Indonesia Basic Chemicals Market is Expected to Reach $35.1 Billion by 2030

According to a new report published by Allied Market Research, titled, " Indonesia Basic Chemicals Market by Type, Application, and Sales Channel: Opportunity Analysis and Industry Forecast, 2021-2030," the Indonesia basic chemicals market size was valued at $17.6 billion in 2020, and is projected to reach $35.1 billion by 2030, growing at a CAGR of 7.2% from 2021 to 2030.

Basic chemicals are manufactured and used by the chemical industry. These chemicals are used as processors in industries such as plastic, food & beverages, building & construction, agriculture, and others. Inorganic chemicals, organic petrochemicals, and oleochemicals are major categories that come under basic chemicals. Acids, alcohols, esters, and peroxides are some examples of basic chemicals that are used for applications such as additives in detergents & hair dyes to carry out reaction between bases & metals in order to form salts and laboratory applications.     

The growth of the Indonesia basic chemicals market is driven by surge in use of basic chemicals such as caustic soda, oleum, hydrochloric acid (HCL), and py-gas for applications such as plastic, fertilizer, and water treatment. HCL is extensively used for production of organic compounds such as dichloroethane and vinyl chloride, and inorganic compounds such as polyaluminium chloride (PAC) and iron (III) chloride, which is one of the major growth factors. In addition, it can also be used for cleaning pools, purification of table salt, regeneration of ion exchangers, and removing stains from iron, brass, and other metals. These factors are driving the growth of the Indonesia basic chemicals market. 

On the contrary, fatty alcohols are type of oleochemicals that have several health-related issues such as burning, stinging, redness, or irritation that may occur if they come in contact with skin. In addition, serious allergic reactions such as swelling of face, tongue, throat, and severe dizziness may occur if a person is exposed to it for long period. These factors are predicted to hamper the market growth.  

The Indonesia chemical sector is growing steadily, owing to rise in number of new industries being set up and national economic growth. For instance, according to the Minister of Industry Agus Gumiwang Kartasasmita, the Indonesia pharmaceutical and chemical sector contributed around $18.04 billion in 2020. This factor is anticipated to offer potential growth opportunities in the upcoming period. 

The global Indonesia basic chemicals market is segmented on the basis of product type, application, and sales channel. By product type, the Indonesia basic chemicals market is segregated into inorganic chemicals, organic petrochemicals, and oleochemicals. The organic petrochemicals chemicals segment accounted for the highest revenue in 2020, and is projected to grow at a CAGR of 7.8% during the forecast period. Benzene is an organic chemical composed of six carbon atoms. It is a colorless or light yellow liquid at room temperature. It is used for manufacturing plastics, nylons, reins, synthetic fibers, lubricants, drugs, pesticides, and others. 

On the basis of application, the Indonesia basic chemicals market is categorized into packaging, energy, pharmaceuticals, agriculture, building & construction, and others. The others segment acquired the largest revenue share. This is attributed due to increasing awareness for hygiene and cleanliness, where acetic acid is used as an antimicrobial agent. For instance, according to a report published by Asia and the Pacific Finance Minister Meetings 2020, the cost of inaction of water, sanitation, and hygiene (WASH) sector in Indonesia is expected to reach up to $6.3 billion which is 2.3% of the gross domestic product (GDP) of Indonesia. 

Based on sales channel, the market is classified into B2B and B2C. Presently, B2B accounts for the largest share of the Indonesia basic chemicals market followed by B2C. 
The major companies profiled in this report include PT. Mega Chemical Pratama, PT Asahimas Chemical, Chandra Asri Petrochemical (CAP) Tbk, PT Dow Indonesia, PT. Lautan Luas Tbk, BASF SE, Solvay, PT. Indonesia Acids Industry, PT. Sumitomo Indonesia, and PT. Polychem Indonesia Tbk.

Key findings of the study

•  B2B segment is projected to grow at the highest CAGR of around 7.4%, in terms of revenue, during the forecast period.
• By product type, the organic petrochemicals segment accounted for the largest share in Indonesia basic chemicals market share in 2020.
•  On the basis of application, in 2020, the others application garnered the largest share.

Impact Of Covid-19 On The Indonesia Basic Chemicals Market

• The COVID-19 pandemic has negatively affected the global economy and is subsequently shrinking the GDP in global economies; thereby, changing consumer spending patterns globally.
• Several challenges have been faced by the plastic industry due to the outbreak of the pandemic such as temporary closure of manufacturing sites and travel restrictions, which, in turn, has created logistical supply issue and delay is shipment.
• Major construction & building sector across the world are facing problems despite of no construction ban. This is attributed to disruption in value chain and closure of other industries that are directly or indirectly linked with the construction sector.
• The real estate sector is directly dependent on the growth of the building & construction sector, owing to unavailability of raw materials, slowdown in the construction sector, and restrictions laid by government to prevent the spread of virus. Therefore, the demand for building & construction has declined considerably. Thus, consumption and production of basic chemicals have been hampered during the COVID-19 pandemic.      
•  In addition, other industries such as food & beverage and agriculture are hit due to the global health crisis, which, in turn, has negatively affected the Indonesia basic chemicals market.