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
Recent Developments
Jul 20, 2024 - Average Wage Tops $40 Per Hour
- Employment by basic chemical manufacturers grew 1.9% in May compared to a year ago, while the average industry wage jumped 14.5% over the same period to a new high of $40.03 per hour, according to the latest US Bureau of Labor Statistics data. Meanwhile, low demand and industry destocking are depressing chemical manufacturers’ pricing power. Producer prices fell 8.8% in May compared to a year ago after declining 4.5% in the previous annual comparison, BLS data show. Rising labor costs and falling prices are putting pressure on industry margins. According to the Census Bureau, after-tax profits for basic chemicals, resins, and synthetics companies plummeted by more than 93.2% in the fourth quarter of 2023 compared to Q4 2022 and 91.9% from the previous quarter.
- The 2024 Atlantic hurricane season is expected to be extremely active and similar to the 2020 season, according to ICIS. As such, it could threaten chemical producers along the Gulf Coast and offshore oil and natural gas production. Near-record warm ocean temperatures in the Atlantic Ocean and the development of La Nina conditions in the Pacific favor tropical storm formation. NOAA’s outlook for the 2024 Atlantic hurricane season, which spans from June 1 to November 30, predicts an 85% chance of an above-normal season, a 10% chance of a near-normal season, and a 5% chance of a below-normal season. While chemical companies in Texas appear to have avoided serious damage from Hurricane Beryl when it hit the Houston region in July, the season is just starting. The US Chemical Safety and Hazard Investigation Board urges Texas chemical manufacturers to prepare for the next extreme weather event.
- 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.
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