CHEMICAL INDUSTRY by SABITHA

CHEMICAL INDUSTRY

Submitted To
PROF.JAYAMOHAN NAIR



Submitted By
SABITHA.P.S
I SEMESTER MBA
INSTITUTE OF CO-OPERATIVE MANAGEMENT








ABSTRACT


Chemical Industry comprises the companies that produce industrial chemicals. The major products of these companies are polymers & plastics especially polyethylene, polypropylene, polyvinylchloride, polyethylene terephthalate, polystyrene and polycarbonate comprise about 80% of the industry’s output worldwide. The major segments are inorganic chemicals, fine & specialities, bulk drugs, agrochemicals, paints & dyes, petrochemicals etc.
















CONTENTS

1 Introduction
2 Industry Structure
2.1 Products
2.2 Product Category Breakdown
5
3 Companies
Technology
5 Product Type Examples
6 History
7 Companies in 21st Century
8 Chemical Industry Overview
9 Major Segments
9.1 Petrochemicals
9.2 Inorganic Chemicals
9.3 Organic Chemicals
9.4 Fins & Specialities
9.5 Bulk Drugs
9.6 Agrochemicals
9.7 Paint & Dyes
9.8 Plastic & Rubber


Conclusion




1. INTRODUCTION



The chemical industry comprises the companies that produce industrial chemicals. It is central to modern world economy, converting raw materials (oil, natural gas, air, water, metals, minerals) into more than 70,000 different products.

















2. INDUSTRY STRUCTURE

2.1 PRODUCTS

Polymers and plastics, especially polyethylene, polypropylene, polyvinylchloride, polyethylene terephthalate, polystyrene and polycarbonate comprise about 80% of the industry’s output worldwide.
Chemicals are used to make a wide variety of consumer goods, as well as thousands inputs to agriculture, manufacturing, construction, and service industries. The chemical industry itself consumes 26 percent of its own output. Major industrial customers include rubber and plastic products, textiles, apparel, petroleum refining, pulp and paper, and primary metals. Chemicals is nearly a $3 trillion global enterprise, and the EU and U.S. chemical companies are the world's largest producers

