Industrial Alcohols Market Size Forecast to Reach $225 Billion by 2026

August 10 22:06 2021
Industrial Alcohols Market Size Forecast to Reach $225 Billion by 2026
Industrial Alcohols Market
Demand for Biofuels Among End-users for Energy Protection, as Well as Growing Demand for Low-cost Feedstock in the Chemical Industry, Are Driving the Global Industrial Alcohols Market.

Industrial Alcohols Market size is forecast to reach $225 billion by 2026, after growing at a CAGR of 8% during 2021-2026. Due to the excellent properties of industrial alcohols, such as high octane number and increased flammability characteristics, there is a boom in demand for organic solvents such as ethyl alcohol, methyl alcohol, which boosts market growth in transportation. Furthermore, a lack of petroleum and oil prices has exacerbated the issue of energy scarcity, contributing to an increase in the use of alcohol as a source of energy.

Bioethanol is also combined with gasoline and diesel to be used as a vehicle fuel. Furthermore, government mandates in Brazil to use 22 percent ethanol blended gasoline, as well as a blend of 10% ethanol with gasoline (gasohol) in the United States, have fueled market growth. In addition, the demand is expected to expand due to proactive government policies and increased use of methanol in chemical industries, as well as spiraling growth in production facilities.

Furthermore, an increase in the number of corporate collaborations aimed at reducing greenhouse gas emissions and reducing the energy sector’s reliance on imported fossil fuels is expected to improve market growth. However, fluctuating feedstock costs, such as molasses, are expected to obstruct alcohol production and, as a result, market growth. Furthermore, COVID-19 has had some effect on industrial alcohol manufacturing and development. Though the pandemic has had an effect on their companies, it has had little impact on their industrial alcohol products’ global operations and supply chain.

Industrial Alcohols Market Segment Analysis – By Product

The ethyl alcohol held the largest share in the industrial alcohol market in 2020, due to the high demand for the commodity, which can be made easily from biomass, corn, wheat, barley, and other sources. Because of its high octane content, it is blended with gasoline as a green fuel. Regardless of the source, the ethanol generated has the same chemical properties and can be found in a variety of forms. Worldwide recognition of ethanol as a renewable and alternative fuel has resulted in ethanol and gasoline blend mandates.

Furthermore, the demand for methanol is also increasing at a faster rate. Methanol is also known as wood alcohol because it is a byproduct of destructive wood distillation. It’s most commonly made with natural gas as the primary fuel. Methanol is used to make a range of chemicals that are then used to make thousands of products, including resins, construction materials, paints, plastics, foams, polyester, and a variety of medical and health-care products.

Methanol is a biodegradable and clean-burning fuel that is an organic compound. Methanol is less expensive than other fossil fuels and has a positive environmental impact. Methanol is increasingly being used as an alternative fuel for food production, vehicle power, and marine vessels due to its economic and environmental benefits.

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Industrial Alcohols Market Segment Analysis – By Source

The corn source held the largest share in the industrial alcohol market in 2020, owing to the product’s widespread demand as a renewable source of energy. The ethanol industry’s expansion has resulted an increase in corn distiller oil, which is used as a biodiesel feedstock or animal feed around the world. In the by-products sector, ethanol production from corn is also thriving. In several countries around the world, sugar molasses is used as a biomass source that is converted into energy. Sugar molasses are ideal for ethanol production due to their fermentation capacity. Sugarcane and its derivatives are the widely used feedstock for ethanol production, after corn.

Industrial Alcohols Market Segment Analysis – By Application

Transportation fuels & fuel additives application held the largest share in the industrial alcohol market in 2020 and is growing at a CAGR of 8.3% over 2021-2026. In Europe and Asia Pacific, the market for gasoline-powered vehicles has increased significantly. As opposed to other fossil fuels, such as diesel and gasoline derived from fossil fuels, the use of bioethanol in current gasoline vehicles has environmental advantages because it releases less hazardous materials.

Additionally, bioethanol extends the life of the engines. Because of the growing sales of flexible fuel vehicles, bioethanol producers have a chance to break into the regional commodity market. Furthermore, since it is derived from natural sources, such as plants, industrial alcohol used in chemicals has a number of advantages, including hygiene, versatility, and sustainability. Many manufacturers are concentrating on bio-derived products to replace crude chemicals, which is expected to fuel demand for industrial in the respective application industries over the forecast period.

Canada had the highest average fuel consumption per capita in the world in 2019, according to a survey by the International Energy Agency. It also has the highest concentration of heavy vehicles on the route. As a result, the heavy vehicles on Canadian roads are inefficient in terms of fuel consumption. In 2018, trucks accounted for 70% of newly registered vehicles in Canada. As a result, the government is promoting the use of ethanol in fuel to increase fuel quality and reduce environmental harm. In 2019, Canada had 13 operating ethanol plants with a total capacity of 2.15 billion liters, according to Ethanol Producer Magazine.

