banner-img

Top Five Key Trends to Impact The Organic Chemicals Industry Serving at Bulk in the Near Future

Organic chemicals or commodity chemicals are highly sought after by various industries such as healthcare, agriculture, construction, and automobiles across the world. Some common commodity organic chemicals are acetic acid, acetone, acrylic acid, benzene, etc. They are used as raw materials in the manufacture of different products such as fine and specialty chemicals and hence are produced in large quantities.

Here are a few characteristics of the bulk chemical industry (see Figure 1)-
  • These businesses have high volume but are of low value
  • A bulk chemical business is marked by high capital cost, large-scale production, and high energy consumption
  • The products, processes, and technologies have altered very little in these legacy businesses in the past few decades
  • Emerging economies have the lion’s share of the market in comparison with developed economies
Infographics1 organic-chemicals-industry

Bulk Organic Chemical Industry Outlook

Crude oil and natural gas are the feedstock used in the production of these bulk chemicals. Naturally, the price of crude oil plays a big role in the growth of the commodity chemicals market. In the past few years, oil prices have increased by over 5x from ~USD 20 in 2020 to ~USD 100 a barrel in 2022, which is affecting the costs and profit margins of chemical companies. The war in Ukraine has thrown the energy and commodity markets in Europe into turmoil. Other regions too have been affected by the war and a global pandemic. These disruptions have increased chemical costs. Even the World Bank has warned about rising inflation and economic slowdown.

The chemical industry in the US is steadily making a recovery since the dawn of 2021. Some commodity chemicals reached pre-pandemic sales levels in the same year. As per the latest report, the total chemical output is said to grow by 2.5% in 2023, with organic chemicals to make a 4.5% growth. Capital expenditure is expected to exceed USD 35 billion, with key industry players looking to expand their production capacities as well as penetrate into new markets. The next few years will see a sharp trend in areas such as sustainability, innovation, digitization, and artificial intelligence. Let’s examine them in detail.

1. Growing Sustainably Toward a Circular Economy
organic-chemicals-industry

Sustainability and decarbonization will be of focus to most organic bulk chemicals businesses in the years to come. Stakeholders and regulatory boards are already putting pressure on them to commit to ESG compliance, recycling, and resource recovery strategies. They are expected to invest heavily in research and development (R&D) to address greenhouse gas emissions and other solutions that can reduce their carbon footprint.
The European chemical industry has pledged to achieve carbon neutrality by the year 2050 as part of the Green Deal, set forth by the members of the European Union. Along with transitioning to renewables from fossil fuels, industry players are turning their focus on new and innovative technologies such as carbon capture and utilization (CCU), electrification of steam cracking, chemical recycling, green hydrogen, and carbon capture and storage (CCS). In a recent survey, more than 85% of chemical industry representatives said they were willing to embed resource and energy efficiency into the production of chemicals. Companies on the other end, are focusing on developing bio-based platform chemicals, in order to stick to their imperatives of green chemistry.

2. Digital Transformation and Industry 4.0 Unlocking New Growth Opportunities
organic-chemicals-industry

Digital transformation will help chemical plants optimize organic bulk chemicals production, reduce waste, increase safety and sustainability, and become agile to quickly respond to supply and demand fluctuations. Over the next few years, the Industrial Internet of Things (IIoT), artificial intelligence, and cloud computing will be at the heart of industry 4.0 across the chemical sector.

The internet of things (IoT) will enhance connectivity between various devices to improve the quality of material produced, asset performance, and the safety of employees. AI can generate information that can improve and automate production processes. With AI, companies can detect anomalies, leakages, and contamination and engage in early prevention. Cloud computing and predictive analytics will help in the discovery of new materials and chemical formulations. Extended reality and digital twin technologies will help chemical engineers resolve issues such as workforce shortages and employee training. 3D printing can automate device fabrication and the development of novel materials. Cobots and automated guided vehicles can perform hazardous operations without having to put human lives at risk. Sensors and wireless devices can track the historical performance of manufacturing equipment, based on which AI algorithms can forecast potential failures and decrease machinery downtime. With supply chain analytics, producers can analyze weather patterns and predict events that may cause a delay in the supply chain.

Here is a glimpse of the five key trends in bulk organic chemicals industry (see Figure 2).

Infographics1 organic-chemicals-industry
3. Customer-Centric Approach in an Evolving Industry
organic-chemicals-industry

Just like any other industry, the chemical industry is also incorporating customer-centricity across all aspects of its value chain. Chemical businesses are going above and beyond to meet and surpass customers’ needs and expectations in return for their loyalty. They are rebranding themselves to stay ahead of the competition. With the help of digital technologies such as automated trend sensing and social media scanning, they are able to take a pulse of the market trends and predict customer needs and preferences.

4. Innovation as a Key Enabler of Success in Organic Bulk Chemicals Business
organic-chemicals-industry

Innovation is the key to unlocking growth and expansion. Chemical companies are harnessing the power of innovation to better respond to market fluctuations. Now more than ever, businesses should focus on realigning their innovation strategies and efforts as incumbent players are currently being challenged by startups and companies outside the industry. Chemical companies are likely to benefit from collaborating with these new startups and platforms and leveraging machine learning algorithms to develop new technologies and products. Such promising research is currently being undertaken across various branches of chemistry by brilliant scientists, but there needs to be a way to channelize these discoveries into innovation.

5. Tracking Chemicals Along the Value Chain Using Blockchain Technology
organic-chemicals-industry

Large-scale digitization and network connectivity may result in cyberattacks and significant losses. Therefore, the chemical industry is focusing on blockchain algorithms to secure data and supply chains. Blockchain technology tracks everything from the procurement of raw materials to the production of chemical products. It monitors every single molecule at every step of the supply chain. Keeping tabs on the utilization of the chemicals, blockchain helps in demand planning and eliminates overstocking, rushed orders, and scheduling issues. Smart contracts further provide distributed and autonomous control to ensure safety and quality and reduce errors during testing processes.


In Conclusion

By paying close attention to and leveraging the aforementioned trends, chemical companies can sail through volatile markets, transform challenges into opportunities, and maximize ROI. Here is a glimpse of some of the markets associated with organic chemicals (see Figure 3).

Infographics1 organic-chemicals-industry

Contact Us

swara-keni
Swara Keni

Head- Global Business Development

Ready to talk?

I want to talk to your experts in:

We work with ambitious leaders who want to define the future, not hide from it. Together, we achieve extraordinary outcomes.

Let Us Hear About Your Requirements:

Submit Your Request For Proposal (RFP)

Connect With Our Consultant