Basic Chemical Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,200 basic chemical manufacturers in the US produce commodity chemicals that act as raw materials in or catalysts for the production of more refined chemicals. Products include petrochemicals, industrial gases, synthetic dyes and pigments, inorganic chemicals, and organic chemicals.

Price-based Competition

The basic chemical industry is highly competitive, and products are generally considered commodities.

Capital Intensity

Basic chemical manufacturing is capital-intensive and generally requires large investments in property, facilities, and equipment.

Industry size & Structure

A typical basic chemical manufacturer employs about 118 workers and generates about $163 million annually.

    • The basic chemical manufacturing industry consists of about 1,200 companies that employ 149,500 workers and generate $206 billion annually.
    • The industry is concentrated with the 20 largest firms accounting for 52% of industry revenue.
    • Large companies include BASF, Linde-Praxair, LyondellBasell, and Air Products.
    • Some large companies, such as Dow Chemical and DuPont, produce basic chemicals in addition to a number of other products, including specialty chemicals and other downstream products.
                          Industry Forecast
                          Basic Chemical Manufacturers Industry Growth
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          Nov 15, 2022 - Global Pesticide Use Soars
                          • Global pesticide use has increased by 80% since 1990, with the world market set to hit $130 billion in 2023, according to a new Pesticide Atlas for 2022 released in October. The growth in pesticide use – driven in part by the European Union’s relaxation of some agricultural rules to prioritize food security following Russia’s invasion of Ukraine – is having a dramatic impact on human health and biodiversity, according to the Pesticide Atlas, which blames pesticides for driving a 30% decline in populations of field birds and butterflies since 1990 and an estimated 11,000 human fatalities and the poisoning of 385 million people every year. The report notes that almost one in 10 of Europe’s bees are threatened with extinction, due in part to the use of toxic chemical formulations in herbicides, pesticides, and fertilizers.
                          • High natural gas prices in Europe have led German chemicals giant BASF to announce it will downsize permanently in Europe, raising concerns that persistently high energy prices could lead to a deindustrialization of the continent, The Wall Street Journal reported in October 2022. Europe’s chemical industry has been particularly hard hit because it relies on gas to both generate power and as feedstock for products that make it into toothpaste, medicines and cars, according to WSJ. BASF said that in the first nine months of 2022, gas costs at its European sites were about €2.2 billion higher than in 2021. “The significant increase in natural gas and power prices over the course of this year is putting pressure on chemical value chains,” BASF CEO Martin Brudermüller said. Regulations planned by the European Union are also weighing on Europe’s chemical industry, according to Brudermüller.
                          • Chemical makers increasingly are turning to drones to perform inspections and other functions at plants and facilities worldwide. Drones’ ease of use, advanced sensors, and 3D modeling capabilities are making them more attractive to chemical companies searching for safe, fast, and cost-effective inspection routines, Chemical Processing reported in October 2022. Applications include inspecting tank farms to collect data instead of having inspectors physically visiting the tanks; monitoring construction progress; and using caged drones to inspect large storage tanks from the inside, avoiding the need for internal scaffolding. Shell’s Autonomous Integrity Recognition Program (AIRP) combines drones and AI-based image analyses, to detect rates of corrosion and insulation — especially on top of piping bridges and columns. Drones’ increased use and acceptance means they’re no longer considered specialty tools for explicit tasks, but instead are being embedded into operations as the preferred way of working.
                          • The US Environmental Protection Agency has proposed designating two widely-used chemicals commonly known as PFOA and PFOS as hazardous due to health concerns. They are part of a class of perfluoroalkyl and polyfluoroalkyl substances (aka PFAS or “forever chemicals'') because they infiltrate people and the environment without breaking down, according to The Wall Street Journal. While chemical manufacturers in the US no longer make the two chemicals, the cleanup problem remains. If the rule is finalized, it will trigger increased reporting standards for releases of PFOA and PFOS into the environment and give the EPA more tools under the federal Superfund law to require cleanup by emitters.
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