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 1,245 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 125 workers and generates about $198 million annually.

    • The basic chemical manufacturing industry consists of about 1,245 companies that employ 156,000 workers and generate $253 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

                          May 20, 2024 - Prices Sink Amid Lower Demand
                          • Producer prices for basic chemical manufacturers fell 11.2% in March compared to a year ago after rising 1.2% in the previous annual comparison, according to the latest US Bureau of Labor Statistics data. Lower demand for products made from chemicals amid a surplus of inventory has resulted in weak pricing power for makers of basic chemicals. In response, the industry is gradually destocking, with chemical products inventories falling 0.6% in March year over year. Meanwhile, employment by the industry continues to grow, up 3.6% in March compared to a year ago, while average industry wages jumped 11.3% over the same period to a new high of $38.48 per hour, per the BLS.
                          • Under a new EPA rule aimed at reducing the risk of cancer for people living near industrial sites, over 200 US chemical plants will be required to curb their emissions, The New York Times reported in April. The rule specifically targets ethylene oxide, a chemical that’s used to sterilize medical devices, and chloroprene, used in the manufacturing of rubber in footwear. The EPA has classified both chemicals as likely carcinogens. Most of the facilities impacted by the rule are in Texas, Louisiana, and elsewhere along the Gulf Coast and in the Ohio River Valley and West Virginia, according to NYT. EPA Administrator Michael Regan said the new rule will cut toxic pollutants by 6,200 tons annually and reduce emissions of ethylene oxide and chloroprene by 80%. Under the new rule, chemical manufacturers must monitor vents and storage tanks for ethylene oxide and chloroprene emissions and plug any leaks.
                          • 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.
                          Get A Demo

                          Vertical IQ’s Industry Intelligence Platform

                          See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.

                          Build valuable, lasting relationships by having smarter conversations -
                          check out Vertical IQ today.

                          Request A Demo