2.2 PRODUCT CATEGORY BREAKDOWN
Sales of the chemical business can be divided into a few broad categories, including basic chemicals (about 35 to 37 percent of the dollar output), life sciences (30 percent), specialty chemicals (20 to 25 percent) and consumer products (about 10 percent).
Basic chemicals or "commodity chemicals" are a broad chemical category including polymers, bulk petrochemicals and intermediates, other derivatives and basic industrials, inorganic chemicals, and fertilizers. Typical growth rates for basic chemicals are about 0.5 to 0.7 times GDP. Product prices are generally less than fifty cents per pound. Polymers, the largest revenue segment at about 33 percent of the basic chemicals dollar value, includes all categories of plastics and man-made fibers. The major markets for plastics are packaging, followed by home construction, containers, appliances, pipe, transportation, toys, and games. The largest-volume polymer product, polyethylene (PE), is used mainly in packaging films and other markets such as milk bottles, containers, and pipe. Polyvinyl chloride (PVC), another large-volume product, is principally used to make pipe for construction markets as well as siding and, to a much smaller extent, transportation and packaging materials. Polypropylene (PP), similar in volume to PVC, is used in markets ranging from packaging, appliances, and containers to clothing and carpeting. Polystyrene (PS), another large-volume plastic, is used principally for appliances and packaging as well as toys and recreation. The leading man-made fibers include polyester, nylon, polypropylene, and acrylics, with applications including apparel, home furnishings, and other industrial and consumer use. The principal raw materials for polymers are bulk petrochemicals.
Chemicals in the bulk petrochemicals and intermediates are primarily made from liquefied petroleum gas (LPG), natural gas, and crude oil. Their sales volume is close to 30 percent of overall basic chemicals. Typical large-volume products include ethylene, propylene, benzene, toluene, xylenes, methanol, vinyl chloride monomer (VCM), styrene, butadiene, and ethylene oxide. These chemicals are the starting points for most polymers and other organic chemicals as well as much of the specialty chemicals category.
Other derivatives and basic industrials include synthetic rubber, surfactants, dyes and pigments, turpentine, resins, carbon black, explosives, and rubber products and contribute about 20 percent of the basic chemicals' external sales. Inorganic chemicals (about 12 percent of the revenue output) make up the oldest of the chemical categories. Products include salt, chlorine, caustic soda, soda ash, acids (such as nitric, phosphoric, and sulfuric), titanium dioxide, and hydrogen peroxide. Fertilizers are the smallest category (about 6 percent) and include phosphates, ammonia, and potash chemicals.
Life sciences (about 30 percent of the dollar output of the chemistry business) include differentiated chemical and biological substances, pharmaceuticals, diagnostics, animal health products, vitamins, and crop protection chemicals. While much smaller in volume than other chemical sectors, their products tend to have very high prices—over ten dollars per pound—growth rates of 1.5 to 6 times GDP, and research and development spending at 15 to 25 percent of sales. Life science products are usually produced with very high specifications and are closely scrutinized by government agencies such as the Food and Drug Administration. Crop protection chemicals, about 10 percent of this category, include herbicides, insecticides, and fungicides.
Specialty chemicals are a category of relatively high valued, rapidly growing chemicals with diverse end product markets. Typical growth rates are one to three times GDP with prices over a dollar per pound. They are generally characterized by their innovative aspects. Products are sold for what they can do rather than for what chemicals they contain. Products include electronic chemicals, industrial gases, adhesives and sealants as well as coatings, industrial and institutional cleaning chemicals, and catalysts. Coatings make up about 15 percent of specialty chemicals sales, with other products ranging from 10 to 13 percent.
Specialty Chemicals are sometimes referred to as "fine chemicals"
Consumer products include direct product sale of chemicals such as soaps, detergents, and cosmetics. Typical growth rates are 0.8 to 1.0 times GDP.
Every year, the American Chemistry Council tabulates the U.S. production of the top 100 basic chemicals. In 2000, the aggregate production of the top 100 chemicals totaled 502 million tons, up from 397 million tons in 1990. Inorganic chemicals tend to be the largest volume, though much smaller in dollar revenue terms due to their low prices. The top 11 of the 100 chemicals in 2000 were sulfuric acid (44 million tons), nitrogen (34), ethylene (28), oxygen (27), lime (22), ammonia (17), propylene (16), polyethylene (15), chlorine (13), phosphoric acid (13) and diammonium phosphates (12).
3. COMPANIES

The largest corporate producers worldwide, with plants in numerous countries, are BASF, Dow, Shell, Bayer, INEOS, ExxonMobil, DuPont, SABIC, Braskem and Mitsubishi, along with thousands of smaller firms.
In the U.S. there are 170 major chemical companies. They operate internationally with more than 2,800 facilities outside the U.S. and 1,700 foreign subsidiaries or affiliates operating. The U.S. chemical output is $400 billion a year. The U.S. industry records large trade surpluses and employs more than a million people in the United States alone. The chemical industry is also the second largest consumer of energy in manufacturing and spends over $5 billion annually on pollution abatement.
In Europe, especially Germany, the chemical, plastics and rubber sectors are among the largest industrial sectors. Together they generate about 3.2 million jobs in more than 60,000 companies. Since 2000 the chemical sector alone has represented 2/3 of the entire manufacturing trade surplus of the EU. The chemical sector accounts for 12% of the EU manufacturing industry's added value.
The chemical industry has shown rapid growth for more than fifty years. The fastest growing areas have been in the manufacture of synthetic organic polymers used as plastics, fibres and elastomers. Historically and presently the chemical industry has been concentrated in three areas of the world, Western Europe, North America and Japan (the Triad). The European Community remains the largest producer area followed by the USA and Japan.
The traditional dominance of chemical production by the Triad countries is being challenged by changes in feedstock availability and price, labour cost, energy cost, differential rates of economic growth and environmental pressures. Instrumental in the changing structure of the global chemical industry has been the growth in China, India, Korea, the Middle East, South East Asia, Nigeria, Trinidad, Thailand, Brazil, Venezuela, and Indonesia.



