Chemical Distribution Market Size, Share & Trends Analysis Report By Product (Specialty Chemicals, Commodity Chemicals), By End Use, By Region, And Segment Forecasts, 2020 - 2027

Industry Insights

The global chemical distribution market size was valued at USD 239 billion in 2019 and is expected to register a CAGR of 5.3% during the forecast period. Increasing consumption of chemicals across end-use industries such as construction, pharmaceutical, polymers and resins coupled with high complexity in reaching the customers is likely to drive the opportunities for chemical distributors over the coming years.

The chemical industry produces and supplies essential raw material for companies in the industrial and manufacturing sectors. These feedstock are distributed to the end users by third-party distributors or sold directly by manufacturers. Distribution of commodity and specialty chemicals by third parties is anticipated to witness significant growth than the sale of products directly to end users owing to the outsourcing of value-added services, such as logistics, packaging, blending, waste removal, inventory management, and imparting technical training.

The U.S. market for chemical distribution is driven by sustained construction activities and strong consumer purchasing power. Business investments in the housing market are regaining traction and contributing to building momentum for the chemical industry. Furthermore, according to a report published by American Chemistry Council, Inc. in June 2019, 334 new production projects, valued at over USD 204 billion were announced, which demonstrates constant rise in investments in U.S. economy. This trend is anticipated to result in a significant expansion of manufacturing sector, thus generating a positive impact on the overall market.

Demand for specialty construction chemicals in U.S. is driven by the rising trend of sustainable and green infrastructure. Specialty product distributors are thus benefiting from the demand for such chemicals even from developed economies such as U.S., Germany, and U.K.

The growth in other end-use industries, such as automotive, pharmaceutical, and electronics coupled with strong growth in the industrial manufacturing sector is anticipated to drive the global demand for chemicals. This factor is further expected to benefit the third party distribution channel. Global distributors are adopting differentiated channel strategies such as product knowledge, local expertise and strong logistics network to gain a competitive advantage in a highly fragmented market.

Along with a high industry rivalry, the third-party distributors are also anticipated to face strong competition from direct suppliers. Some of these are multinational companies, such as BASF SE, Arkema, Honeywell International, and Lanxess AG. These companies possess high investment capacities as well as a strong network with end users and a wide geographical presence. Direct distribution channels offer bulk discounts and reduce third-party profit margins.

Product Insights

On the basis of product, the global chemical distribution market is segmented into basic or commodity and specialty products. The product portfolio of one supplier is generally easily interchangeable with others, leading to low differentiation, and reducing switching costs for consumers. Pricing is thus an important differentiating factor for competitors in the market.

The commodity chemicals sector includes plastics and polymer, synthetic rubber, explosives, petrochemicals and other such as bulk polymers, fibers, and basic organics or aromatics. Collectively, the segment has displayed the strongest Total Return to Shareholders (TRS) performance in the chemicals value chain with above 14% growth from 2000 to 2015. Specialty compounds grew only by about 12% during the same period. Despite a decline in sales, due to the crash in crude oil prices, the commodity chemicals segment has been able to retain selling prices in certain markets.

Commodity compounds dominated the global supply landscape owing to the vast consumption of these products in several major end-use industries such as automotive, construction, electronics, and consumer goods. Consumption of these products in bulk across various industries has prompted segment to expand at a CAGR of 5% from 2020 to 2027.

The specialty product segment refers to high-performance and customized chemical solutions that meet application-specific consumer requirements. Specialty compounds include Coatings, Adhesives, Sealants, Elastomers (CASE), cosmetic additives, construction materials, polymers, lubricants additives, and others such as surfactants, industrial gases, and textile auxiliaries. These are most widely used across end-use industries such as automotive, electronics, construction, pharmaceuticals, textiles and others.

Major manufacturers are shifting their manufacturing bases in Middle East and Africa (MEA) due to the cheap petrochemical feedstock availability. Whereas, some other industries are expanding their production in Asia owing to the low labor cost and high economic growth. Furthermore, trade liberalization, breakdown of numerous economic barriers, the spread of advanced processing technology, and rapid growth of the industrialized Asian economies, along with rising standards of living in many developing countries, has also driven specialty chemical consumption and distribution activities in recent years.

Specialty chemicals is expected to emerge as the fastest-growing segment and are anticipated to reach USD 133.27 billion by 2027. Rising demand for application-specific compounds in several industries along with technological advancements in terms of production is anticipated to drive the demand over the forthcoming period.

