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Specialty chemicals are produced by a complex, interlinked industry. In the strictest sense, specialty chemicals are chemical products that are sold on the basis of their performance, rather than for their composition. They can be single-chemical entities or formulations/combinations of several chemicals whose composition sharply influences the performance and processing of the customer’s product. Products and services in the specialty chemicals industry require intensive knowledge and powerful innovation.
Commodity chemicals, at the other extreme, are sold strictly on the basis of their chemical composition. They are single-chemical entities. The commodity chemical product of one supplier is generally readily interchangeable with that of any other.
Market-oriented specialty chemicals are groups of chemicals that are utilized by a specific industry or market, such as electronic chemicals or oil field chemicals. Functional specialty chemicals, on the other hand, are groups of products that serve the same defined function, such as adhesives, antioxidants or biocides. Technology-oriented specialty chemicals include nanochemicals and materials—particles, layers or composites—where at least one dimension is in the nanometer range, and biotechnology products, which include chemicals that are synthesized, modified and isolated from biomass by man or nature.
In several specialty chemical markets prices have been falling, especially when volumes have increased and production has shifted overseas to places like China/Southeast Asia. This is a natural tendency of shifting from specialty to commodity chemicals over time. In the last three years, energy and raw material input prices have risen considerably; however, these cost increases have not always been passed on to customers through price increases.
Over the last decade, the specialty chemicals industry has experienced slower growth and lower overall profitability within a more competitive environment than in the preceding decade. Between 2007 and 2012, the overall growth rate is forecast to be moderate.
For the United States, Western Europe and Japan, the following segments are expected to experience good growth: specialty polymers, advanced ceramic materials, separation membranes, nutraceutical ingredients, and nanoscale chemicals. High growth rates are found in various subsegments.
Five industries or subsegments in the three major regions are stagnating or declining—anticorrosion coatings, photographic chemicals, pesticides, textile chemicals and synthetic dyes. Pesticides is the largest of these industries. Contributing to the stagnation of pesticide consumption is the increased planting of genetically modified (GM) crops. The planted area for GM crops increased to 100 million hectares, an increase of more than 10%. Chemical consumption for photographic film manufacturing and development is forecast to decline significantly through 2012 because of the changeover from analog to digital cameras in consumer photography. Total sales of photofinishing solutions are expected to decline slowly through 2012.
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