4. TECHNOLOGY
As accepted by chemical engineers, the chemical industry involves the use of chemical processes such as chemical reactions and refining methods to produce a wide variety of solid, liquid, and gaseous materials. Most of these products are used in manufacture of other items, although a smaller number are used directly by consumers. Solvents, pesticides, lye, washing soda, and portland cement are a few examples of product used by consumers. The industry includes manufacturers of inorganic- and organic-industrial chemicals, ceramic products, petrochemicals, agrochemicals, polymers and rubber (elastomers), oleo chemicals (oils, fats, and waxes), explosives, fragrances and flavors. Examples of these products are shown in the Table below.

5. PRODUCT TYPE EXAMPLES

inorganic industrial ammonia, nitrogen, sodium hydroxide, sulfuric acid, nitric acid
organic industrial acrylonitrile, phenol, ethylene oxide, urea
ceramic products silica brick, frit
petrochemicals ethylene, propylene, benzene, styrene
agrochemicals fertilizers, insecticides, herbicides
polymers polyethylene, Bakelite, polyester
elastomers polyisoprene, neoprene, polyurethane
oleochemicals lard, soybean oil, stearic acid
explosives nitroglycerin, ammonium nitrate, nitrocellulose
fragrances and flavors benzyl benzoate, coumarin, vanillin



Although the pharmaceutical industry is often considered a chemical industry, it has many different characteristics that puts it in a separate category. Other closely related industries include petroleum, glass, paint, ink, sealant, adhesive, and food processing manufacturers.
Chemical processes such as chemical reactions are used in chemical plants to form new substances in various types of reaction vessels. In many cases the reactions are conducted in special corrosion resistant equipment at elevated temperatures and pressures with the use of catalysts. The products of these reactions are separated using a variety of techniques including distillation especially fractional distillation, precipitation, crystallization, adsorption, filtration, sublimation, and drying. The processes and product are usually tested during and after manufacture by dedicated instruments and on-site quality control laboratories to insure safe operation and to assure that the product will meet required specifications. The products are packaged and delivered by many methods, including pipelines, tank-cars, and tank-trucks (for both solids and liquids), cylinders, drums, bottles, and boxes. Chemical companies often have a research and development laboratory for developing and testing products and processes. These facilities may include pilot plants, and such research facilities may be located at a site separate from the production plant(s).
6. HISTORY
Chandler (2005) argues the relative success or failure of American and European chemical companies is explained with reference to three themes: "barriers to entry," "strategic boundaries," and "limits to growth." He says successful chemical firms followed definite "paths of learning" whereby first movers and close followers created entry barriers to would-be rivals by building "integrated learning bases" (or organizational capabilities) which enabled them to develop, produce, distribute, and sell in local and then worldwide markets. Also they followed a "virtuous strategy" of reinvestment of retained earnings and growth through diversification, particularly to utilize "dynamic" scale and scope economies relating to new learning in launching "next generation" products.
7. COMPANIES IN 21ST CENTURY

The chemical industry includes large, medium, and small companies that are located worldwide. Companies with sales of chemical products greater than $10 billion dollars in fiscal year 2007 are shown below. For some of these companies the chemical sales might represent only a portion of their total sales; (for example Exxon Mobil’s chemical sales were only 8.7 percent of their total sales in 2005).
COMPANY, HEADQUARTERS 2007 Chemical Sales, billions] Rank Country
BASF SE, Ludwigshafen, Germany $65.3 1
Dow Chemical, Midland, Mich. $53.5 2
INEOS, Lyndhurst, UK $43.6 3
LyondellBasell, Houston, Texas $42.8 4
Formosa Plastics, Taiwan $31.9 5
DuPont, Wilmington, Delaware $28.5 6
Saudi Basic Industries Corporation, Riyadh, Saudi Arabia $26.4 7
Bayer, AG, Leverkusen, Germany $24.2 8
Mitsubishi Chemical, Tokyo, Japan $22.2 9
Akzo Nobel/Imperial Chemical Industries (ICI), Amsterdam/London $19.9 10
Air Liquide, Paris, France $16.3 11
Sumitomo Chemical, Tokyo, Japan $15.2 12
Evonik Industries, AG, Düsseldorf, Germany $15.0 13
Mitsui Chemicals, Tokyo, Japan $14.3 14
Asahi Kasei, Tokyo, Japan $13.8 15
Toray Industries, Tokyo, Japan $13.1 16
Chevron Phillips, The Woodlands, Texas $12.5 17
DSM NV, Heerlen, Netherlands $12.1 18
PPG Industries, Pittsburgh, Pennsylvania $11.2 19
Shin-Etsu Chemical Co., Ltd., Tokyo, Japan $11.1 20




