South America specialty pulp and paper chemicals market is estimated to witness high growth owing to high demand for packaging materials and increasing focus on bio-based chemicals
South America specialty pulp and paper chemicals market is estimated to be valued at USD 1.93 Bn in 2024, exhibiting a CAGR of 2.8% over the forecast period (2024-2031). There has been huge demand for specialty chemicals due to increasing production of packaging materials such as corrugated boxes and paper bags across industries. Furthermore, growing focus on development of bio-based and sustainable specialty chemicals can drive the propel market growth during forecast period.
Market Dynamics-
South America specialty pulp and paper chemicals market growth is primarily driven by huge demand for packaging materials across various end-use industries such as food & beverages, personal care, pharmaceuticals, and chemicals. Specialty chemicals play a crucial role in improving the functionality and quality of packaging boards and papers. Increasing focus of manufacturers on reducing environmental footprint can boost demand for bio-based specialty chemicals in the region. Major market players are engaged in developing eco-friendly and sustainable product offerings using renewable raw materials to gain competitive advantage.
Demand for environmentally sustainable specialty pulp and paper chemicals can drive the market growth
Rising awareness about environmental protection and sustainability can drive the South America specialty pulp and paper chemicals market growth. Specialty chemicals like process chemicals and functional chemicals that can enhance the operational efficiencies of mills are gaining popularity. These allow paper manufacturers to meet stringent environmental regulations while maintaining productivity levels. The push for greener paper products encourages paper companies to invest in eco-friendly specialty chemicals to strengthen their sustainability credentials.
Expanding tissue paper industry in South America boosts functional chemical sales
Robust growth of tissue paper industry across South America can boost demand for specialty chemicals. Countries like Brazil, Argentina, and Chile witness rising consumption of tissue paper products like napkins, toilet paper, facial tissues, and others due to growing population, urbanization, and rising incomes. This boosts demand for performance-enhancing functional chemicals from tissue manufacturers. Specialty chemicals that can improve strength, wet strength and softness witness higher demand. Expanding tissue industry opens up opportunities for specialty chemical providers to partner with these manufacturers and capitalize on the growth momentum.
Stringent environmental regulations limit non-compliant specialty chemical imports
Stringent environmental policies and regulations in South American countries regarding the use of chemicals can pose challenges for market players. Governments are introducing laws to curb the import and usage of specialty chemicals that do not meet certain sustainable and safety standards. For example, Brazil has set tough emission limits for pulp and paper mills through its climate policies. This restricts the imports of non-eco-friendly specialty chemicals from foreign companies who cannot adjust their product lines as per the local norms. Complying with the evolving legislation increases compliance costs for international specialty chemical makers.
High cost of developing customized specialty chemical solutions
Developing customized and application-specific specialty chemical formulations as per the requirements of paper manufacturers is an expensive and time-consuming process. It requires extensive research, testing, certification and collaborating closely with end-users during trials. The costs involved in product development, getting approvals and achieving commercialization makes it difficult for small and mid-sized specialty chemical companies to develop tailored solutions. This high entry barrier deters new players and limits innovations.
Rising import dependence on graphic paper presents an opportunity
South America specialty pulp and paper chemicals market is heavily dependent on imports to meet domestic demand for chemicals especially from China, the U.S., and Western Europe. However, there is potential to substitute a part of these imports by boosting local graphic paper production. This presents opportunities for specialty chemical providers to partner with regional graphic paper mills and support their capacity expansions. These can supply critical process chemicals, coating additives and other materials to help manufacturers ramp up output as well as upgrade their product portfolios. It allows chemical companies to gain new customers and strengthen their footprint in the fast-growing South America specialty pulp and paper chemicals market
Opportunity to supply innovative specialty chemicals for tissue paper product differentiation
As the demand for advanced tissue papers increases, there is an opportunity for innovative specialty chemicals to support product development and differentiation. There has been huge demand for functional chemicals enabling properties like wet strength, softness, absorbency, and scent and premium aesthetics. Specialty chemical providers can introduce customized solutions tailored for new applications like wet wipes, facial tissues, paper towels, and others. This allows tissue manufacturers to launch novelty product ranges and break from commodity competition.
Key Developments-
- In December 2023, Klabin, a top producer of packaging and sustainable paper, announced the acquisition of Arauco's forestry management operations in Paraná. This investment encompasses the purchase of over 85,000 hectares of valuable forest land, primarily located in the State of Paraná. With this acquisition, the company aims to enhance its self-sufficiency in raw materials.
- In June 2023, CMPC, a Chile-based packaging and tissue paper company, signed an agreement to purchase Powell Valley Millwork in the U.S. As per the deal, the company aims to expand its business in the U.S.
- In August 2021, Klabin empowered its growth strategy by starting first paper machine (MP27) of the Puma II Project located in Ortigueira, Paraná. The machine has a production capacity of 450,000 tons to produce Eukaliner, the world’s first kraftliner paper made 100% from eucalyptus fiber.
Key Players-
Klabin, Ashland, BASF SE, Buckman Laboratories International, Inc., Kemira, Evonik Industries AG, MWV Rigesa, AVENT, CMPC, and MASISA
