Industrial Chemical Manufacturing
Description
Companies in this industry manufacture chemicals, which are usually separate chemical elements or separate chemically-defined compounds, using basic processes, such as thermal crackling and distillation. Major companies include BASF (Germany), Dow (US), Formosa Petrochemical Corporation (Taiwan), Mitsubishi Chemical Corporation (Japan), SABIC (Saudi Arabia), Shell (UK), Sinopec Group (China), and TotalEnergies (France).
The global chemical production is forecast to grow by 3.5% by the end of 2025, according to the American Chemistry Council. China is the world's largest chemical market and will continue to drive growth in the Asia region from the Chinese automotive industry. The European Union and the US will see similar growth trajectories, driven by a rising demand in chemicals.
The US industrial chemical manufacturing industry includes about 2,500 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $220 billion. Key growth drivers include output in major end-use markets such as automotive manufacturing and construction.
COMPETITIVE LANDSCAPE
Demand depends on the overall strength of the economy, because most industrial chemicals are used in the manufacture of more-complicated products like fibers, plastics, paints, and paper. The profitability of individual companies is closely linked to efficient operations, because most products are commodities. Big producers have large economies of scale in production, which is why some chemicals are made by just a handful of companies. Small companies can compete effectively by making specialized or highly-purified products.
The US industry is concentrated: the 50 largest companies generate about 70% of revenue. Specific market segments are often dominated by just a handful of competitors. As few as eight companies account for almost all revenues in the petrochemical and carbon black sectors, for example.
International trade in industrial chemicals is substantial. China, Canada, Germany, and Ireland are the largest suppliers of US imports, accounting for roughly 10% of production. Top markets for US exports include Mexico, Canada, China, and Belgium, accounting for about 10% of production.
PRODUCTS, OPERATIONS & TECHNOLOGY
Industrial chemicals include gases like oxygen and nitrogen, dyes and pigments, chlorine and caustic soda, sulfuric and nitric acids, and thousands of organic chemicals. Unlike advanced chemicals that are manufactured through complicated chemical reactions, most industrial chemicals are made by extraction and purification from natural substances, including minerals, natural gas, petroleum, plants, air, and water. Oxygen and nitrogen gas are made by freezing air, phosphates from marine deposits, ethanol by fermenting corn, chlorine from salt water, and a large number of chemicals are made by boiling petroleum. Liquefied refinery gases account for about 15% of the industry's revenues, followed by fuel ethanol (more than 10%).
Manufacturing facilities are often located close to raw materials. Because production facilities often consist of equipment that is specialized for the product being made, and because of economies of scale, most companies operate a single large production plant and produce only a handful of related products. Manufacturing operations focus on obtaining the highest possible yield of finished product from the raw materials. Access to high-quality raw materials is a primary consideration. Many companies either own their raw material supply or acquire it under long-term leases. Most producers of soda ash, for example, obtain raw material under long-term leases from mining operations in the Green River area of Wyoming.
Extracting basic chemicals from raw materials typically requires large amounts of energy. In many industrial processes, energy is used in the form of steam, which often is generated from coal. Energy-intensive chemical plants are often located where the cost of energy is low, such as near hydroelectric plants or coal mining areas.
Because producing industrial chemicals is usually a purification process, many producers (especially those that use minerals as a raw material) must dispose of large quantities of waste materials, of which there may be many pounds for each pound of finished product. Some wastes, like the mash that remains after corn has been fermented to ethanol, can be sold as animal feed or fertilizer, but many have no economic value.
The global chemical production is forecast to grow by 3.5% by the end of 2025, according to the American Chemistry Council. China is the world's largest chemical market and will continue to drive growth in the Asia region from the Chinese automotive industry. The European Union and the US will see similar growth trajectories, driven by a rising demand in chemicals.
The US industrial chemical manufacturing industry includes about 2,500 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $220 billion. Key growth drivers include output in major end-use markets such as automotive manufacturing and construction.
COMPETITIVE LANDSCAPE
Demand depends on the overall strength of the economy, because most industrial chemicals are used in the manufacture of more-complicated products like fibers, plastics, paints, and paper. The profitability of individual companies is closely linked to efficient operations, because most products are commodities. Big producers have large economies of scale in production, which is why some chemicals are made by just a handful of companies. Small companies can compete effectively by making specialized or highly-purified products.
The US industry is concentrated: the 50 largest companies generate about 70% of revenue. Specific market segments are often dominated by just a handful of competitors. As few as eight companies account for almost all revenues in the petrochemical and carbon black sectors, for example.
International trade in industrial chemicals is substantial. China, Canada, Germany, and Ireland are the largest suppliers of US imports, accounting for roughly 10% of production. Top markets for US exports include Mexico, Canada, China, and Belgium, accounting for about 10% of production.
PRODUCTS, OPERATIONS & TECHNOLOGY
Industrial chemicals include gases like oxygen and nitrogen, dyes and pigments, chlorine and caustic soda, sulfuric and nitric acids, and thousands of organic chemicals. Unlike advanced chemicals that are manufactured through complicated chemical reactions, most industrial chemicals are made by extraction and purification from natural substances, including minerals, natural gas, petroleum, plants, air, and water. Oxygen and nitrogen gas are made by freezing air, phosphates from marine deposits, ethanol by fermenting corn, chlorine from salt water, and a large number of chemicals are made by boiling petroleum. Liquefied refinery gases account for about 15% of the industry's revenues, followed by fuel ethanol (more than 10%).
Manufacturing facilities are often located close to raw materials. Because production facilities often consist of equipment that is specialized for the product being made, and because of economies of scale, most companies operate a single large production plant and produce only a handful of related products. Manufacturing operations focus on obtaining the highest possible yield of finished product from the raw materials. Access to high-quality raw materials is a primary consideration. Many companies either own their raw material supply or acquire it under long-term leases. Most producers of soda ash, for example, obtain raw material under long-term leases from mining operations in the Green River area of Wyoming.
Extracting basic chemicals from raw materials typically requires large amounts of energy. In many industrial processes, energy is used in the form of steam, which often is generated from coal. Energy-intensive chemical plants are often located where the cost of energy is low, such as near hydroelectric plants or coal mining areas.
Because producing industrial chemicals is usually a purification process, many producers (especially those that use minerals as a raw material) must dispose of large quantities of waste materials, of which there may be many pounds for each pound of finished product. Some wastes, like the mash that remains after corn has been fermented to ethanol, can be sold as animal feed or fertilizer, but many have no economic value.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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