Basic Chemicals Market Expected to Reach $949.1 Billion by 2030-Allied Market Research

According to a new report published by Allied Market Research, titled, "Basic Chemicals Market by Product Type and End Use: Global Opportunity Analysis and Industry Forecast, 2021–2028,"the global basic chemicals market was valued at $649.8 billion in 2020, and is projected to reach $949.1 billion by 2030, growing at a CAGR of 3.9% from 2021 to 2030.

Basic chemicals are usually produced in large quantities and these chemicals are crucial products that will be used in the industrial and consumer sectors. Inorganic chemicals are chemical compounds that lack carbon-hydrogen bond. These chemicals can be manufactured through synthetic & industrial process and can be naturally available in nature. Organic chemicals are chemical compounds that contain carbon-hydrogen bond. Acetic acid, ethanol, phenol, urea, benzene, ethylene, and methanol are some examples of organic chemicals that are used in applications such as vinegar production, pharmaceuticals, paints & adhesives, and descalers.

The pharmaceuticals sector uses a wide range of basic chemicals to safeguard the health and providing care to patients. Some oleochemicals such as glycerol, citric acid, and others are used for different medical and pharmaceutical purposes. For example, glycerol is used as medicine for treating constipation, improving hydration, performance in athletes, and for other skin-related problems. Proliferating demand for basic chemicals such as glycerol, citric acid, and others in the medical and pharmaceutical sectors is the major key market trend in Indonesia. Furthermore, growth in awareness for the benefits of sports on human health has made the youth more linear toward using glycerol for increasing athletic performance. This may boost the growth of the basic chemicals market in the pharmaceutical sector. These factors are predicted to notably contribute toward the global market.

However, side effects of inorganic chemicals such as acute inhalation, redness of eyes, and long-term exposure of hydrochloric acid leads to respiratory tract irritation and inflammation and pulmonary edema in humans. All these factors are anticipated to hamper the basic chemicals industry growth. 

Inorganic and organic chemicals are used for production of paper and paper pulp products. Inorganic chemicals that are used in pulp & paper industry includes sodium bisulfite solution, aluminum chloride anhydrous, sodium sulfite, melamine, and others. Decorative overlay paper products require high gloss retention and better scratch resistance. Thus, use of melamine to impart these properties is the key market trend. Chemi-thermomechanical pulping (CTMP) and thermomechanical pulping (TMP) are widely used semi-chemical pulp and chemical pulp manufacturing process. Use of sodium sulfite helps to improve the TMP and CTMP process quality and it is also employed during processing of rags and in the cooking of straw is driving the adoption of inorganic chemicals thereby augmenting the growth of the global market.

This factor is anticipated to create remunerative opportunities for the expansion of the basic chemicals market in the coming future.

The basic chemicals market is segmented on the basis of type, end-use, and region. By type, the market is segregated into organic and inorganic. The organic product type dominated the global market in terms of revenue in 2020, with over five-ninth of the total share. Acetic acid is widely used as food additive and raw material for spices. In addition, it can also be used as a raw material for production of vinyl acetate (VAM) and it is employed to enhance the chemical reaction during production of terephthalic acid. Ethanol is an important industrial chemical compound that is used in applications such as solvent production, production of other organic chemical compounds, and it can be utilized as an additive in automotive fuel.

By end use, the global basic chemicals market is segmented into chemical industry, food & beverages, textile, pharmaceuticals, pulp & paper, polymer, and others. The chemical industry end-user dominated the global market in terms of revenue in 2020, with over two-fifth of the total share. Basic chemicals such as acetic acid, phenol, caustic soda, ammonia, and others are widely used in chemical industries as a raw material, intermediates or process chemicals in various applications. Acetic acid is an important chemical reagent used in the production of cellulose acetate for photographic film, synthetic fibers & fabrics, and polyvinyl acetate for wood glue manufacturing.

Region-wise, the basic chemicals market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. The Asia-Pacific basic chemicals market is projected to grow at the highest CAGR during the forecast period. Chemical industry sector in China is growing and remains to outpace as compared to other major chemical producing countries. Factors such as rise in investments, intense competition, and presence of large number chemical manufacturing companies is anticipated to drive the demand of basic chemicals market in Asia-Pacific. Coupled with shift towards specialty-chemical manufacturing sector, growing consumer-demand, and mounting superiority of China’s industrial output is another considerable factor driving the demand of basic chemicals sector in Asia-Pacific.

