The impact of COVID-19 on the specialty chemicals industry is highly varied. Nutraceuticals, fragrances and flavors, food and feed additives remained stable in 2020. Specialty chemicals utilized at the frontlines to battle the pandemic, such as surfactants, hand-sanitizers, and even certain plastics for PPE equipment and packaging, witnessed a substantial growth throughout 2020.
“Overall surfactants have benefited with 5% growth in 2020, but this is driven by the home and personal care sector, which accounts for about 65% of the total surfactant market,” according to Adam Bland, executive director/solvents & surfactants at IHS Markit. On the other hand, the effects on the industrial and institutional (I&I) sector have been negative, he said. The hand sanitizer industry has stolen the spotlight with a dramatic increase of about $3 billion, solely at the institutional level.
In 2020, the consumption of nonwoven fabric used in the production of face masks, disinfecting wipes and PPE, increased by 24%. Surgical/medical applications increased by a whopping 208%. To cater to the demand spike, the capacities of textile auxiliaries increased. The demand for the nonwoven fabric was 17 million metric tons last year, and it is forecasted to remain steady through 2025, according to reports.
As the packaged food industry has performed well during the pandemic, food additives have not taken a hit. However, there have been some exceptions. For instance, demand for food additives used in soft drinks and chewing gums went down due to the restrictions imposed during the pandemic. The food additives market is expected to show continued growth, but demand for artificial sweeteners is predicted to decline gradually.
Water treatment specialty chemicals
Despite the increase in water usage by households during the lockdown, the industrial use of water went down. Since industries consume roughly 2 million metric tons of specialty chemicals in water, the market for water treatment specialties was affected. As the manufacturing is recovering currently, this situation is predicted to change. Looking ahead, the use of water treatment specialty chemicals is forecasted to go up 2–3% in 2021, based on the expected GDP growth.
Automotive specialty chemicals
Though supply chains of the automotive industry were strained, 2020 saw a massive growth in the sales of electric vehicles in Europe and other parts. Consequently, the consumption of lithium and cobalt, used in EV batteries, remained high.
Meanwhile, the polyurethane industry suffered setbacks as the usage of PU foams declined. The consumption of PU foams, which account for around 65% of the total PU consumption, decreased by 12%. Reports suggest that recovery to pre-pandemic levels will take two to three years.
With the lockdown and the shift to work-from-home conditions, the demand for all types of electronic appliances has increased. People have set up home offices and schooling arrangements for children at home. This has led to a boost in demand for engineering plastics like acrylonitrile butadiene styrene (ABS), pushing producer margins higher over the coming years.
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