KSA Specialty Chemicals Market Outlook to 2028

KSA Specialty Chemicals Market Overview

The KSA Specialty Chemicals Market was valued at USD 4 billion, driven by increasing industrialization, diversification of the Saudi economy under Vision 2030, and rising demand for high-performance materials across various sectors. Specialty chemicals are vital for industries like construction, automotive, energy, and agriculture, contributing to the growing demand for tailored chemical solutions in the region.

Key players in the KSA specialty chemicals market include SABIC, Saudi Chevron Phillips, Advanced Petrochemical Company, Tasnee, and National Industrialization Co. These companies leverage local raw material availability and advanced manufacturing capabilities to meet the regions increasing demand for specialized chemicals.

The cities of Riyadh, Jubail, and Yanbu dominate the specialty chemicals market, primarily due to their advanced industrial infrastructure, presence of key manufacturing plants, and proximity to major industrial clients. The Saudi governments efforts to develop industrial clusters in these regions play a critical role in the growth of the market.

In 2024, SABIC and Lubrizol collaborated to provide compatible material solutions that combine soft and rigid materials, suitable for applications in consumer electronics and mobility industries. These solutions feature SABIC's specialty compounds and copolymers as rigid substrates, and Lubrizol's soft ESTANE ECO TPU materials, which are 2-shot injection molded onto the substrates.

KSA Specialty Chemicals Market Segmentation

The KSA Specialty Chemicals Market is segmented by product type, end-use industry, function, and region.

By Product: The market is segmented into Agrochemicals, Construction Chemical, and Oilfield. In 2023, Construction Chemical held the dominant market share due to the region's booming construction and automotive industries, which demand high-performance and durable materials.

By End-User: The market is segmented by end-use industries such as Construction, Agriculture, Oil & Gas. The Construction segment led the market in 2023, driven by Saudi Arabias substantial investment in infrastructure projects such as NEOM and The Red Sea Project. The construction sector's sustained growth fuels this segment's leadership in the market.

By Region: The market is segmented by region into Central, Eastern, Western, and Southern. The Eastern region dominated the market in 2023 due to its proximity to major industrial zones and petrochemical hubs, especially in Jubail Industrial City. This region also has a noteworthy number of industrial parks, contributing to the high market share.

KSA Specialty Chemicals Market Competitive Landscape

Company

Establishment Year

Headquarters

SABIC

1976

Riyadh, Saudi Arabia

Saudi Chevron Phillips

1996

Al-Jubail, Saudi Arabia

Advanced Petrochemical Company

2005

Jubail, Saudi Arabia

Tasnee

1985

Riyadh, Saudi Arabia

National Industrialization Co.

1985

Riyadh, Saudi Arabia

Advanced Petrochemical Company: In February 2024, APC announced plans to construct a new Isopropanol plant in Jubail Industrial City, with an investment of approximately USD 191.3 million. This facility aims to enhance the company's production capabilities and expand its product offerings in the specialty chemicals sector.

Tasnee: Tasnee has been actively increasing its production capabilities across various product lines, including butanol, acrylic acid, and super absorbent polymers. The company has successfully boosted its production volume of butyl acrylate by 29% above budget, reflecting its operational efficiency and market responsiveness.

KSA Specialty Chemicals Market Analysis

Growth Drivers:

Industrial Diversification Under Vision 2030: One of the main growth drivers for the KSA Specialty Chemicals Market is Saudi Arabias Vision 2030, which aims to diversify the economy away from oil dependency by developing industrial sectors such as construction, automotive, and agriculture. As a result, there is an increasing demand for advanced chemicals tailored for specific industrial applications. The National Industrial Development and Logistics Program (NIDLP) aims to boost investment in new industrial sectors, with a target of reaching USD 453.2 billion by 2030. This initiative is crucial for meeting the countrys rising demand for high-performance materials needed in large-scale projects such as NEOM and The Red Sea Project.

Rising Demand for Oilfield Chemicals: Saudi Arabias position as a major oil producer requires substantial investment in specialty chemicals used for enhanced oil recovery, drilling, and refining processes. Saudi Aramco's capital expenditure (capex) for 2024 is estimated to be between USD 48 billion and USD 58 billion, with a noteworthy portion directed toward upstream activities, including gas production. The rising global energy demand has pushed the country to enhance its production capacity, further boosting the need for oilfield chemicals. This surge in investment directly fuels the specialty chemicals market, particularly for oilfield chemicals.

Growth in Agriculture Sector: Saudi Arabia's agriculture sector has witnessed considerable growth, driven by government programs aimed at achieving food security. In 2023, the Ministry of Environment, Water, and Agriculture launched several initiatives to boost agricultural productivity, creating a demand for agrochemicals like fertilizers, pesticides, and herbicides. Specialty chemicals play a key role in improving crop yields and combating harsh environmental conditions, which are prevalent in the region. This rise in agricultural activities contributes to the growth of the agrochemicals segment within the specialty chemicals market.

Challenges
:

High Cost of Raw Materials: The rising cost of raw materials, particularly petrochemicals, poses a momentous challenge for specialty chemicals manufacturers in Saudi Arabia. The Saudi Petrochemical Industry Association reported that in 2023, the cost of key raw materials such as ethylene and propylene increased substantially, driven by supply chain disruptions and fluctuating global oil prices.

Environmental Regulations: In 2024, Saudi Arabia implemented stricter environmental regulations under its National Environmental Strategy, requiring companies in the specialty chemicals sector to adopt more sustainable production processes. These regulations have increased operational costs as manufacturers must now invest in greener technologies and reduce their carbon footprint. Failure to comply with these regulations could result in fines and operational delays.

Government Initiatives:

Vision 2030 and Industrialization: As part of Vision 2030, the Saudi government is focusing on industrial diversification, which includes developing the chemical manufacturing sector. The government aims to increase the contribution of the petrochemical and specialty chemicals sector to the overall economy by fostering innovation and local production.

National Industrial Development and Logistics Program (NIDLP): The National Industrial Development and Logistics Program (NIDLP) is a key initiative launched by Saudi Arabia to diversify its economy, enhance industrial development, and promote logistics. The program focuses on sectors such as energy, mining, industry, and logistics, aiming to drive economic growth and create jobs.The NIDLP has initiated 283 projects, with a focus on driving local employment and economic diversification, but specific funding amounts for particular sectors are not detailed.

KSA Specialty Chemicals Market Future Outlook

The KSA Specialty Chemicals Market is expected to witness remarkable growth in the forecasted period, driven by the expansion of the construction, automotive, and oil & gas sectors, and increased investments in industrial diversification.

Future Market Trends:

Growth in Demand for Sustainable Chemicals: By 2028, the KSA Specialty Chemicals Market is expected to witness a significant increase in demand for sustainable chemicals as industries across the Kingdom adopt eco-friendly solutions. Government regulations and sustainability goals, particularly under Vision 2030, will push manufacturers to develop green alternatives to traditional chemicals.

Technological Advancements in Oilfield Chemicals: The future of the specialty chemicals market in Saudi Arabia will be driven by advancements in oilfield chemical technologies. Over the next five years, companies are expected to invest heavily in developing chemicals that enhance oil recovery rates and reduce environmental impact.
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