Chemspec Europe is an event that the Haig Barrett team looks forward to each year. With nearly 350 exhibitors from 27 countries, this gathering is a bellwether of sorts for the European specialty chemical industry. So what will we be striving to learn more about at Chemspec Europe 2019? As we prepare to leave for Basel, Switzerland, the four issues discussed below are at the forefront of our minds.
Fastest-Growing Specialty Chemical Segments
Which specialty chemical segments will drive the market during the next decade? Specialty chemicals used in the production of electronics, nutraceutical ingredients, and oil field chemicals appear to be favorably positioned due to the growth within the markets in which these chemicals are utilized. Although the oil and gas industry is always a volatile market, sales of oil field chemicals are again growing due to a recovery in crude oil prices. Specialty chemicals used within the nutraceutical and personal care segments are growing largely due to increased consumption of these end-market products within the developing world. Specialty chemical sales for the manufacture of electronics and batteries are growing due to growing electronics markets within the developing world and the growth in adoption of electric cars in Europe, Asia, and to some degree, North America.
Are these the segments that will continue to drive growth within the specialty chemical industry, or are there other large growth segments on the horizon?
China’s Impact
Over the past two decades, China has contributed approximately half of the global growth of the specialty chemical market. Even though China’s economic growth percentages are not as high as they used to be, China’s economy has developed to the point where even slightly lower rates of growth represent massive contributions to the global economy. For instance, in 2017 China represented 40 percent of the global chemical industry revenue. That share is unlikely to decrease, and overall revenue will continue to grow at a healthy rate.
Today, the growth of China’s economy is much more consumption driven than investment driven. As the income levels within China’s domestic market continue to rise, there are much higher consumption levels of high-tech and luxury products. Specialty chemicals used in personal care products, electronics production, and aerospace are at the forefront of this growing affluence. Additionally, electric vehicles are expected to represent 12 percent of all vehicles operated in China by 2030. In addition, the growth of electric vehicle sales is driving profound growth in the sales of specialty chemicals used for the production of batteries.
China’s R&D spending is now on par with that of the traditional hubs of specialty chemical markets—North America, Europe, and Japan—assuring there will be ample competition for not only sales but innovation.
What will China’s impact be on the global specialty chemical market as the nation continues to grow and develop?
European Competitiveness within the Global Specialty Chemical Industry
For decades, the specialty chemicals market has been rooted in North America, Western Europe, and Japan. Although the production of chemicals and the commodity chemical market gravitated toward the Middle East, Asia, and North America, Western Europe and Japan have remained the bastions of innovation. Meanwhile, China continues to expand its dominance within the global economy as the Middle East seeks to expand its value chain into higher-value products.
Although specialty chemical innovation is still most prevalent in North America, Western Europe, and Japan, the domination is nowhere near what it was. The market growth percentages are slowing for China’s overall economy and, in some cases, other Asian economies; however, rising standards of living, aggressive investment in innovation, and increased consumption in those markets will continue to put pressure on the regions that have traditionally led specialty chemical innovation.
What are the best paths for the European specialty chemical market to remain competitive given ongoing global market shifts?
Sustainability
Sustainability is increasingly important within Europe’s specialty chemical market. Bio-based plastics, battery recycling, and improving efficiencies within alternative energy sectors are critically important. For instance, in Europe approximately 11 percent of electricity is generated from wind, and that energy source continues to grow rapidly. Material improvements within the carbon fiber used to produce wind turbine blades is improving blade efficiency, thus increasing power generated per wind turbine.
What innovations is the specialty chemical industry developing that will continue to improve sustainable practices in Europe and across the globe?
We realize that identifying new and fast-growing specialty chemical segments, answering the question of China’s ongoing impact, contemplating advancing Europe’s competitiveness within the global market, and sustainability trends are heady topics. That’s why we don’t expect to walk away from our few days at Chemspec Europe with definitive answers. But, we do look forward to learning more about those topics and to answering questions we haven’t yet even asked ourselves.