Specialty Chemicals
Unlike commodity producers, this industry formulates high-value, performance-enhancing chemical products tailored to specific customer applications, such as coatings, flavorings, or adhesives.
Why it exists
Specialty chemicals solve specific performance problems—coatings, adhesives, additives, catalysts, electronic materials—where formulation and know-how matter more than volume.
Why it’s necessary
They enable differentiated performance (e.g., faster chips, longer-lasting paints, safer batteries) and often determine the final product’s quality and reliability.
Key components
Coatings, adhesives, sealants
Additives for plastics, fuels, foods
Electronic and battery chemicals
Custom formulations and technical service teams
How to evaluate businesses
Look for high gross margins, sticky relationships, and switching costs. A good specialty chemical business has deep application expertise, diverse end-markets, low customer churn, and consistent innovation. Evaluate R&D productivity, patent position, share of wallet with key customers, and resilience in downturns.
How the industry could be improved
Closer co-development with customers, shorter formulation cycles, and better digital tools for simulating performance before lab work. Greener chemistries and less toxic components. More modular manufacturing that can adapt to smaller, higher-value batches.