Chemical Intermediate Market Analysis

Chemical Intermediate market (Global, 2024)

Introduction

The intermediates of the chemical industry are of great importance to the chemical industry, and form a necessary link between the raw materials and the finished products in the various chemical industries. As the chemical industry is becoming more and more refined, the demand for high-quality chemical intermediates is expected to rise. The products of the chemical intermediates are of a great variety, each with its own special application, and the development of new intermediates is therefore a field of great opportunity for innovation and development. In addition, the emphasis on sustainable development and the demand for self-discipline from governments are also driving manufacturers to develop greener and more efficient production methods. In this way, the chemical intermediates market is a complex field with a variety of regulations, laws and competition. The market players in this field must have a good understanding of these trends in order to grasp the opportunities and avoid the risks.

PESTLE Analysis

Political

In 2024, the market for chemical intermediates is heavily influenced by government regulations aimed at reducing carbon emissions. The European Union has introduced the Green Deal, which requires a reduction in greenhouse gas emissions of at least 55% by 2030 compared with the level of emissions in 1990. This regulation has an impact on chemical companies. They have to invest in cleaner production processes and equipment. This may cost the industry up to a billion in extra costs by 2030. In addition, the import duties imposed by the trade agreements have an impact on the prices and availability of chemicals. For example, the United States has imposed a duty of up to 25% on certain Chinese chemicals.

Economic

In 2024, the world economy is recovering from the pandemic, with an average rate of inflation of 3.5% in the developed countries. The cost of intermediate chemicals is rising by about 15 per cent a year. The unemployment rate in the industrial sector is expected to stabilize at 4.2 per cent, indicating a tight labour market that could push up wages and add to the cost of chemicals.

Social

The consumer’s preferences are changing towards sustainable and eco-friendly products. According to a recent survey, a large majority of consumers (70 %) are willing to pay a premium for products made from sustainable chemical intermediates. This trend is driving companies to change their products and to adapt their production methods to meet this demand. Furthermore, public awareness of the dangers of chemicals has grown, and now 60% of consumers are concerned about the safety of chemicals in everyday products.

Technological

In the chemical intermediates market, technological development is accelerating, and by 2024 R & D expenditures will reach $ 15 billion. The process of automation and process optimisation is reducing production costs by 20 per cent. The use of digital tools such as the Internet of Things and artificial intelligence is transforming the supply chain, and in two years’ time half of the chemical industry’s companies are expected to have introduced them.

Legal

In 2024, the chemical industry is subject to a strict regulatory framework, especially in the European Union and North America. In the EU, for example, the REACH regulation, which requires the registration of more than 30,000 chemicals, with an average cost of a million dollars per substance, is in force. In the United States, the EPA has increased its budget to ten billion dollars for the regulation of chemical safety, which means that the inspections will be stricter and that there will be more penalties for non-compliance.

Environmental

The chemical industry is responsible for about ten per cent of the world's carbon dioxide emissions. In order to counteract this, many companies are investing in sustainable development, and by 2024, an estimated five billion dollars will be spent on green chemistry. Meanwhile, circular economy practices are gaining ground, with 40 per cent of the chemical industry pledging to reduce waste and increase recycling, with the aim of reducing waste by a third by 2030.

Porter's Five Forces

Threat of New Entrants

The intermediates market has a medium barrier to entry, which includes a significant investment in capital, the need for regulatory compliance and the need for special knowledge. These factors may discourage some new entrants, but the growing demand for chemical intermediates in many industries may attract new entrants looking to exploit market opportunities.

Bargaining Power of Suppliers

Suppliers in the chemical intermediate market often have considerable negotiating power, because of the limited number of raw materials and the special nature of the chemicals in question. This can result in higher prices and lower profit margins for the manufacturers, especially if the suppliers are able to combine their efforts or if the supply chain is disrupted.

Bargaining Power of Buyers

In this market, the buyer has a medium degree of power, since he can choose from a number of suppliers. But his requirement for a consistent quality and a certain quantity of intermediate products may limit his choice. Large buyers can bargain more effectively, but smaller buyers have less power to negotiate prices.

Threat of Substitutes

The threat of substitution in the chemical intermediate market is relatively low, as many intermediates are essential for certain applications and have few direct alternatives. However, even where such alternatives do exist, they often do not match the performance or cost-effectiveness of the established chemical intermediates.

Competitive Rivalry

The competition in the chemical intermediates market is intense, and many companies are vying for market share. Competition is based on factors such as price, quality and innovation, which leads to aggressive marketing strategies and continuous process improvement in order to maintain a competitive edge.

SWOT Analysis

Strengths

• Diverse applications across various industries including pharmaceuticals, agriculture, and manufacturing.
• Established supply chains and distribution networks enhancing market accessibility.
• Continuous innovation in chemical processes leading to improved efficiency and sustainability.

Weaknesses

• High dependency on raw material prices which can lead to volatility in production costs.
• Environmental regulations increasing operational costs and complexity.
• Limited awareness and understanding of chemical intermediates among end-users.

Opportunities

• Growing demand for sustainable and eco-friendly chemical solutions.
• Expansion into emerging markets with increasing industrialization.
• Technological advancements enabling the development of new chemical intermediates.

Threats

• Intense competition from alternative materials and substitutes.
• Economic fluctuations impacting demand across key sectors.
• Stringent regulatory frameworks that may hinder market growth.

Summary

The 2024 chemical intermediates market is characterized by a wide range of applications and a well-developed supply chain, which is the biggest advantage. But there are also challenges, such as the high dependence on raw materials and the high cost of environmentalism. Opportunities are the growing demand for sustainable solutions and the expansion into emerging markets. Threats are competition from substitutes and economic fluctuations. These market conditions are the basis for strategic innovation and environmentalism.