METHYLENE CHLORIDE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The methylene chloride market size is expected to reach US$ 1.71 Bn by 2030, from US$ 1.25 Bn in 2023, exhibiting a compound annual growth rate (CAGR) of 4.6% during the forecast period. Methylene chloride which is also known as dichloromethane, is a volatile colorless liquid with a mildly sweet odor. It is widely used as a solvent, paint stripper, degreaser, aerosol propellant, and foaming agent across several end-use industries including automotive, construction, pharmaceuticals, and chemical processing. The growth of the methylene chloride market is driven by the rising demand from construction, automotive, and chemical processing industries.

The methylene chloride market is segmented into application, end-use industry, and region. By application, the market is segmented into paint remover, pharmaceuticals, chemical processing, foam manufacturing, and metal cleaning. The paint remover segment accounted for the largest share of the global methylene chloride market in 2023. The growth of this segment is due  to the high usage of methylene chloride-based paint strippers in various end-use industries due to their fast acting property and ease of use.

Methylene Chloride Market Regional Insights

• North America is expected to be the second largest market for methylene chloride market during the forecast period, accounting for over 28.7% of the market share in 2023. The growth of the market in North America is to the well-established construction and automotive industry.
• The Asia Pacific market is expected to be the largest market for methylene chloride market, accounting for over 41.2% of the market share in 2023. The growth of the market in Asia Pacific is due to the rapid industrialization and growing construction activities in emerging economies such as China and India.
• The Middle East & Africa market is expected to be the fastest-growing market for methylene chloride market, with a CAGR of over 6.5% during the forecast period. The growth of the market in Middle East & Africa is due to the expanding oil & gas and chemical processing industries in the region.

Figure 1. Methylene Chloride Market Share (%), By Region, 2023

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Methylene Chloride Market Drivers

• Growth in the construction industry- Increasing demand from the construction industry is driving the methylene chloride market. The product is widely used as a solvent in various construction chemical formulations including coatings, paint strippers, and adhesives. Global construction industry has been growing steadily driven by population growth, urbanization, and infrastructure development activities especially in emerging economies. This has resulted in increasing consumption of paints and coatings, thereby driving the demand for methylene chloride. For example, the United Nation's 2030 Agenda for Sustainable Development highlights the importance of infrastructure in achieving development goals. It estimates that US$6.4 trillion will be needed to be invested globally each year in infrastructure until 2030 to sustain growth. This will create a steady demand for surface coating removal solvents like methylene chloride.
• High usage of methylene chloride- The automotive industry is fueling the market growth. Methylene chloride is extensively used in metal cleaning applications in the automotive industry as it effectively removes grease from metal surfaces prior to coating or painting. With increasing automotive production and sales globally, the consumption of methylene chloride for metal cleaning in automotive manufacturing is rising. For instance, projections by the United Nations indicate that global construction output will increase by 85% by 2030 and 115% by 2050 from the 2016 levels. This uptrend will significantly contribute to the consumption of paint strippers, thinners, and other surface preparation chemicals, containing methylene chloride.
• Growing demand for polyurethane (PU) foams- Polyurethane foam is catalyzing the methylene chloride market. Methylene chloride is one of the widely used blowing agents in the production of polyurethane foams which find applications across industries such as automotive, construction, electronics, and others. With growing PU foam consumption in various end-use industries, especially in developing regions, the demand for methylene chloride is increasing, as it is relatively more economical. For instances, according to the estimates of the International Organization of Motor Vehicle Manufacturers, global vehicle production to increase by 3-4% annually till 2025. This will stimulate the uptake of methylene chloride for automotive grade PU foams.
• Rising use of methylene chloride- Production of agrochemicals is anticipated to propel market growth.Methylene chloride is used as a solvent in the manufacturing process of several pesticides and insecticides. With the growing global population, the demand for agrochemicals is increasing to improve agricultural productivity. This, in turn, is expected to drive the consumption of methylene chloride in the agrochemicals industry in the near future.