8. CHEMICAL INDUSTRY OVERVIEW


Total US$30.59 Billion during 2005-2006 as per March 2007 report. Contributes to 3% of GDP in the same report. One of the fastest growing sectors of Indian economy. Chemical Industry in India is fragmented and dispersed - multi product and multi faceted. Chemicals sold directly to large customers and through distribution channels. Distribution channels mostly consist of stockists and dealers spread all over India addressing small segments and retail market.



9. MAJOR SEGMENTS


Chemical Industry is highly heterogeneous with following major sectors:


Petrochemicals
Inorganic Chemicals
Organic Chemicals
Fine and specialties
Bulk Drugs
Agrochemicals
Paints and Dyes


9.1PETROCHEMICALS

The major category in the chemicals
One of the fastest sectors at 13% p.a.
Covers:
Basic chemicals like Ethylene, Propylene, Benzene and Xylene etc.
Intermediates like MEG, PAN and LAB etc.
Synthetic fibres like Nylon, PSF and PFY etc.
Polymers like LDPE/HDPE, PVC, Polyester and PET etc.
Synthetic rubber like SBR, PBR etc.
Major players are Reliance, IPCL, NOCIL, Haldia and GAIL etc.
PETROCHEMICAL MAJOR PLAYERS
Reliance Industries Ltd. - 750,000 TPA Ethylene
- 400,000 TPA Propylene
- 27,000,000 TPA refinery
IPCL Baroda - 300,000 TPA
Nagothane - 300,000 TPA
Gandhar - 400,000 TPA
Haldia Petrochem - 420,000 TPA Ethylene
- 200,000 TPA Propylene
GAIL - 300,000 TPA Ethylene
NOCIL -150,000 TPA

9.2INORGANIC CHEMICALS

US$ 2.5 Billion industry.
Covers basic products like Caustic, Chlorine, Sulphuric Acid etc.
Inorganic chemicals mostly used in detergents, glass, soap, fertiliser, alkalies etc.
Competition from imports are on the rise.
Products Installed Capacity 95 - 96 96 -97 97 -98 98 -99 99 -2000*
Soda ash 1865 1552.1 1540 1545.8 1560 1560
Caustic Soda 1964.5 1243.1 1250 1309.2 1320 1350
Liquid Chlorine 1031.1 709 715 702.9 715 740
Carbon Black 286.2 223.6 250.8 208.3 230 240


OTHER CHEMICALS



Products Installed Capacity 95 -96 96 -97 97 -98 98 -99 99 - 2000*
Calcium carbide 150 95.3 96 78.3 72 80
Titanium dioxide 47 29.4 25 26.2 27 27
Aluminium fluoride 30.1 17 17 14.3 15.4 17.5
Potassium chloride 13.3 4.1 3.5 4 5 5.5
Sodium chlorate 4.1 1.5 1 0.5 0.5 1
Red phosporous 1.7 0.9 0.9 1 0.9 1

9.3ORGANIC CHEMICALS

1 Billion Dollar industry
Covers a wide range of chemicals
Units concentrated mostly in the Western India
Production Major Chemicals
Chemicals Installed Capacity ('000 tonnes) Production :98-99 ('000 MT)
Methanol 386.0 380.0
Formaldehyde 255.0 161.4
Acetic acid 203.6 190.0
Phenol 66.6 62.6
Acetone 63.6 5.0
Acetic anhydride 56.2 40.5
Nitrobenzene 52.0 42.8
Chloromethane 32.1 33.2
Aniline 28.1 23.5
Maleic anhydride 24.4 12.7
Pentaerithitol 15.2 13.9
PNCB 11.2 11.0
MEK 7.0 5.0
Citric acid 6.3 5.3
ONCB 5.3 5.3
Isobutyl alcohol 2.0 1.3

