Situation and prospect of chemical industry

In 2019, the global chemical distribution market will reach US $239 billion and is expected to grow at a compound annual growth rate (CAGR) of 5.3% from 2020 to 2027. The increasing consumption of chemicals in end-use industries such as construction, pharmaceuticals, polymers and resins, coupled with the high complexity of customer engagement, may drive opportunities for chemical distributors in the next few years.

The chemical industry produces and supplies essential raw materials for industrial and manufacturing companies. These raw materials are distributed to end users by third-party distributors or sold directly by manufacturers. As a result of outsourcing value-added services such as logistics, packaging, mixing, waste removal, inventory management and technical training, the growth of third-party distribution of goods and specialty chemicals is expected to be significantly higher than that of products sold directly to end users.

The chemical sales market in the United States is driven by continued construction activities and strong consumer purchasing power. Commercial investment in the real estate market is regaining its appeal and is helping to build momentum in the chemical industry. In addition, according to a report issued by the American Chemical Commission in June 2019, the United States has announced 334 new production projects worth more than $204 billion, indicating that investment in the US economy continues to grow. This trend is expected to lead to a substantial expansion of the manufacturing sector, which will have a positive impact on the overall market.

The rise of sustainable and green infrastructure has driven the demand for specialty building chemicals in the United States. As a result, specialty product distributors benefit even from the demand for such chemicals in developed economies such as the United States, Germany and the United Kingdom

Growth in other end-use industries such as automobiles, pharmaceuticals and electronics, coupled with strong growth in industrial manufacturing, is expected to drive global demand for chemicals. This factor is expected to further benefit the third-party distribution channels. Global distributors are adopting differentiated channel strategies such as product knowledge, local expertise and strong logistics networks to gain competitive advantage in highly fragmented markets.

In the fierce competition in the industry, the third-party dealers are also facing fierce competition from direct suppliers. Some of them are multinationals, such as BASF, arcoma, Honeywell international and Lanson. These companies have high investment capability, strong end-user network and wide geographical distribution. Direct distribution channels provide bulk discounts and reduce the profit margin of the third party.

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