What sub-sectors are included in the fine chemical industry

In recent years, various countries around the world, especially developed industrial countries are the development of fine chemical products as one of the key development strategies for upgrading and adjusting the structure of the traditional chemical industry, its chemical industry are to "diversification" and "refinement" of the direction of development. With the further development of social economy, the demand for electronic, automobile, mechanical industry, new materials for construction, new energy and new environmental protection materials will rise further, and electronic and information chemicals, surface engineering chemicals, pharmaceutical chemicals, etc. will be further developed, and the global market scale of fine chemicals will keep growing faster than the traditional chemical industry.
01 Fine chemicals

Fine chemicals are chemicals with high technical density, high added value and high purity that can enhance or give a (class) of products with specific functions or possess specific functions in small quantities.

In 1986, the former Ministry of Chemical Industry divided fine chemicals into 11 categories: (1) pesticides; (2) dyes; (3) coatings (including paints and inks); (4) pigments; (5) reagents and high-purity substances; (6) chemicals for information (including photographic materials, magnetic materials and other chemicals that can accept electromagnetic waves); (7) food and feed additives; (8) adhesives; (9) catalysts and (10) chemicals (APIs) and chemicals for daily use (produced by chemical systems); (11) functional polymer materials in polymers (including functional films, polarizing materials, etc.). With the development of the national economy, the development and application fields of fine chemicals will continue to develop and new categories will be added.
Fine chemicals have the following characteristics.

(1) A wide range of products and applications

Internationally, there are 40-50 categories of fine chemicals and more than 100,000 varieties. Fine chemicals are used in all aspects of daily life, such as medicine, dyes, pesticides, paints, daily chemicals, electronic materials, paper chemicals, inks, food additives, feed additives, water treatment, etc. They are also widely used in aerospace, biotechnology, information technology, new materials, new energy technology, environmental protection and other high-tech applications.

(2) Complex production technology

There are many varieties of fine chemicals, and the same kind of intermediate products can be extended by different processes to several or even dozens of different uses of derivatives, the production process is complex and varied, and the technology is complex. Various products of fine chemicals need to go through laboratory development, small trial, pilot test and then large-scale production, and also need to be updated or improved in time according to the changes in demand of downstream customers, which requires high stability of product quality and requires enterprises to continuously improve the process and accumulate experience in the process of production. Therefore, the enterprise's ability to develop fine chemical products derived from niche areas, accumulate experience in production processes and innovate is the core competitiveness of a fine chemical enterprise.

(3) High added value of products

The production process involved in fine chemical products is long, going through several multi-unit operations, the manufacturing process is more complex, and in the production process to meet the mild reaction conditions, safe operating environment, specific chemical reactions and other conditions, to achieve easy separation of chemicals, high product yield, which requires a high level of process technology and reaction equipment. As a result, fine chemical products generally have a high added value.

(4) A wide range of compounding products

In practical applications, fine chemicals appear as a comprehensive function of products, which requires screening different chemical structures in chemical synthesis and giving full play to the synergistic cooperation between the fine chemicals' own functions and other complementary substances in dosage form production. The demand for fine chemicals in industrial production is diverse, and it is difficult for a single product to meet the needs of production or use. Taking the water treatment industry in which the company is engaged as an example, the special chemicals used in this field include algaecides, scale inhibitors, corrosion inhibitors, flocculants, etc., and the chemicals for each use can be compounded from several chemical agents.

(5) Higher viscosity of products to downstream customers

Fine chemical products are generally used in specific areas of industrial production processes or to achieve specific functions of downstream products, so users have higher requirements for product quality and stability, and the selection process and criteria for suppliers are more stringent, and once entered into the supplier list will not be easily replaced.

02 Fine chemical industry classification

The fine chemical industry is a generic term for the production of fine chemicals, referred to as "fine chemicals", with high added value and high investment profits. The fine chemical industry is highly technology-intensive, with high added value and high profitability, and relies on scientific and technological innovation, making it a strategic focus for the development of the chemical industry in the world today, and an important symbol of a country's comprehensive technological level and one of the fastest growing economic sectors. Black Light Technology is an automation control system development and automation project undertaking, chemical equipment development and production (with D1,D2 pressure vessel production license), the technical team has accumulated a wealth of technology and experience in automation control, is a focus on automation control system development, automation project undertaking and technical services.

