Global chemical distribution market was valued at USD 247.1 million in 2020. It is projected to grow at a compound annual rate (CAGR of 5.4%) between 2020 and 2028. The opportunities for chemical distributors will increase due to the increasing use of chemicals in end-use industries like construction, pharmaceutical, polymers and resins, as well as the complexity involved in reaching customers.
The rising trend towards sustainable and green infrastructure is driving the demand for specialty construction chemicals in America. Distributors of specialty products are therefore benefiting from the growing demand for these chemicals, even in developed economies like the U.S., Germany and U.K.
Chemical industry supplies raw materials to companies involved in manufacturing and industrial sectors. These feedstocks can be distributed to end-users either by third-party distributors, or directly by the manufacturers. The third-party distribution of commodity and specialty chemical is expected to grow significantly over the direct sale of products to end-users. This is due to the outsourcing value-added services such as logistics, packaging and inventory management and technical training.
The U.S. market in chemical distribution is driven primarily by strong consumer purchasing power and sustained construction activity. The housing market is seeing a resurgence in business investments, which are helping to build momentum for the chemical sector. According to an American Chemistry Council, Inc. report, 334 new production projects, worth more than USD 204 billion, were announced in June 2019. This shows a steady rise in investment in the U.S. Economy. This is expected to lead to a significant increase in the manufacturing sector and a positive effect on the overall market.
Global demand for chemicals will be driven by strong growth in other end-use sectors, including electronics, pharmaceuticals, and automotive. The third-party distribution channel will also benefit from this factor. To gain competitive advantage in a fragmented market, global distributors have adopted differentiated channel strategies that include product knowledge, local expertise, and a strong logistic network.
Third-party distributors will face fierce competition from direct suppliers, in addition to a strong industry rivalry. These multinational companies include Honeywell International and Arkema SE. These companies have high investment capabilities, strong networks with end-users, and a large geographical presence. Direct distribution channels can offer bulk discounts and lower third-party profit margins.
The global chemical distribution market can be divided into three types of products based on product type: basic, commodity and specialty. One supplier's product portfolio is often interchangeable with those of other suppliers, which allows for low differentiation and lower switching costs. The pricing is therefore an important factor that differentiates competitors on the market.
Commodity chemicals include plastics and polymer and synthetic rubber, explosives and petrochemicals. Other commodities such as bulk polymers and fibers and basic organics or aromas are also included. The segment has shown the highest Total Return to Shareholders, (TRS), performance in the chemicals value chains with a growth rate of over 14% between 2000 and 2015. The growth in specialty compounds was only 12% over the same time period. Despite the decline in sales due to the crash of crude oil prices, the commodity chemicals sector was able to maintain selling prices in some markets.
Due to their large consumption in many major industries, including electronics and automotive, commodity compounds dominated global supply. The segment has seen a 5.1% increase in its consumption across different industries, owing to the large volume of these products.
Specialty products are high-performance, customized chemical solutions that can be tailored to meet specific consumer needs. Coatings and adhesives (CASE), sealants and elastomers (CASE), cosmetic and construction additives, polymers, lubricant additives and other surfactants, industrial gasses, and textile auxiliaries are all examples of specialty compounds. They are used in a variety of industries, including automotive, electronics and construction.
Due to low prices for petrochemical feedstock, major manufacturers are moving their manufacturing facilities in the Middle East and Africa. Other industries are increasing their production in Asia due to low labor costs and high economic growth. In recent years, specialty chemicals consumption and distribution have been driven by trade liberalization, the removal of many economic barriers, the rapid growth of industrialized Asian economies and the spread of advanced processing technology.
The fastest-growing segment is expected to be specialty chemicals. They are predicted to grow to USD 139.0 trillion by 2028. The demand will rise due to rising demand for specific compounds that are used in many industries and technological advances in production.
Commodity and specialty compounds are used extensively in common end-use industries like textiles, automotive, transportation, and industrial manufacturing. Other specific uses of specialty chemicals include pharmaceutical and agriculture. Commodity products are used only in the downstream sector.
In 2020, 17.6% of revenue came from the construction industry which dominated the market. The development of smog-combating products has been fueled by the rise in pollution in the U.S. and China. Boral Roofing has created a smog-repellent tiles that can remove nitrogen oxides (NOx), using a photocatalyst titanium dioxide. This is to improve the air quality. In addition, specialty chemicals demand will rise due to increased construction spending in emerging Asian economies.
