Specialty chemicals are a group of rapid growth chemicals that cater to different market sectors. The growth rate of these products are about one to three times the GDP. They are also known as fine chemicals and are thought of as highly innovative. While some chemicals are produced in bulk, there are many others which are customized. The chemistry of producing the products requires a high value of flexibility. Specialty chemicals are more expensive and generate more waste. It also requires a high degree of research than the production of any other chemical products. Fine chemicals are single substance chemicals that are pure and are produced with chemical reactions to meet specialized applications. Specialty chemicals are formulated for use across the various end use industry verticals like paint and coatings, automotive, construction, plastics and food and beverages. All these industries are growing at a rapid pace in order to meet the increasing demand from the consumers. Due to the same, the demand for specialty chemicals is on a rise.

The specialty chemicals market is anticipated to reach USD 1018.9 billion between the period of 2018 and 2023 at a CAGR of 6.21%. There has been a shift in the preference of the chemicals over commodity chemicals. All specialty chemicals are high in value and low in volume. They are economical and are used to achieve a specific performance determined by the preferences of the consumers. A lot of specialty chemicals are patented and lead to a highly competitive market with high growth.

The formulation of specialty chemicals will vary according to the are material used in the same and this is the reason behind the price fluctuations. For instance, the fluctuating rate of crude oil leads to a hampering growth caused due to price escalation. The demand has also increased due to the increase in the use of chemicals for the purpose of creating unique formulations for personal and cosmetic care products.

Leading players in the global industry include BASF SE, AkzoNobel NV, Solvay SA KGaA, Lanxess AG, Evonik Industries AG, Henkel AG & Co., ExxonMobil Corporation, BHS Specialty chemicals and DowDuPont. The market is segmented by source and is divided into naptha, crude oil, butane, ethane, propane, wood and others. Naptha has the largest share of the market and it is expected to grow at 6.19% in the coming years. The rise in demand for specialty chemicals that are sourced from naphtha in the expanding automotive industry is a huge contributor to the strong position of naphtha in the market. The second largest market segment is crude oil which is used across  different industries. This segment is expected to reach a valuation of 119.60 billion by the end of 2023. The industry is dominated by mergers and acquisitions. This has led to the smaller companies being merged into large corporations in the past few years.

With regard to the type, the market is divided into agrochemicals, fragrance, flavor ingredients, dyes and pigments, water treatment chemicals, personal care active ingredients, surfactants, construction chemicals, polymer additives, textile chemicals and bio based chemicals amongst others. Majority share of the global market is held by the agrochemicals industry due to the shift in demand for functional food products. The market is also segmented region wise and this includes Latin America, North America, Europe, Asia Pacific, Middle East and Africa.
Asia Pacific leads the global market with the inclusion of rapidly growing economies like South Korea, China, Japan, India and others. It holds a market share of 46% which is due to the presence of a number of growing industries like textiles, food and beverages, agrochemicals and automotive. In most of these countries, the agrochemicals market is rapidly expanding and has placed a higher demand for specialty chemicals. Further, the economic growth that is being experienced across these regions has led to an increase in the consumption pattern across the end use industry verticals. The markets in Europe and North America are equally significant because early industrialization has led to the maturity of the global specialty markets. The smallest share of the industry is held by Latin America and Middle East and Africa which is due to a number of political and socio economic factors. Asia Pacific will be leading the market due to the rapid industrial and economic growth especially in the paints and coatings segment. The demand for coatings is increasing due to the its application across different industries like oil and gas, aerospace, automotive, marine, mining, paper and pulp, concrete structures, construction industry, tanks and processing equipment. Coatings are environment friendly and are used for sustainable products in order to reduce emissions. This has led to a rise in environment friendly and water based coatings.

Opportunities for growth
The industry plays a crucial role in the development of any economy. It is a key enabler for many other industries and every industry is dependent on the specialty industry in one form or the other. The growth of the industry is driven by consumption and the overall demand will be driven by infrastructure, industries and consumerism. The market slowdown in China has worked as an advantage for India and given the industry a strong push to emerge as a manufacturing hub. An investment in the research and development in the industry will ensure that the industry achieves its potential.

Challenges
The industry needs to focus on product development and improving product quality to gain a competitive edge in the market. Companies will have to focus on eco-friendly products and processes and address the pollution issue in terms of air and water. A challenge in the industry is the fragmentation and the lack of scale. Companies should offer differentiated products through an innovative marketing strategy and maintain high levels of regulatory standards.