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 1,275 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 38 workers and generates about $237 million annually.

    • The basic chemical manufacturing industry consists of about 1,275 companies that employ 152,000 workers and generate $302 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

                          Mar 20, 2024 - Payroll Costs Rose Amid Falling Prices in 2023
                          • Employment by basic chemical manufacturers ticked up 1% in December compared to a year ago after increasing by about 3.3% in the previous annual comparison, according to the US Bureau of Labor Statistics. Meanwhile, average wages at basic chemical manufacturers were $38.20 per hour in December, a hefty 15.8% year-over-year change and just $0.50 shy of their peak in September. Manufacturers are facing rising payroll costs amid falling prices for basic chemicals, which declined 7.5% in December compared to a year ago, BLS data show.
                          • US output of basic chemicals fell 2.5% in 2023, with declines in petrochemicals and organic intermediates, synthetic rubber, and manufactured fibers output, according to the American Chemistry Council’s Year-End Situation & Outlook. The council expects a “modest recovery” across all chemical segments this year, with overall chemistry output expected to increase by 1.5%, after an “unprecedented” destocking cycle that began in the third quarter of 2022 and continued throughout much of 2023, curbing production. Longer-term, the outlook for the US chemicals industry is positive, with the natural gas liquids feedstock advantage continuing to favor domestic production for the foreseeable future. Moreover, capacity expansions in customer industries will support the industry going forward, ACC maintains. “Because of the chemical industry’s early position in the supply chain, we would expect to see a turnaround in chemicals before improvement in the broader economy,” said ACC chief economist Martha Gilchrist Moore.
                          • The US Gulf Coast has become a magnet for fertilizer companies looking to produce climate-friendly blue ammonia thanks to generous federal subsidies and its existing export structure, Reuters reports. So-called blue ammonia is a low-emissions compound consisting of hydrogen and nitrogen used to make fertilizer. Facilities under construction include a 1.1 million metric ton per year plant at Beaumont, Texas built by Dutch fertilizer producer OCI. The OCI plant, slated to open in 2025, would be the world's first new commercial facility to capture and sequester 95% of the emissions produced by making ammonia. Norway’s Yara is looking to invest in a blue ammonia plant in Ingleside, Texas that would capture about 95% of the carbon emissions. Other companies looking to build low-emissions ammonia projects along the Gulf Coast include Exxon Mobil, BASF, and LOTTE Chemical, Mitsubishi and RWE, according to Reuters
                          • Global fertilizer usage is expected to climb this year and last after falling in 2021 and 2022 when the high price of nutrients affected affordability, Progressive Farmer reported in December. Fertilizer prices moved lower in 2023 as supply returned to the market and nutrients became more affordable. Global fertilizer usage is projected to increase 3% in 2023 after declining 7% in 2022. Dutch multinational banking and financial services company Rabobank is projecting an increase of nearly 5% in 2024 as lower fertilizer prices prompt the world's farmers to increase purchases. Rabobank estimates 2024 global nitrogen fertilizer consumption at 108 million metric tons (MMT). Nitrogen fertilizer production is estimated at 109 MMT. Global consumption is expected to rise through 2030 but with a modest 1.42% compounded annual growth rate from 2021 to 2030, per Rabobank.
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