The downstream sector, which consumes commodity chemicals, has held a dominant market share of 35.6% of the total revenue in 2020. The downstream sector is responsible for petroleum crude oil refining and processing as well as purifying raw natural gas. It also includes marketing and distribution of various petroleum-derived products.
Asia Pacific was the dominant regional market, accounting for 59.2% in total revenue share in 2020. Over the forecast period, demand will be driven by an increase in manufacturing activity and a substantial rise in per-capita disposable income. The expansion of industries like automotive, construction, electrical and electronics is happening in countries such as Thailand, India, Malaysia and Vietnam.
Chemical production in the region will continue to grow rapidly as major players shift their attention to high-opportunity markets. The dominant segment in Asia Pacific will remain commodity compounds, with a 6.4% CAGR in specialty chemicals from 2020-2028.
The North American chemical market is one of the strongest, with Univar, Brenntag and IMCD holding a combined 30% to 40% market share. International chemical producers are expected to invest more capital in the market due to ongoing labor market upgrade, easy credit availability, and access to ample feedstock.
In recent years, major North American chemical companies have increased their production capacity. This has led to a shift towards third-party distributors. They are a way for them to expand into new markets. The decline in the North American petrochemical sector has been due to volatile crude oil prices, a weak GDP in Latin America and economic recessions. Due to the construction of several facilities along the U.S. Gulf Coast, including Natgasoline in South Louisiana and South Louisiana Methanol, the potential for increased petrochemical production is expected to grow over the next few years. These facilities are expected to produce 1.75 million MT and 1.8 millions MT per year respectively.
The acquisition of small distributors by global distributor companies like MilliporeSigma and Brenntag AG has helped to realize economies of scale. They are now able to focus on their specialized sales channel strategy and rationalizing their distributor base.
Companies use a variety of strategies to diversify their product range and increase their market share. These include acquisitions, mergers, and capacity expansion. Companies are increasing their growth by expanding their product lines to include specialty products. The following are some of the most prominent players in the chemical distribution industry:
Azelis Holdings SA
Up Market Research published a new report titled “Chemical Distribution Market research report which is segmented by Product (Specialty Chemicals, Commodity Chemicals), By Players/Companies Helm AG, Biesterfeld AG, Brenntag AG, IMCD Group, BASF SE, Univar AG, Azelis Holdings SA”. As per the study the market is expected to grow at a CAGR of XX% in the forecast period.
|Report Attributes||Report Details|
|Report Title||Chemical Distribution Market Research Report|
|By Product||Specialty Chemicals, Commodity Chemicals|
|By Companies||Helm AG, Biesterfeld AG, Brenntag AG, IMCD Group, BASF SE, Univar AG, Azelis Holdings SA|
|Regions Covered||North America, Europe, APAC, Latin America, MEA|
|Historical Year||2018 to 2019 (Data from 2010 can be provided as per availability)|
|Number of Pages||209|
|Number of Tables & Figures||147|
|Customization Available||Yes, the report can be customized as per your need.|
The report covers comprehensive data on emerging trends, market drivers, growth opportunities, and restraints that can change the market dynamics of the industry. It provides an in-depth analysis of the market segments which include products, applications, and competitor analysis.
The market is segmented by Product (Specialty Chemicals, Commodity Chemicals).
Chemical Distribution Market research report delivers a close watch on leading competitors with strategic analysis, micro and macro market trend and scenarios, pricing analysis and a holistic overview of the market situations in the forecast period. It is a professional and a detailed report focusing on primary and secondary drivers, market share, leading segments and geographical analysis. Further, key players, major collaborations, merger & acquisitions along with trending innovation and business policies are reviewed in the report.
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Based on region, the market is segmented into North America, Europe, Asia Pacific, Latin America and Middle East & Africa (MEA). North America region is further bifurcated into countries such as U.S., and Canada. The Europe region is further categorized into U.K., France, Germany, Italy, Spain, Russia, and Rest of Europe. Asia Pacific is further segmented into China, Japan, South Korea, India, Australia, South East Asia, and Rest of Asia Pacific. Latin America region is further segmented into Brazil, Mexico, and Rest of Latin America, and the MEA region is further divided into GCC, Turkey, South Africa, and Rest of MEA.
We have studied the Chemical Distribution Market in 360 degrees via. both primary & secondary research methodologies. This helped us in building an understanding of the current market dynamics, supply-demand gap, pricing trends, product preferences, consumer patterns & so on. The findings were further validated through primary research with industry experts & opinion leaders across countries. The data is further compiled & validated through various market estimation & data validation methodologies. Further, we also have our in-house data forecasting model to predict market growth up to 2028.
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