Methylene Chloride Market Opportunities

• Bio-based methylene chloride- Bio-based methylene chloride presents significant opportunities due to its higher sustainability and eco-friendliness. Methylene chloride produced from biological sources such as plants, agricultural waste, algae, and others is safer and involves less pollution. Companies are investing in developing commercially viable processes to manufacture bio-based methylene chloride to reduce the product's environmental footprint. Bio-based variants can potentially replace a significant portion of petroleum-based methylene chloride, thereby opening new For instances, according to the data provided by the International Energy Agency's (IEA) Renewables 2020 report, global biofuels production has increased from just 5 Bn liters in 2000 to over 105 Bn liters in 2019. This shows growing acceptance and market potential of bio-alternatives.
• Growing chemical industry- Growing chemical industry in emerging regions provides growth avenues for methylene chloride manufacturers. Regions such as Asia Pacific, the Middle East, and Latin America are expected to drive most of the global chemical market growth in the near future. With methylene chloride being an important solvent for chemical processing, the market players can leverage the chemical industry expansion in high-potential regions by increasing their production capacities and distribution footprint. For instances, according to the U.S. Census Bureau, total construction spending in the U.S. was over US$1.75 trillion in 2021 with an increase of over 10% from the 2020. Construction activities require paints, coatings, and adhesives, where methylene chloride solvents have widespread applications.
• Increasing research & development (R&D) activities- Increasing R&D activities that are focused on improving the safety profile of methylene chloride provide new prospects. Concerns around toxicity and carcinogenicity have limited methylene chloride usage in certain applications. The companies are investing in R&D to modify the molecular structure to develop safer variants. Commercial viability of such variants can help tap new applications and boost consumption.
• Advancements in metal cleaning and stripping- Advancements in metal cleaning and stripping processes are likely to drive usage of methylene chloride. Ongoing technology developments to enhance metal cleaning efficiency in terms of time and cost savings present an opportunity for methylene chloride suppliers. Adoption of new optimized stripping processes by end-use industries can potentially increase the penetration of methylene chloride.

Methylene Chloride Market Trends

• Shift towards the adoption of green and bio-based- There is a rising shift towards the adoption of green and bio-based solvents such as acetone, ethyl acetate, supercritical CO2, and others which poses a threat for conventional solvents including methylene chloride. Regulations around Volatile organic compounds emissions and growing environmental concerns are the key factors driving the trend towards green solvents across industries such as paints & coatings, pharmaceuticals, and others. This can restrain the growth of methylene chloride market in the long run. For instance, Dumond Chemicals, one of the largest producers of paint stripping products in North America, completely replaced methylene chloride with bio-based solvents in all its stripper products by 2022, according to the company's recent sustainability report.
• Advancements in foam blowing agent technology- It is a key trend impacting methylene chloride usage. Environment-friendly blowing agents such as methyl formate, liquid carbon dioxide, methylal, and methyl acetate are being adopted across industries. PU foam manufacturers are shifting towards these alternatives due to their lower global warming and ozone depletion potential. This can hamper the demand growth for methylene chloride as a foam blowing agent. For instances, according to the data provided by the Honeywell, more than a 50% increase in North American hydrofluoroolefin  blowing agent sales volumes was witnessed between 2019 and 2021, as customers transitioned away from methylene chloride and other ozone-depleting substances.
• Increasing trend of solvent recycling- There is an increasing trend of solvent recycling due to rising environmental concerns and volatility in feedstock prices. Methylene chloride recycling is gaining traction as it provides benefits such as reduced resource consumption and waste generation. Chemical companies are collaborating with recycling technology providers to collect and purify used methylene chloride solvent for reuse. This trend is expected to provide growth opportunities in the near future.
• Developing alternatives- Manufacturers are developing alternate non-chlorinated solvents for applications where toxicity concerns limit methylene chloride use. Solvents such as dibasic esters, acetone, and N-methylpyrrolidone are being evaluated as safer replacements in pharmaceutical processes and other sensitive applications. Commercialization of viable alternatives can hamper methylene chloride growth in certain niche applications.

Methylene Chloride Market  Restrain

• Toxicity of methylene chloride- Concerns regarding the toxicity of methylene chloride is a major factor restraining consumption in certain applications. Methylene chloride exposure can have adverse effects on human health including liver toxicity, neurotoxicity, and cancer risks. Regulatory authorities have imposed strict exposure limits on the usage of methylene chloride in pharmaceutical, electronics cleaning, and other applications where it directly contacts humans. This has negatively impacted growth in such niche segments. For instances, in2022, according to a study by National Institutes of Health, major paint stripping product manufacturers in North America and Europe have already replaced methylene chloride with safer chemical alternatives like dibasic esters and N-methylpyrrolidone in their formulations. This transition to safer substitutes is expected to negatively impact the overall demand for methylene chloride in the near future.
• Availability of substitutes- Availability of substitutes such as hydrocarbons, esters, ketones, glycols, and others restricts methylene chloride demand. End-use industries are actively evaluating alternatives that can match the solvency power and vapor pressure needed for specific applications. Switching to replacements is expected to limit methylene chloride market growth to a certain extent. For instances, according to the European Chemicals Agency (ECHA), Methyl ethyl ketone (MEK) capacity in Europe grew from 1.4 million tonnes in 2016 to over 1.7 million tonnes in 2020, indicating rising adoption. Another substitute that is increasingly used is cyclohexane.