9.4 FINE AND SPECIALITY CHEMICALS


Low volume, high price/margin chemicals
Fragmented with large number of players
Major Players
India: ION Exchange, Balmer Lawrie, Dai Ichi Karkaria. etc.
MNC: Ciba, Hoechst, Foseco, Nalco Chemicals, Clariant, ICI etc.
And many small Indian companies
Market around US$ 80 million p.a.
Major end user segments - Textile, Leather, paper, detergent, rubber, paints, polyester, oil and gas etc.
Growing very fast
SPECIALITY CHEMICALS USAGE
Category Speciality Chemicals
Adhesives Thickeners, tackifiers, binders, stabilisers
Construction Chemicals Sealants, flame retardants, concrete setting accelerators / retarders, mastics
Cosmetic Additives Moisturisers, UV absorbers, masking agents, emulsifiers, proteins
Diagnostic Aids Dyes for angiogram, chemicals for other diagnostics (as NMR)
Elastomers SBR, Silicones, Puf, EVA
Electronic Chemicals Electronic substrates, packaging materials, plating chemicals, photoresists, etchnats, cleaners & strippers, dopants, sp gases
Enzymes (Indl) Bates for leather, enzymes for pharmaceuticals, food processing industries
Flavours & Fragrances Speciality esters, bases, concentrates
Food Additives Antioxidants, Flavours, food dyes
Fuel Additives Catalysts, stabilisers, functional additives
(Functional) Dyes Dyes for reprographics & dyes for electronic chemicals
Foundry Chemicals Binders, resins, mould release agents
Indl Cleaning Agents Solvents based on Spl. Esters & alcohols
Lube Additives Antioxidants, dispersants, antiwear & EP additives, pour point depressants, viscosity modifiers & antifoamers
Metal Plating & Finishing Chemicals Cyanates, electrolytic Au/Ag plating, electrolytic / electroless Cu plating chems
Mining Chemicals Flocculants, dispersants, thickeners
Oilfield chemical Pour point depressants, corrosion inhibitors, demulsifiers, EP additives, thickeners, fluid loss control agents, stabilisers, mud additives, cement additives, EOR chemicals
Paint Additives Wetting agents, dispersants, thixotropic, antisettling, antifoaming agents, defoamers, pH stabilisers, emulsifiers, biocides, corrosion inhibitors, plasticisers, thickeners, antiflotation agents, flow control agents
Paper Additives Retention Aids, formation aids, drainage aids, flocculants, defoamers, wet web strength additives, defoamers, biocides, dry strength additives, sizing agents, creping agents, dispersants, binders
Photographic Chemicals Fixing agents, toner, photoresists
Polymer Additives Speciality plasticisers, antioxidants, UV stabilisers, modifiers, flame retardants, antistatic agents
Rubber Chemicals Antioxidants, antizonants, vulcanisation accelerators / retarders, modifiers, inhibitors
Surfactants Anionic & nonionic surfactants mainly used in India. Wetting agents, dispersants, emulsifiers, defoamers, antifoamers, detergency aids
Textile Auxiliaries Sizing agents, leveling agents, dispersants, detergents, acid release agents, dye fixing agents, solvents, anticreasing agents, biocides
Water Management Chem Flocculants, dispersants, corrosion, inhibitors, biocides

9.5 BULK DRUGS

Large market due to large population
Large exports (US$600-800 million) which is around 6-8% of global drugs market
Total market is US$3 Billion / pa
Out of 475 drugs used, 425 are locally produced.
Over 350 units in the organised sector and many more in the unorganised sector
Bulk drug units concentrated around three areas:

Bombay - Ankleshwar
Hyderabad - Madras
Chandigarh
India very strong in reverse Engineering, molecular chemistry and because patents not on products but on process
Major players: Ranbaxy, Shasun, Cipla, Dr. Reddy's, Cheminor, Lupin, IPCA, Sun, Cadilla, Wockhardt, Aurobindo, Kopran etc.
Most of the bulk drug companies are Indian companies, whereas some of the major pharmaceutical formulation companies are MNCs.