Key players operating in the global basic chemicals market include BASF SE, Borealis AG, Eastman Chemical Company, INEOS, LyondellBasell Industries Holdings B.V., Mitsubishi Chemical Corporation, Shin-Etsu Chemical Co. Ltd., Solvay, Sumitomo Chemical Co. Ltd., and Tokyo Chemical Industry Co. Ltd.

COVID-19 analysis

The novel coronavirus is an incomparable global pandemic that has spread to over 180 countries and caused huge losses of lives and the economy around the globe. The basic chemicals market has been negatively impacted due to the wake of the COVID-19 pandemic, owing to its dependence on food & beverages, chemical, textile, pulp & paper, polymer, agriculture, and other sectors. According to a report published by the Ministry of Energy and Mineral Resources, the second quarter of 2020 registered a decrease in the economic growth by -5.3%, owing to the lockdown imposed amid the COVID-19 period.

In addition, around 60% of the manufacturing industries were hardly hit by the pandemic while other industries such as food & beverages and pharmaceuticals are moderately affected due to high demand. This has led the basic chemicals market to witness a downfall in demand, attributed to its use in various manufacturing & other end-use sectors. Furthermore, the fuel consumption (gasoline) was decreased by 34% in April 2020 as compared to April 2019, owing to restrictions for the transportation of non-essential items. This has reduced the refining capacities of the major refineries; thus, decreasing the consumption of organic chemicals used in blending gasoline mixtures in the refineries. In addition, several key companies such as BASF SE, Solvay, and others have registered decreased in sales for their chemical segments amid the COVID-19 Scenario. For instance, Solvay registered a decrease in the net sales by 16.1% in 2020 as compared to 2019, owing to a decrease in the net sales of materials, chemicals, and solutions segments in 2020. However, several antimicrobial & disinfectant chemicals such as acetic acid, citric acid, and others have witnessed a significant increase in demand amid the pandemic. For instance, according to an article published by Cision, the production of antimicrobial products has gained immense traction amid the pandemic and is expected to surpass $7 billion by the end of 2020.

In addition, the increasing awareness for hygiene & sanitization has surged the consumption of basic chemicals such as ethylene dichloride (EDC), vinyl chloride monomer (VCM), propylene, and others among the chemical industry and food & beverages sectors and is anticipated to grow rapidly post COVID-19 scenario.

Furthermore, new emerging geographic scenario, enhanced domestic supply chain and strong public investments in chemical sector is projected to drive the growth of the basic chemicals market. For instance, according to an interim report published by the Australian Chemical Industry Forum (ACIF), the chemical industry is expected to return to pre-COVID-19 levels, driven by strong public investments. According to a report published by the Ministry of Energy and Mineral Resources of the Republic of Indonesia, the second quarter of 2020 registered a decrease in the economic growth by -5.3%, owing to the lockdown imposed in the various parts of the country.

In addition, around 60% of the manufacturing industries in Indonesia were hardly hit by the pandemic while other industries such as food & beverages and pharmaceuticals are moderately affected due to high demand. This has led the basic chemicals market to witness a downfall in demand, attributed to its use in various manufacturing & other end-use sectors. Furthermore, the fuel consumption (gasoline) was decreased by 34% in April 2020 as compared to April 2019, owing to restrictions for the transportation of non-essential items.

This has reduced the refining capacities of the Indonesian refiners; thus, decreasing the consumption of organic petrochemicals used in blending gasoline mixtures in the refineries. In addition, several key companies such as BASF SE, PT, Dow Indonesia, Solvay, and others have registered decreased in sales for their chemical segments amid the COVID-19 Scenario. For instance, Solvay registered a decrease in the net sales by 16.1% in 2020 as compared to 2019, owing to a decrease in the net sales of materials, chemicals, and solutions segments in 2020. However, several antimicrobial & disinfectant chemicals such as acetic acid, citric acid, and others have witnessed a significant increase in demand amid the pandemic. For instance, according to an article published by Cision, the production of antimicrobial products has gained immense traction amid the pandemic and is expected to surpass $7 billion by the end of 2020.

In addition, the increasing awareness for hygiene & sanitization has surged the consumption of basic chemicals such as ethylene dichloride (EDC), vinyl chloride monomer (VCM), propylene, and others among the chemical industry and food & beverages sectors and is anticipated to grow rapidly post COVID-19 scenario.

Key findings of the study

• The inorganic product type is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 4.7% from 2021 to 2030.
• The polymer end-use segment is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 4.5% from 2021 to 2030.
• Asia-Pacific basic chemicals market garnered the highest share of 49.4% in 2020, in terms of revenue, growing at a CAGR of 4.5%