Overview of Specialty Chemicals Industry - WorldOfChemicals

Specialty Chemicals – Manufacturing, Challenges and Market Trends

Specialty Chemicals Industry


Specialty chemicals manufacturing is a unique niche in the chemicals industry, which is entrepreneurial, innovative and customer driven. Specialty chemicals are manufactured and sold based on their performance or function, unlike commodity chemicals, which are strictly based on their chemical composition. They can be single chemical establishments or formulations, whose composition effects the performance and processing of the end products.


1. Manufacturing Process

Specialty chemicals manufacturers make smaller quantities of chemicals as opposed to commodity chemicals manufacturers, which have specific performance applications. Specialty chemicals are manufactured by the batch process, where a finite quantity is produced within a short duration of time.

Manufacturing of specialty chemicals, unlike commodity chemicals, require a regular change of raw materials, operating conditions, processes and equipment to cater to the needs of the customers. Specialty chemical manufacturing is also known as fine chemical or custom chemical manufacturing.


2. Challenges

Since there is a stiff competition in the specialty chemicals industry, the manufacturers must be on their toes to stay ahead and maintain margins. Some of the major challenges faced by the specialty chemicals industry are listed below:

 1. The regulatory changes and the constant need to adjust to the requirements of agencies such as OSHA, FDA, HCS, DHS, CFATS, and REACH is one of the major challenges faced by specialty chemical manufacturers daily.

 2. The specialty chemical marketplace is drastically changing along with the rising cost of raw materials and products.

 3. Specialty chemical manufacturers compete at the global level for higher quality products with lower cost margins.

 4. The challenge to accommodate a new merger or acquisition based on the existing business system.

 5. Manufacturing the right products relevant to the specialty chemicals industry along with their associated costs and time requirement.

3. Present Scenario

At present, chemical companies are increasingly focusing on sustainability, innovation, and competitiveness. The leading specialty chemicals manufacturers are adhering to green chemistry and sustainability, such as reduced carbon footprint and improved raw material supply. The chemical companies are competing to differentiate themselves in the chemical industry by having sustainability as part of their USP’s.

4. Market Trends

The markets for specialty chemicals were largely concentrated in the developed areas of Western Europe, North America, and Japan in the past. The trend has changed over the last two decades, the traditional specialty chemical industry has been pressurized by the emergence of China as the economic powerhouse and the expansion of the Middle East’s value chain. These upcoming regions have assertively expanded into value-added specialties with government backing.

With trade liberalization, accessibility to process technology and growth of newly industrialized economies, the central gravitational point of the global chemical industry is moving towards the MiddleEast due to the availability of low-cost petrochemical feedstocks as well as Asia because of its cheap labor and high economic growth.

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