but Chinese plant closures enabled manufacturers in Europe, the United States, and India to fill the gap and increase order intakes. One of India's oldest and most diverse businesses is chemical production. According to Invest India, India is a major worldwide dye supplier, producing around 16% of all dye and dye intermediate output. India's federal government sees itself as poised to support the transfer of technology from China to India in a range of industries. It has launched a campaign to promote the domestic manufacturing of pharmaceutical starting materials and active compounds, many of which were formerly produced in India. In order to encourage growth, India is building investment zones in the states of Andhra Pradesh, Gujarat, Odisha, and Tamil Nadu. These zones will provide infrastructure for the petroleum and chemical sectors. Thus, India is expected to steadily overtake China as the world's biggest supplier of Speciality chemicals. The covid -19 has also demonstrated the necessity for digitization, and the pharmaceutical industry is anticipated to become one of the main segments in the Speciality chemicals industry.