The solvent market is expected to grow at a steady rate over the forecast period. It is driven by increasing demand from the automobile, pharmaceutical, adhesives sealants, printing and construction industry. Moreover, the increasing regulatory pressure by the governments for the use of organic solvents is also driving this growth.
Substantial unconventional hydrocarbon production in North America and activities by the OPEC, an oil cartel has reduced oil & gas prices to exceptionally low levels. Such downturns have promoted the production of conventional solvents due to higher profit margins. Governments and agencies such as the ECHA and Environmental Protection Agency (EPA) have executed regulations that favour green solvents, thereby aiding market growth.
Solvents are used in manufacturing pharmaceuticals printing inks, cosmetics & personal care, dyes & pigments, paints & coatings, food & beverage, chemical production, automotive, cleaning and degreasing, agrochemicals, adhesives and aerosols. Oxygenated solvents are the major types of solvents that consume the usage of hydrocarbon and halogenated solvents which is being slowly phased out.
There are two types of solvents, namely organic solvents and conventional solvents. Conventional solvents consist of hydrocarbons, glycol ethers, alcohols, acetate esters, chlorinated and ketones. Organic solvents are widely used in traditional applications such as dry cleaning and manufacturing industries. They are highly flammable in nature except chlorinated solvents.
Environmental impact, health hazards related to solvent, and the unstable crude oil prices are expected to pose a challenge to this industry. Although, these restraints have a positive impact on green solvents, the artificial solvent market is expected to be severely hampered by their impact. Moreover, the evolution of technologies, such as water-based paints which utilize less (or no) volume of solvents is expected to be a potential threat to the market.
Green & bio-solvents help resuscitate the market, solely at the cost of conventional solvents. In such scenario, it is of utmost importance that the market participants exert their competitiveness by adopting growth strategies which include getting rid of deadweight assets to increase profitability and a focus on capacity expansion. The companies are increasingly expanding their capacity in Asia Pacific to tap the region’s high solvent demand.
Infrastructural developments in the residential sector of developing nations in Asia Pacific such as India and China are expected to act as an opportunity for the solvent market. The relocation of industrial processes to China which consumes large amounts of solvent for furniture coating, and wood is expected to present an opportunity for the market.
The market can be segmented on the basis of product and application. On the basis of product it can be segmented as alcohols, ketones, chlorinated, hydrocarbons, and esters. The demand for hydrocarbon is expected to grow over the forecast period based on its organic properties. Asia Pacific is expected to grow significantly based on the development in the residential and infrastructure developments. On the basis of application, the industry can be segmented into coating & paints, printing ink, pharmaceuticals, cosmetics & adhesives and others. Paints and coating segment is expected to grow significantly based on the boom in the automobile and infrastructure industry.
Alcohol-based solvents is expected to emerge as the leading product segment. Moreover being the largest product segment, it is also expected to be the fastest-growing products. Alcohol based solvents were followed by hydrocarbons.
The market is characterized by larger number of mergers and acquisitions activity. A USD 130 billion merger between chemical giants DOW Chemical Co and DuPont has created a shared competency in the market creating difficulties for the new entrant in the market. In December 2014, Eastman Chemical Company announced the acquisition of Taminco Corporation. The company expects accelerated earnings per share and use Taminco Corporation’s presence in niche end markets which will strengthen company’s position as a leading specialty chemical company.
ExxonMobil, BASF, DOW Chemical Company, Eastman Chemical Company, Celanese Corporation, Flotek Industries Incorporated and Sinopec are the key players in the market.
Research Support Specialist, USA