9.6 AGROCHEMICALS


India is a large agricultural economy which is the major user. Average Indian consumption is very low (1/20th of world average)
Market size 100,000 MT (in terms of technical grade)
US$ 800 million
Growth 10% pa
Consumption varies depending on crop and region
Cash crops like sugarcane, tobacco etc. are the major consumers of pesticides (above 60%)
Two types of producers - Technical - 40 nos.
Formulators - above 500 nos.
Major players

India: United Phosphorus, Rallis and Excel
MNC: Hoechst Agrevo, Novartis, Bayer etc
Significant exports
Production
Production ('000 MT)
Product Installed Capacity 92 - 93 93 - 94 94 - 95 95 - 96 96 - 97 97 - 98 98 - 99
Insecticides 81.9 73.4 71.8 75.6 77.7 84.1 60.4 66.0
Fungicides 10.7 5.3 5.5 6.0 6.6 7.3 9.2 8.0
Herbicides 4.8 2.0 1.3 1.5 1.4 1.6 1.9 1.7
Weedicides 10.3 2.2 2.7 5.1 8.5 7.3 7.33 6.7
Rodenticides 0.9 0.27 0.51 0.46 0.40 0.40 0.5 0.5
Fumigants 1.6 1.0 1.5 1.8 1.8 1.9 1.6 1.8
Total 110.2 84.17 83.31 90.46 96.40 102.6 80.9 80.9

Technical grade pesticides have been growing at the rate of 10% in the last few years


9.7 PAINTS AND DYES

Total Market - US$ 1 Billion
Growth Rate 12% p.a.
Per capita consumption very low (400 gms) as compared to developed countries like USA (15 kgs)
Market highly fragmented
25 large and medium players - 50% market share
2000 unorganised players - 50% market share
Dyes used in Paints, Inks, Textiles, Polymers etc.
India is a major exporter of dyes, mostly due to ban of production of some of the dyes and intermediates in the developed countries due to pollution
Major Players:
Paints - Asian Paints, Goodlass Nerolac, ICI, Courtalds, Jenson & Nicholson
Dyes & Intermediates - Color Chem (Hoechst), Clariant, IDI, Atul, Mardia etc.
Inks - Coates, Hindustan Inks, Sakata

9.8 PLASTICS AND RUBBER


Overview

The chemicals, plastics and rubber industries are among the largest industrial sectors in the EU. Together they generate about 3.2 million jobs in more than 60 000 companies. The chemicals industry is one of the largest contributors to the trade surplus of the EU; in 2007 it accounted for 26% of the total manufacturing trade surplus. The chemicals sector also accounts for 12% of the EU manufacturing industry's added value. In 2007 chemicals sales in the EU amounted to €537 billion which is about 30 % of global chemicals sales. This means that the EU chemical industry is still in a top position although it recently lost the first place in the ranking of biggest chemicals producers to Asia (including China and Japan).

There are several European Commission services with different objectives contributing to the ongoing work in this area. The main players are Enterprise & Industry, Environment, Health & Consumer Protection, Employment, Social Affairs & Equal Opportunities and Energy & Transport. The overall objective is to provide the sector with the necessary framework conditions for assuring a sustainable development and contributing to the accomplishment of the Lisbon objectives.

From the industrial point of view the main objectives are:

to ensure the completion of an internal market for chemicals;

to encourage competitiveness of the sector;

to encourage the sector to actively contribute to the policy objective of sustainable development;

to have ready -available comprehensive and up-to-date economic and technical data on the sector;

to consult about important developments with stakeholders as appropriate

Regulation has a significant impact on the chemicals industry. This is why the quality of legislation, correct implementation and proper enforcement are not only of high significance for the achievement of health and environmental objectives, but also for the competitiveness of the chemicals industry.

From a regulatory perspective the main challenges are the correct implementation of REACH (Registration, Evaluation, Authorisation and restriction of Chemicals) and GHS (Globally Harmonised System of Classification and Labelling of Chemicals). Furthermore, DG Enterprise and Industry is also in charge of sector-specific legislation on chemicals (e.g. fertilizers, detergents, etc.) in the EU.

