The Commodity Chemicals Market is estimated to be valued at US$ 67.72 Bn in 2023 and is expected to exhibit a CAGR of 6.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
Commodity chemicals are basic chemicals which serve as building blocks and intermediates for many downstream products. Some key commodity chemicals include ethylene, propylene, benzene, methanol, and xylenes. They find extensive applications in various end-use industries such as construction, packaging, automotive, pharmaceuticals, consumer goods, agriculture and others. The growing demand from these downstream industries is driving the growth of the commodity chemicals market.
Market key trends:
One of the key trends witnessed in the commodity chemicals market is increasing demand from emerging economies of Asia Pacific and Middle East Africa. Rapid industrialization, rising disposable incomes, and growth in manufacturing sector in countries like India, China, Indonesia, Saudi Arabia etc. has boosted the demand for commodity chemicals from these regions. Moreover, these regions are witnessing expansion of petrochemical facilities by major players to cater to the growing regional demand. For instance, Reliance Industries and Saudi Aramco are developing petrochemical complexes in India to leverage the market potential. Such investments in expanding production capacities are expected to drive the commodity chemicals market growth over the forecast period.
Porter's Analysis
- Threat of new entrants: Entry barriers such as production scales, logistics, and brand recognition are high for commodity chemicals market.
- Bargaining power of buyers: Large buyers such as manufacturers have significant bargaining power due to commoditized nature and availability of substitutes.
- Bargaining power of suppliers: Supply of raw materials is consolidated and suppliers have moderate bargaining power over commodity chemical producers.
- Threat of new substitutes: Substitutes exist for many commodity chemicals but switching costs are high due to product specifications, requiring significant RD investments.
- Competitive rivalry: Intense competition exists among large diversified producers focusing on cost leadership through economies of scale.
SWOT Analysis
- Strengths: Established production facilities and global supply chain capabilities of major players.
- Weaknesses: Intense price competition, volatile raw material costs and cyclical demand impact margins. Commoditized products face threats from substitutes.
- Opportunities: Growing demand for chemicals from industries like construction and automotive. Opportunities in developing markets of Asia Pacific and Middle East.
- Threats: Stringent environmental regulations globally. Shift towards sustainability may reduce demand for some petrochemical-based commodity chemicals.
Key Takeaways
The global commodity chemicals market is expected to witness high growth, exhibiting CAGR of 6.6% over the forecast period, due to increasing production of automobiles and growth in the construction industry globally. The market size for 2023 is estimated at US$ 67.72 Bn.
Asia Pacific dominates the global commodity chemicals market owing to large manufacturing bases and growing industrialization in major economies like China and India. China contributes to over 30% of global demand attributed to strong presence of petrochemical, polymers and chemical manufacturers.
North America is another major consumer owing to large automotive and construction industries in the US and Canada. Europe is forecast to grow at a steady pace during the forecast period on improving economic recovery.
Key players operating in the commodity chemicals market are BASF SE, Dow Inc., SABIC, and LyondellBasell Industries. Major players are focusing on backward integration, merger and acquisition strategies to gain access to raw material supplies and expand portfolio to capture higher margins.
