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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                          Coronavirus Update

                          May 14, 2022 - EU to Ban Dangerous Chemicals
                          • Exporters of basic chemicals to Europe could see some of their products banned there under new restrictions proposed to prohibit potentially harmful chemicals. The European Union proposed “the largest ever ban” on dangerous chemicals, The Guardian reported in April. The plan focuses on entire classes of chemical substances for the first time as a rule, including all flame retardants, bisphenols, PVC plastics, toxic chemicals in disposable diapers and PFAS, which are also known as “forever chemicals” because of the time they take to naturally degrade. Industry groups say as many as 12,000 substances could ultimately fall within the scope of the new proposal, which would constitute the world’s “largest ever ban of toxic chemicals”, according to the European Environmental Bureau.
                          • Interest in chemically recycled plastics is growing among packaging companies as they seek to advance their recycled-content goals, according to a May 2022 article from Plastics Recycling Update. Several packaging companies recently announced they will purchase recycled resin produced through ExxonMobil’s chemical recycling technology. The aim is to recycle flexible plastics from the food supply chain into new food-grade packaging, according to the article. The Consumer Goods Forum’s (CGF) Plastic Waste Coalition of Action is pushing for the “credible, safe and environmentally sound” development of plastics recycling technologies that could reduce the climate impact of plastic, when compared to waste-to-energy processes.
                          • Chemical manufacturers can continue to supply PIP to the automotive industry, but with a deadline. The EPA recently released a final ruling to extend the compliance data for phase out of the chemical PIP by automotive manufacturers. Phenol, Isopropylate, Phosphate (PIP) is a critical flame retardant, plasticizer, and anti-wear additive used in automotive electronic components, safety systems, and hydraulic fluids. PIP is also classified by the EPA as a Persistent, Bioaccumulative, and Toxic (PBT) chemical, which was scheduled for phase out in early March 2022, but the deadline was pushed to November 2024. Chemical manufacturers may need to develop alternatives that are less toxic.
                          • The Biden Administration is using Defense Production Act funds to re-shore critical chemical manufacturing in the US. For example, the Department of Defense (DoD) recently awarded Nalas Engineering Services $2.1 million to establish the capability to produce 17,000 pounds per year of DoD compliant aminoguanidine bicarbonate (AGB), which is a chemical component of energetic materials used in armament systems. The Connecticut-based chemical company, which has already invested $2 million in facility retrofitting, will be assisting the federal government in securing needed chemical supplies domestically and reducing reliance on imports.
                          • The US chemical industry is forecast to grow production volume by 3% and shipments by 8% in 2022, according to Deloitte. Exports are also expected to improve as foreign markets open. However, supply bottlenecks and price hikes for raw materials are likely. Firms are forecast to rebalance their asset portfolios to better balance manufacturing scale, scope of product, and growth. The industry will also experience more pressure to manage waste and carbon emissions.
                          • The chemical manufacturing industry is expected to make greater use of digital technology to improve efficiency, design new products and processes, engage customers, solicit feedback, and measure customer expectations, according to Deloitte. Firms are finding that digital transformation involves culture, people, structures, and tasks, rather than deploying technology in silos with little compatibility or collaboration across the organization or supply chain.
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