Specialty chemicals are a type of particular chemical product that provide a wide variety of effects on which many other industry sectors rely. Some categories of specialty chemicals are agriculture, adhesives, colors, cleaning materials, cosmetic additives, polymers, surfactants, construction flavors, industrial gases, lubricants, food additives, fragrances, chemicals, elastomers, paints, and textile auxiliaries. Other industrial sectors such as food, cosmetics, automotive, aerospace, manufacturing, agriculture, and textiles depend highly on such products. Specialty chemicals are used based on their function. These chemicals are sometimes referred to as 'performance' chemicals or 'formulation' chemicals. These can be unique molecules or mixtures known as formulations. The chemical and physical characteristics of the single molecules and the composition of the mixtures influence the performance of the end product.
Some specialty chemical companies are trying to create barriers to the entry of new companies into the specialty chemicals industry by becoming service-oriented. They are focusing more on support services and specific customers and less on products. Providing services alongside products is the way to do business in some specialty chemical sectors, including fluid catalytic cracking catalysts, automotive coatings, water treatment, and pharmaceutical ingredients. However, as more sectors wrestle with decreasing growth rates and encroaching commoditization, many specialty chemical companies are increasing the service component of their portfolios.
The specialty chemicals industry was valued at USD 586.5 billion in 2020 and is expected to grow at a CAGR of 4.3% from 2020 to 2028. Growing demand for high-performance and function-specific chemicals across end-use industries such as pulp and paper, oil and gas, and personal care and cosmetics is expected to be one of the prime market growth factors. Specialty chemicals are also referred to as performance chemicals or effect chemicals. Some popular examples include essential gelatin, castor oil, oils, and collagen. These chemicals are referred to as specialties because they are produced in lesser volumes and attend only to a few applications, unlike the other fine and commodity chemicals. As the specialty chemicals industry is majorly consumer-driven, innovation and R&D are some of the key growth prospects. Manufacturers' focus on providing innovative and custom-made product offerings for target applications and catering to specific customers' demands is a major factor for research and development investment. Thus, it has contributed to developing innovative specialty chemicals and expanded the market product portfolio.
The demand for user-friendly and environment-friendly specialty chemicals is due to the rising concerns regarding the harmful effects of conventional chemicals on the environment and humans. Therefore, market focus has shifted towards developing and marketing specialty chemicals to edge out conventional fine and commodity chemical manufacturers.
In 2021, the world's five-largest specialty chemicals segments— specialty polymers, electronic chemicals, flavors & fragrances, industrial & institutional cleaners, and surfactants —had a market share of 38%. Each specialty chemicals business segment comprises several subsegments, each with a market, individualized product, and competitive profiles.
China is the largest consumer of specialty chemicals with construction, feed additives, printed circuit board, antioxidants, catalysts, semiconductor packaging, rubber-processing chemicals, plastics additives, paper chemicals, specialty polymers, specialty coatings, water management chemicals, and textile chemicals. The USA is the leading consumer of biocides food additives, surfactants, industrial and institutional cleaners, lubricating oil additives, oil field chemicals, corrosion inhibitors, cosmetic chemicals, printing inks, and synthetic lubricants.