China’s Chemicals Industry Gets Special

Another China-is-the-world’s-largest-market is in prospect. This time it is for chemicals, driven by the growth of industries as varied as construction, car making, electronics and alternative energy. Next year is the forecast tipping point. But the key shift is from commodity to specialty chemicals, according to a new briefing from Pricewaterhouse Coopers, as demand increases for fine chemicals, surface treatments, advanced polymers, pigments and additives.

Four of the strategic emerging industries identified in the current five year plan are closely tied to the chemicals industry–new materials, alternative energy, green vehicles, and sustainability and energy conservation technologies. This should magnify the trend. Datamonitor forecasts that  the Chinese specialty chemicals market will be worth $81.6 billion by the end of the current five year plan in 2014, up 44% from 2009’s level. The challenge for existing multinationals in the industry will be that the inevitable rising quality of domestic specialty chemicals producers will squeeze the margins of rivals that lack advanced technologies and manufacturing strength.

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