1. By application area

According to the national economic classification standard, fine chemical industry is divided into 4 sub-industries, such as pesticide manufacturing, coating, ink, pigment and similar products manufacturing, special chemical products manufacturing and daily use chemical products manufacturing.

2. By product category

Along with the leapfrog development of China's economy and science and technology after the reform and opening up, China's fine chemical industry has developed rapidly, and according to product categories, it can be distinguished into two parts: traditional and new fields.

(1) Traditional areas of the fine chemical industry

The traditional fields of the fine chemical industry mainly include pesticides, fertilizers, coatings and other fields. After a long period of accumulation, China's fine chemical industry has basically met the needs of the national economic development in traditional areas, and some products have a certain degree of international competitiveness, the production of dyes and pesticides has been in the first place in the world, paint production has reached the fourth place in the world.

(2) Emerging areas of the fine chemical industry

Emerging areas of fine chemical products have the characteristics of strong specialization and high technical content, and the types mainly include food additives, feed additives, adhesives, surfactants, paper chemicals, water treatment chemicals, electronic chemicals, etc. At present, the overall technical level of China's fine chemical industry is still relatively low, some emerging areas of fine chemical products still need to be imported in large quantities, the whole industry is in the development stage of optimization and upgrading, emerging areas of fine chemical industry there is still more room for improvement

03 Fine chemical industry characteristics

1. Fine chemical industry belongs to the manufacturing industry, and other industries have a high degree of industrial relevance

The fine chemical industry has a high degree of industry relevance, including: agriculture, textiles, construction, paper industry, food industry, daily use chemical production, electronic equipment, etc. The development of the fine chemical industry is closely related to these industries.

The upstream of the fine chemical industry is mainly the basic chemical raw material manufacturing; at the same time, the products provided by the fine chemical industry are the basic raw materials for many other industries, such as agriculture, construction, textiles, pharmaceuticals and other important industries. The development of agriculture, construction, textiles, pharmaceuticals, electronics and other related industries provides an opportunity for the development of the fine chemical industry; at the same time, the development of the fine chemical industry will also promote the development of upstream industries.

2. The fine chemical industry has certain characteristics of economy of scale

The production scale of foreign fine chemical production enterprises is more than 100,000 tons, the second half of the 20th century, the global fine chemical production enterprises in the United States and Japan is representative, is large, professional characteristics, in order to continuously reduce production costs. At present, the concentration of China's fine chemical industry is relatively low, most small enterprises, medium-sized and large enterprises, especially the proportion of large enterprises is relatively low.

3. The fine chemical industry is an industry with high emissions of industrial pollutants

According to the 2012 annual report on environmental statistics, the chemical industry accounts for 16.3% of the national industrial waste water emissions, ranking second; waste gas emissions account for 6% of the national industrial waste gas emissions, ranking fourth; solid waste emissions account for 5% of the national industrial solid waste emissions, ranking fifth; COD emissions account for 11.7% of the national industrial COD emissions, ranking third.

4. Cyclical characteristics of the industry

The downstream industries facing the fine chemical industry mainly include environmental protection plasticizers, powder coatings, insulation materials, high-temperature curing agents and other industries, the end products are used in various plastic products, building materials, packaging materials, household appliances, automotive machinery, etc., covering many areas of the national economy, the industry itself does not have obvious cyclical characteristics, but the impact of the macro-economy will be with the overall economic conditions and show The industry cycle and the overall macroeconomic cycle are basically the same.

5. Regional characteristics of the industry

From the regional distribution of enterprises in China's fine chemical industry, the regional pattern of enterprises in the fine chemical industry is obvious, with East China accounting for the largest share and North China ranking second.

6. Seasonal characteristics of the industry

The fine chemical industry has a wide range of downstream applications, and overall there are no obvious seasonal characteristics.

