Commodity chemicals are basic building blocks for a wide range of downstream products and include ethylene, propylene, benzene, toluene, and xylene. They are used to manufacture various industrial and consumer products such as packaging materials, paints, detergents, synthetic fibers, and plastics. Commodity chemicals are in high demand due to the growing applications across industries.
The global Commodity Chemicals Market is estimated to be valued at US$ 67.72 billion in 2024 and is expected to exhibit a CAGR of 6.6% over the forecast period 2024 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The demand for commodity chemicals is expected to witness high growth in developing countries owing to the rapid industrialization and growing manufacturing sector. Countries such as China, India, Brazil, and others are attracting huge investments in sectors like infrastructure, automotive, construction which are key end-users of various commodity chemicals. Moreover, the rising population and improving economic conditions in these countries are significantly driving the consumption. The widespread application in various downstream sectors presents lucrative opportunities for commodity chemicals market players to expand their operations in developing regions over the forecast period.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is moderate as the commodity chemicals industry requires high capital investments for setting up manufacturing facilities and distribution network. However, barriers to entry are somewhat lower for trading companies.
Bargaining power of buyers: The bargaining power of buyers is high due to the fragmented nature of the industry with the presence of a large number of global and regional players. Buyers can exert pressure on prices through negotiations and alternate sourcing.
Bargaining power of suppliers: The bargaining power of suppliers is moderate. While raw materials represent a significant portion of the total production cost, suppliers of key raw materials such as petrochemicals are significantly consolidated.
Threat of new substitutes: The threat of substitutes is low as commodity chemicals have limited substitutes and switching costs are high for end-users. However, continuous research on developing bio-based and green chemicals poses a moderate threat in the long run.
Competitive rivalry: The industry features many global and regional players competing on pricing and product differentiation, resulting in high competitive rivalry.
SWOT Analysis
Strengths: Established production infrastructure and economies of scale of major players. Strong demand from end-use industries such as plastics, consumer products, and automobile.
Weaknesses: Susceptibility to fluctuations in crude oil and naphtha prices which are key raw materials. Regulatory compliance leading to increasing environmental protection costs.
Opportunities: Growing plastics and polymers industry in emerging economies boosting demand. Development of bio-based commodity chemicals providing growth opportunities.
Threats: Stringent environmental regulations pertaining to emissions and effluents in Europe and North America. Volatility in feedstock prices influencing production economics.
Key Takeaways
The global Commodity Chemicals Market is expected to witness high growth over the forecast period 2023-2030. The market size is projected to reach US$ 67.72 Bn in 2024.
Regional analysis- Asia Pacific dominates the global commodity chemicals market with China being the largest producer and consumer globally. The region's dominance is expected to continue over the forecast period owing to the rising polyester demand from textiles and packaging industries in India and China along with propylene demand from construction activities. North America and Western Europe are also major regional markets.
Key players- Key players operating in the Commodity Chemicals market are BASF SE, Dow Inc., SABIC, and LyondellBasell Industries. BASF SE is one of the leading producers globally, with a diversified product portfolio. Dow Inc. is another major player focusing on ethylene and propylene derivatives. SABIC and LyondellBasell Industries are also prominent names among the top petrochemical companies.
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