Specialty Chemicals end-user segment outlook


Accounting for around 50 percent of our revenue, the Industrial end-user segment is by far the largest for the Specialty Chemicals Business Area and is served by all of our chemical platforms. We generate significant revenue from the sale of chemical intermediates, such as salt, chlorine, caustic soda, organic peroxides, metal alkyls and ethylene-based products into the plastics (polymer) industry and other chemical industries. We also sell surfactants and ethylene-derived products into the oil and gas, metals and mining and agrochemical industries. In addition, we sell bleaching chemicals (primarily sodium chlorate) for use in the production of pulp.

We expect that in the long term, market development in chemicals will be disproportionately strong in the Middle East (due to access to low cost raw materials) and in the US (due to shale gas). In the short to medium term, the regional outlook is less clear due to lower oil prices. In the Middle East, downstream investments are being postponed or even cancelled. In North America, there has been a reduction in the cost advantage in terms of shale gas-based ethylene feedstocks and this is moderating regional chemical growth rates somewhat.

Although growth rates are expected to be lower in Europe than they are in other regions, Europe is currently continuing to post record trade surpluses in chemicals and we expect this to continue, particularly in the chemical sectors relevant to AkzoNobel. Due to local demand, we also expect continued growth in the large and important Chinese market, albeit at a lower level than we have seen in the recent past.

From a sub-segment perspective, we continue to expect above GDP growth in polymer markets, where there is continued demand growth as global wealth increases and products continue to be converted to plastics for a variety of reasons, including weight reduction. We expect GDP-level growth in segments such as agrochemicals. While overall growth in chemically-bleached pulp is below GDP, we expect, continued strong growth in Brazil, due to the cost competitiveness of the region.

Buildings and Infrastructure

Our main involvement in the Buildings and Infrastructure end-user segment is through the Salt-Chlorine Chain and Polymer Chemistry platforms. We produce salt, chlor-alkali products, organic peroxides, metal alkyls and various other products used to manufacture plastics that are, in turn, used to manufacture plastics for a wide variety of construction components. We also supply products for more direct use, such as cellulosic products for paints and redispersible polymer powders (RPP) for concrete admixtures.

As our Salt-Chlorine Chain platform is almost entirely based in Europe, and a substantial proportion of our RPP and cellulosic business is also in Europe – where building regulations are more stringent – the European outlook is very important. Most analysts are predicting continued modest construction recovery, which should have a positive impact on the growth outlook for the markets in which we compete. However, this is mitigated somewhat by lower than historical growth levels in China, which is another area of regional strength for our business.

Consumer Goods

We sell a wide variety of surfactants and ethylene-based products for consumer goods applications such as cleaning, dishwashing and pharmaceutical products. We also sell chlor-alkali products, organic peroxides and metal alkyls for the production of plastics (polymers) that are used in packaging, as well as consumer durables such as toys and furniture. We also sell consumer salt.

As a general rule, expected growth in Consumer Goods roughly follows GDP growth. Currently, this translates into above average growth in North America, balanced by more moderate growth in Europe. In China, growth rates have fallen off from the high rates experienced in the recent past. Growth is still expected, however, fueled by increased domestic demand as wealth levels continue to rise, as well as exports to North America, where growth rates are also robust.


The Transportation end-user segment is the smallest for our Business Area. Similar to other end-user segments, we sell a wide variety of products, generally from our Salt-Chlorine Chain and Polymer Chemistry platforms. For example, our products are used in plastics (polymers) for the manufacture of cars and other forms of transportation. These markets have almost entirely recovered from the 2008-2009 recession and are, in general, growing at or above GDP growth levels. The trend towards smaller, lighter weight cars supports the continued conversion to plastics, so growth in these businesses is disproportionately high.

The market

The global chemicals industry is very large (more than €3.5 trillion globally) and diverse. China has become the global leader in terms of chemical production. Market development is also disproportionately strong in the Middle East (due to access to low cost raw materials) and in the US (due to shale gas). Europe continues to post record trade surpluses in chemicals in all major regions and we expect this to continue, particularly in the chemical sectors relevant to AkzoNobel. Growth rates in Europe are expected to be substantially lower than in other regions, though, due to a combination of limited local demand growth (as described in the end-user segment analysis above) and a higher local raw material and energy cost base.