End-use Insights

Specialty and commodity compounds are largely used in common end-use industries such as textiles, automotive and transportation, and industrial manufacturing. Some other specific applications of specialty chemicals include agriculture, and pharmaceutical, whereas commodity products are specially used in the downstream sector.

Consumption of commodity chemicals in the downstream sector has dominated the market with a share of 35.5% in terms of revenue in 2019. The downstream sector includes the petroleum crude oil refining, processing and purifying of raw natural gas. In addition to this, it also includes the marketing and distribution of a variety of petroleum-derived products.

Construction industry dominated the market and accounted for over 35.6% of the revenue share in 2019. Alarming pollution levels in U.S., as well as in China, have driven innovation in construction materials, leading to the development of smog-combating products. Boral Roofing is one such company that has introduced an innovative smog-repellent tile that removes nitrogen oxides (NOx) via a photocatalyst titanium dioxide, to improve air quality. Furthermore, increased construction spending in emerging economies across Asia Pacific is anticipated to drive specialty chemicals demand in several applications.

Regional Insights

Asia Pacific emerged as the leading regional market and accounted for 58.6% of the overall revenue share in 2019. Increasing manufacturing activities along with a significant rise in per capita disposable income is expected to drive demand over the forecast period. Countries such as China, India, Malaysia, Vietnam, and Thailand are witnessing expansion of industries such as automotive, construction and electrical and electronics.

Moreover, chemical production in the region is set to grow at a tremendous rate with major players shifting their focus to high opportunity markets. Commodity compounds are anticipated to remain the dominant segment in Asia Pacific, with a higher CAGR of 7.2% from 2020 to 2027 posted in the specialty chemicals segment.

North American chemical industry is one of the most consolidated markets with the top three distributors, Brenntag, Univar, and IMCD collectively holding a 30% to 40% market share in 2019. However, the market is projected to witness accelerated capital investment by international chemical producers owing to continued labor market upgrading, easy availability of credit and access to abundant feedstock.

Expanding production capacities by major chemical companies in North America in recent years has driven the shift in trend towards third-party distributors as a growth platform for expanding into untapped regional markets. However, the petrochemical industry in North America witnessed slowdown over the past few years on account of volatile crude oil prices, feeble GDP of Latin America and recession-stricken economies. Petrochemical production capacity is likely to increase in the upcoming years owing to several planned facilities across the U.S. gulf coast including Natgasoline and South Louisiana Methanol with an expected production of 1.75 million per MT and 1.8 million per year MT respectively.

Chemical Distribution Market Share Insights

Acquisition of small distributors by leading global distributor companies such as MilliporeSigma, Brenntag AG, and Univar Solutions, has influenced to achieve economies of scale and focus on specialized sales channel strategy, rationalizing their distributor base, and strengthening of supply chain networks.

Key market players include Univar AG, Helm AG, Brenntag AG, Azelis Holdings SA, IMCD Group, BASF SE and Biesterfeld AG. Mergers, acquisitions, and capacity expansion are major strategies followed by the companies to diversify product portfolio and increase market share on a global scale. Major companies are consolidating growth by expanding existing product ranges to include specialty products as well.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis on the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global chemical distribution market on the basis of product, end use, and region:

• Product Outlook (Revenue, USD Billion, 2016 - 2027)

  • Specialty Chemicals

    • CASE

    • Agrochemicals

    • Electronic

    • Construction

    • Specialty Polymers & Resins

    • Others

  • Commodity Chemicals

    • Plastic & polymers

    • Synthetic Rubber

    • Explosives

    • Petrochemicals

    • Others

• End-Use Outlook (Revenue, USD Billion, 2016 - 2027)

  • Specialty Chemicals

    • Automotive & Transportation

    • Construction

    • Agriculture

    • Industrial Manufacturing

    • Consumer Goods

    • Textiles

    • Pharmaceuticals

    • Others

  • Commodity Chemicals

    • Downstream Chemicals

    • Textiles

    • Automotive & Transportation

    • Electrical & Electronics

    • Industrial Manufacturing

    • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2027)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • France

    • Italy

    • U.K.

    • Belgium

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Taiwan

  • Central & South America

    • Brazil

    • Argentina

  • Middle East & Africa

    • Saudi Arabia

    • UAE