Industrial Alcohols Market Segment Analysis – By Geography

Asia Pacific held the largest share in the industrial alcohol market in 2020 up to 35%, owing to China’s and India’s high consumption and production of methyl alcohol and ethanol. The government of India’s initiatives to use ethanol as an automotive fuel is expected to boost ethanol demand significantly in India. China’s increasing demand for methanol for gasoline blending and the production of olefins from methanol, has resulted in new pricing, fiscal, and market dynamics. Furthermore, fuel consumption is rapidly increasing, followed by rising concerns about air quality, especially in China and India. With the GDP and population, the amount of fuel required for transportation is expected to rise dramatically by 2030, necessitating the use of more biofuels. China is the world’s fourth-largest producer of biofuels, while India has the strongest bioethanol market conditions. Thus, these factors are influencing the industrial alcohol market growth in this region.

Industrial Alcohols Market Drivers

Governments emission control regulations are influencing industrial alcohol market growth

Industrial alcohol is mainly ethanol, also known as ethyl alcohol, a volatile, colorless, flammable liquid that is a commonly used biofuel worldwide. It is widely used as a blend with gasoline in gasoline-operated vehicles because of its low emissions and less intoxicating effects. Furthermore, the Clean Air Act has mandated that traditional gasoline emit lower levels of exhaust gases. According to The United States Environmental Protection Agency, ethanol plays an important role as a fuel additive in lowering emissions and reducing engine knocking. Moreover, conventional gasoline formulated by refiners has a high octane value, which is needed by the United States’ gasoline industry. Since ethanol has a high octane number of 113, gasoline formulators are increasingly using it to improve engine efficiency. According to the Renewable Fuels Association, there were 210 ethanol plants in the United States in 2018 and produced 16.1 billion gallons of clean-burning renewable ethanol across 27 states. Total consumption reached a new high of 16.2 billion gallons, up 300 million gallons from the previous year, owing in part to record exports of over 1.6 billion gallons as global octane demand continues to rise.

Increasing demand from the pharmaceutical industry

Industrial alcohols, because of their properties, are used in the pharmaceutical industry as a carrier for a variety of iodine solutions, decongestants, medications, and other products. Ethanol is used as a solvent in the pharmaceutical industry to manufacture vaccines, antibiotics, pills, Vitamins and tablets, and a number of other medicines. As a large number of pharmaceutical companies collaborate with industrial alcohol suppliers to source needed technological expertise in the development of pharmaceutical products, demand for various products is growing. Manufacturers are concentrating on growing their production capacities to meet that demand, which presents attractive opportunities for market growth.

Industrial Alcohols Market Challenges

Fluctuating prices of raw material

In terms of price, industrial alcohol is relatively elastic. The product’s scarcity induces a significant price rise and vice versa. Sugar, corn, and wheat are all important raw materials for the alcohol industry. The cost of raw materials is calculated by a variety of factors, including crop yield, climatic conditions, and crop quality. Furthermore, the main crops used in the manufacture of ethyl alcohol encompass sugarcane, corn, and wheat which are vulnerable to adverse weather conditions. Degradation of the environment has a strong impact on agriculture. All of these factors contribute to raw material price volatility. The global industrial alcohol market is being held back by the COVID-19 pandemic, which has forced many companies to shut down their manufacturing facilities in order to preserve safety and health.

Furthermore, demand for industrial alcohols as well as potable alcoholic drinks is increasing, and there is a supply-demand gap in some parts of the world. Furthermore, crop production has been harmed by flooding or a lack of attention to crops, resulting in a shortage of livestock for alcohol production. Countries like India and other Asian countries are especially affected, putting a halt to the industrial alcohol industry. Small retailers and shopkeepers in India, according to the Institute of Management Development and Research (IMDR), are reluctant to stock and sell agricultural commodities due to the possibility of spoilage. Farmers’ ignorance of agricultural industrial alcohol is a major impediment to the market’s development.

Industrial Alcohols Market Landscape

Technology launches, acquisitions and R&D activities are key strategies adopted by players in the Industrial Alcohols Market. Major players in the Industrial Alcohols market includes Cargill Inc., Cristalco SAS, MGP Ingredients Inc., Grain Millers Inc., The Andersons Inc., among others.

Key Takeaways

Asia Pacific dominates the Industrial Alcohols market, owing to the increasing demand from various industries such as pharmaceuticals, personal care, transportation, food and beverages, and others in the region.

The market for ethanol, the most common commodity used as a transportation fuel is largely motivated by ethanol mandates imposed by a number of countries around the world.

The demand for biofuels among end-users for energy protection, as well as growing demand for low-cost feedstock in the chemical industry, are driving the global industrial alcohols market.

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