04 Barriers in the fine chemical industry

The variety of fine chemical products, the speed of renewal, the strong specialization and the complexity of the production process have determined that the main barriers to entry into the industry are technological research and development barriers, environmental protection and safety barriers, sales channel barriers and capital investment barriers.

1. Technical research and development barriers

In addition to a professional academic background, high-end technical personnel of fine chemical intermediates also need years of practical experience in research and development and production. There are many kinds of fine chemical intermediates and they are updated quickly, so we need to adjust and update the product varieties according to the demand of downstream pesticide, pharmaceutical and dye industries. This requires enterprises to have strong R&D capability and reserves of new technologies and varieties.

Technology research and development in the fine chemical industry is mainly focused on the selection of new product varieties, chemical reaction process path selection, catalyst selection and process control such as temperature, pressure, time, etc. Different research and development paths and process selection can make a big difference to product cost, purity, quality and subsequent expansion. Therefore, having a large number of high end and mature technical professionals is extremely important for the continued development of the company. The fine chemical industry also has very high requirements for crystallisation and separation technology, distillation and purification technology, chromatography inspection technology, safety operation technology and pollutant treatment technology, requiring companies to be equipped with corresponding professional production technology workers.

To sum up, to enter the market and develop in the long term, fine chemical enterprises must have strong product development capabilities and long-term production technology accumulation, all of which constitute technical barriers to the industry.

2. Environmental protection and safety barriers

The production process of fine chemicals will produce waste water, waste gas, solid waste and other harmful substances, enterprises need to invest a lot of money for the treatment of these harmful substances, so that the production of enterprises in line with national environmental protection standards. As national environmental protection standards increase, companies must continue to increase their research and development of pollutant treatment technologies, investment in environmental protection facilities and pollutant disposal efforts.

At the same time, some of the raw materials and intermediate products used in the production process are flammable, explosive, toxic and other dangerous chemicals, and the chemical reactions in the production process are subject to safety risks such as leakage, flammability and explosion. If employees violate safety operating procedures, resulting in changes in reaction path, temperature, concentration and pressure exceeding safety standards, or if equipment is seriously aged and out of repair, safety incidents such as explosions, leaks and fires may occur, resulting in injuries, deaths and property damage to the Company. The company needs to continuously invest in safe production handling technology and safety protection.

In summary, the continued strengthening of environmental protection and safety requirements, and the increasing investment in environmental protection and safety by companies, constitute environmental protection and safety barriers in the fine chemical industry.

3. Sales channel barriers

Fine chemical intermediates are highly specialized and require the establishment of specific sales channels. The ability to maintain long-term business cooperation with customers will have a significant impact on the daily operation and long-term development of enterprises. The quality and purity of fine chemical intermediates directly affects the performance and quality of end products, and multinational integrated chemical companies such as BASF Group and Kolon have quite strict requirements on the production scale, product quality and sustainable operation ability of suppliers. The main suppliers of one or several intermediates are identified and reviewed and rated/audited regularly.

Therefore, once a fine chemical intermediate company is selected as a supplier, it usually forms a stable cooperation relationship with large downstream customers. Specific sales channels and strict qualification requirements constitute a strong sales channel barrier to new entrants.

4. Barriers to capital investment

With the increasing improvement of China's environmental protection policy, safety production policy and employee welfare policy, as well as the increasingly strict import standards for fine chemical intermediates in developed countries such as the United States and Europe, the entry threshold of the fine chemical intermediate industry is getting higher and higher, which require fine chemical intermediate manufacturers to make large investments in environmental protection, safety, product research and development and operation scale, resulting in their initial and continuous investment constantly This has led to rising initial and ongoing investments. Smaller fine chemical enterprises that do not have the scale and technological advantages will be gradually eliminated from the market.

As a result, the increasing requirements for fixed assets and R&D investment constitute a financial barrier to entry into the industry.

05 Introduction to the industry chain of the fine chemical industry

The fine chemical industry is an important pillar industry of the national economy. The upstream includes raw materials such as oil and ore, while the downstream includes agriculture, textile industry, construction industry, paper industry, food industry, daily-use chemical production, electronic equipment and many other industries. The fine chemical industry involves many fields in the national economy and has a high strategic position.
Source: Reproduced
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