Counterbalance: To counterbalance this restraint, the market players need to upgrade the usage of methylene chloride to compete with the available substitutes.

• Volatility in crude oil prices- The volatility in crude oil prices affects methylene chloride production economics, which hinders the market growth. The raw material benzene is derived from crude oil refining. Fluctuating oil prices lead to inconsistent benzene supply and cost volatility. This, in turn, increases the production costs for methylene chloride manufacturers, thereby impacting the overall market growth.

Analyst View

The methylene chloride market is expected to grow at a steady pace over the 2027 next five years. The paints and coatings industry is the dominant end-user segment and will continue driving volumes over the forecast period. This is due to methylene chloride's excellent solvent properties and wide use as a thinner and paint stripper. The construction industry's healthy growth outlook particularly in Asia Pacific will also support demand from this segment. However, stringent regulations around methylene chloride's usage may act as a restraint. Many countries have imposed bans or restrictions on its usage due to safety hazards. Substitute products may gain traction if regulatory pressure mounts further. Alternatively, producers may opt to shift to developed nations where rules are still evolving. Meanwhile, the chemical manufacturing industry presents opportunities for higher methylene chloride consumption. Its high solvency makes it ideal for various chemical processing applications. Rising polyethylene and polycarbonate production will bolster demand from this end-use. Growing electronics sector is also expected to support the chemical industry's output going forward. Regionally, the Asia Pacific region leads consumption due  to the large manufacturing capacities in China, India, and other developing Asian countries. North America is also a major market underpinned by the region's developed end-use industries. European demand may rise moderately over the forecast period.

Recent Developments

New product launches

• In March 2021, Dow Chemical Company, a U.S. based multinational corporation launch its new solvent methylene chloride under the brand name DOWCLENETM 1190 in the Indian market. It is used as a process solvent across various industries including agrochemicals, coatings, cleaning, and automotive. This launch widened Dow’s solvent offerings for the growing Indian market. The company is among the three largest chemical producers in the world. It is the operating subsidiary of Dow Inc., a publicly traded holding company incorporated under Delaware law. Dow Inc.
• In January 2020, Ineos Group Limited, an U.K. multinational conglomerate, announced the opening of a new production facility for methylene chloride in the U.S. The new plant has the capacity to produce more than 30,000 tons annually. This helped Ineos Group Limited expand its methylene chloride production capabilities in North America. Till 2021, it is the fourth largest chemical company in the world, with additional operations in fuel, packaging and food, construction, automotive, pharmaceuticals, textiles, and professional sports

Acquisition and partnerships

• In December 2021, KH Chemicals, a leading distributor of base chemicals, completed the acquisition of MC Chemical China Ltd. This acquisition expanded KH Chemicals presence in China and strengthened its position in the methylene chloride market. Founded in 1994, it is currently active in more than 90 countries worldwide. Being part of Ravago Chemicals Group enables the company to pursue global expansion and strategic growth.
• In October 2020, Dow and Veolia announced a partnership to utilize recycled plastic waste as feedstock for production of new polymers and solvents including methylene chloride. This partnership aligns with Dow's sustainability targets.

Figure 2. Methylene Chloride Market Share (%), By Application, 2023

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Top Companies in Methylene Chloride Market

• Dow Chemical Company
• AkzoNobel N.V.
• Ineos Group
• Solvay S.A.
• KEM ONE
• Shin-Etsu Chemical Co. Ltd.
• Gujarat Alkalies & Chemicals Ltd.
• Tokuyama Corporation
• Occidental Petroleum Corporation
• Ercros S.A.

Definition: Methylene chloride, also known as dichloromethane (DCM), is a volatile colorless liquid with a mildly sweet odor. It is widely used as a versatile solvent across many end-use industries such as automotive, construction, pharmaceutical, chemical processing, and paints & coatings. Methylene chloride's excellent solvent properties for many organic compounds, low boiling point, high vapor pressure, and low toxicity make it an ideal solvent for several applications including paint stripping, polyurethane foam manufacturing, aerosol formulations, and metal cleaning. The growth of end-user industries is expected to drive the global methylene chloride market size over the forecast period.

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