roduction output may be small but the specialty chemicals sector has one of the best growth potential within Singapore’s chemicals cluster. Worldwide, the specialty chemicals market – niche chemicals and polymers with unique functions to enhance the processing and performance of consumer products – is expected to grow at a compound annual growth rate (CAGR) of 5.42% from 2015 to 2025.
The Asia Pacific will outpace the global average spurred on by the exponential growth of the Asian middle class. It is forecast that by 2030 two-thirds of the global middle class will be living in Asia and will drive trends in the personal care, packaging, automotive and infrastructure sub-market segments.
“The market is evolving and, whilst historically most businesses have approached Asia by deploying developed western technologies, it is becoming increasingly apparent that innovation cannot be parachuted into the region and be expected to be effectively utilised and integrated into new technological solutions. Innovation in Asia has to be driven for Asia because, as the fastest growing market in the world, it deserves its own attention,” Croda’s president of the Asia Pacific, Nick Challoner, told Global Business Reports in December 2016.
This development augurs well for Singapore, a leading chemicals hub with an extensive chemicals value chain spanning refining to olefins production to chemicals manufacturing, supported by innovation and research. With a refining capacity of more than 1.3 million barrels a day, Singapore is the world’s fifth largest refinery export hub. It is also one of the top 10 globally by chemical export volume.
Many of the leading players in specialty chemicals are also here, leveraging on its good infrastructure, robust intellectual property protection, secure environment and strong research capability to undertake production and research and development (R&D) to develop products targeted at the Asian consumer.
Between 2007 and 2016, manufacturing output from specialty chemicals rose by an annual average of 5.1% to S$9.5 billion in 2016, accounting for 11.6% of the chemicals sector’s gross turnover and 27.5% of the sector’s value added.
Spurring Innovation, Fostering Growth
Singapore has redoubled efforts to foster growth of speciality chemicals as part of its development of the energy and chemicals (E&C) industry. In October 2017, an Industry Transformation Map (ITM) was unveiled to steer Singapore’s future development as a globally competitive and leading hub for E&C.
Spearheaded by the Economic Development Board (EDB), it has identified a two-pronged strategy, focused on innovation. Speaking at the launch, Lim Hng Kiang, Minister for Trade and Industry (Trade), said, “The first prong of our innovation efforts is to drive the adoption of advanced manufacturing technologies among our E&C industry. Advanced manufacturing technologies such as robotics, industrial internet-of-things, are changing the way products are created, supply chains are managed and value chains are defined globally. In Singapore’s context, advanced manufacturing technologies will enable our companies to be more competitive by overcoming land, labour and carbon constraints as well as raising productivity. By 2020, we aim to have 20 E&C plants, including all refineries and crackers, adopt advanced manufacturing technologies. This will provide a strong foundation for our effort to be scaled to the rest of the industry.
“The second prong is to focus on building capabilities such as applied research or novel platform strategies to accelerate innovation and shorten the go-to-market process. This will help our companies better tailor our products and solutions to customers and capture growth in the region. To this end, the EDB and A*STAR have embarked on a joint technology road mapping exercise to identify the technology needs of our companies, and invest in the relevant technologies and capabilities.”
More specifically, the EDB noted, “Singapore will diversify and upgrade its olefin derivative portfolio towards high value added petrochemical products and specialty chemicals. Focus end-markets include lubricant additives, oilfield and water chemicals, consumer care, agricultural chemicals and animal health and nutrition, as well as functional chemicals such as surfactants and function polymers. Industrial biotechnology and synthetic biology are also technology focus areas that will be explored.”
To further support the growth of Singapore’s specialty chemicals segment, the EDB added, “Singapore will strengthen its innovation ecosystem by building the necessary capabilities such as applied research or novel platform technologies to help companies accelerate and shorten innovation cycles. The government will work with leading players to develop domain knowledge in their labs in Singapore as well as support companies who adopt ‘open innovation’ as a means to co-innovate and co-develop system solutions with their partners.
Broadening Feedstock, Developing Higher Olefins
Singapore is broadening its feedstock to increase its competitiveness and enhance its resilience. Under Jurong Island v2.0, a strategic blueprint aimed at boosting Jurong Island’s cost competitiveness through a series of systems level upgrades, Singapore has built terminals and infrastructure to allow for the import of feedstock such as liquefied petroleum gas (LPG), liquefied natural gas (LNG) and naphtha.
“Eventually oil prices will increase again, and we have to shield ourselves against volatility. Developments such as the LNG terminal, increasing the number of LNG aggregators for greater energy security and competitiveness, along with efforts put towards feedstock diversification such as Vopak’s new LPG terminal on Jurong Island, all contribute to this goal,” EDB’s Executive Director Energy and Chemicals Damian Chan told the Global Business Reports.
As for olefins, Singapore is actively working on developing the higher olefins chains, such as C5s. Higher olefins are reactive intermediates used to manufacture products used in lube oil additives, surfactants, agricultural chemicals, coatings and corrosion inhibitors. The main industrial sources of olefins are petroleum and natural gas refining.
“While typically one cracker does not produce enough C5s to result in a world-scale C5 complex, the island has the benefit of having four crackers. Hence we could aggregate C5s that come out of the crackers to produce a world-scale C5 complex, which is something that we are keen to develop,” Mr Chan noted.
Industry majors have given their vote of approval by ramping up their investments in Singapore to develop and manufacture chemicals tailored to Asia’s needs.
In synthetic rubber, Singapore is one of the largest manufacturing sites for synthetic rubber globally following multi-million dollar investments by industry leaders, including LANXESS, Asahi Kasei, Sumitomo and Zeon. Together they have invested well over S$1.5 billion in new facilities to produce intermediates that go into making new-generation, high-performance green tyres, the fastest growth sector in the tyre industry today. By using tyres with low-rolling resistance and reduced tyre abrasion, drivers can cut down carbon dioxide emissions from their vehicles and reduce the use of fuel, to comply with increasingly stringent regulations on vehicles.
Singapore is also the preferred location for companies tapping into the demand spike for lubricants. It now hosts three of the world’s top four lubricant-additives companies – Infineum, a joint venture between ExxonMobil and Shell, Chevron Oronite and Afton.
Afton is building a US$100 million facility in Singapore, the company’s first greenfield manufacturing project in 35 years, to produce customised lubricant components for its customers in the Asia Pacific and the Middle East, while ExxonMobil increased its production of grease and synthetic lubricants in 2017 following the completion of an expansion project in Jurong.
Also expanding their presence in Singapore are Evonik Industries, which doubled its oil additives plant in Singapore in 2015, and France’s Total Oil. Evonik now operates its largest oil additives plant globally in Singapore, producing 40% of its global output, while Total has a lubricant oil-blending plant in Singapore, which is also its largest in the world. Built at a cost of US$150 million, Total’s new facility has the capacity to produce 310,000 tonnes of lubricants per year for automotive, industrial and marine applications, mainly for its customers in Southeast Asia.
For methionine, an essential amino acid used in animal feed, Singapore is host to Evonik Industries’ mammoth plants. By 2019, when the second plant is completed, the German group will have a combined annual capacity of 300,000 tonnes, making Jurong Island the largest methionine production site in the world.
Demand for specialty chemicals is continuing to expand. By putting all the building blocks in place, Singapore is well positioned to play an increasingly significant role in the market growth.