These web pages (Enterprise & Industry/Chemicals) offer the interested reader further information on the legislation on chemicals and on the ongoing work on competitiveness-related issues. Links to the work of other Commission services and/or stakeholders are offered where available and applicable.
CIS updates the top 10 chemical company rankings

Of the 10 ranked highest in our global Top 100, four hold firm, two drop down and four climb - with two new entries. Here are the highlights of the chemical sector's brightest players


10 .LISTEN TO ANDY BRICE AND WILL BEACHAM DISCUSS THE CHANGE IN RANKINGS

1 BASF - UNCHANGED

Changes at board level have done little to dent the hopes of German major BASF in retaining its top position in our rankings. The board of executive directors saw the retirement of Eggert Voscherau, Peter Oakley and Klaus Peter Lobbe, and the addition of Harald Schwager and Hans-Ulrich Engel in January and March, respectively.

After the chemical giant announced more than a year ago that it would sell its styrenics division, it finally looks like a deal will be done. The price tag originally deterred bidders, but the decision to reorganize its styrenics business and add its copolymer operations to the mix looks likely to bear fruit.

2. DOW - UNCHANGED

Second-placed Dow Chemical has continued its aggressive cost-control plans and raised efforts to respond more effectively to surging costs. The US-based producer has stolen most of the headlines for major acquisitions this year, particularly with its announcement in July that it would buy specialty chemical maker Rohm and Haas, also of the US, for $18.8bn (€13.3bn).

It also soon hopes to finalize a joint venture with Kuwait's Petrochemical Industries Co. into which it intends to place a large proportion of its commodity petrochemical and polymer businesses.

Apart from these deals, Dow has been among the most vocal regarding the need for hefty price hikes. Its unprecedented across-the-board price increases came hot on the heels of record-high crude and oil prices, highlighting the pressures faced throughout the chain.

3. EXXONMOBIL - UNCHANGED

Holding firm at number three, the US-based energy and chemical major's achievements this year have been many and varied. In July, Rex Tillerson, chairman and CEO of ExxonMobil said its core focus was on meeting the challenges posed by energy supply and demand.

As part of efforts to improve the supply of its specialty compounds in the Asia-Pacific region, the company has entered into an agreement with Singapore-based Resin & Pigment Technologies (R&P) - a subsidiary of Singapore specialty cement and polymer manufacturer EnGro - where R&P will make a range of Exxon Mobil's products, primarily for automotive applications.

Other projects have seen the completion of a major expansion at its plant in Baytown, Texas, US, to increase halobutyl capacity, used in the production of tires.

ExxonMobil also announced that its affiliate, Mobil Producing Nigeria, has started operations of a $1.3bn (€919m) project in Nigeria to produce and sell natural gas liquids.


4. SHELL - UP FROM 5

Shell has seen a decent increase in sales this year, clawing itself up a place to fourth. The past few months have seen numerous deals including the August addition of Canada's Duvernay Oil to its portfolio. In June, Shell signed a preliminary agreement with US-based BPZ Energy to explore for oil and gas in northern Peru.

This followed agreements with Qatar gas and Petro China for the long-term supply of liquefied natural gas (LNG) from Qatar to the rapidly-growing Chinese market. In March, Shell and Virent Energy Systems, in the US, agreed to develop biogasoline, converting plant sugars into gasoline and gasoline blend components, rather than ethanol.

5. LYONDELLBASELL - UP FROM 11 (LYONDELL)/19 (BASELL)

Newly merged petrochemical giant LyondellBasell, of the Netherlands, is the highest new entrant to the Top 10.

The nascent business was formed in December 2007 after US-based Access Industries' Basell spent a mammoth $19.4bn (€13.7bn) on the US petrochemical major Lyondell, after an unsuccessful bid for US chemical giant Huntsman.

Among many changes since the deal is the company's decision to stop polypropylene (PP) production at its Morris plant in Illinois, US, in the fourth quarter. The move forms part of an ongoing strategy to rationalize and concentrate production on its Spheripol and Spherizone process facilities.

It also finalized the sale of its Sarnia, Ontario, Canada, site to global oil major Shell in August, having previously announced plans to stop PP production there because of high operating costs.

There are also plans to expand its global PP compounding capacity by 30% to 1.2m tonnes/year by the end of next year. A new facility in Guangzhou, China, is due to come on stream, followed by a joint-venture compounding plant in Dammam, Saudi Arabia.

The company says it is looking at opportunities in Russia and India, as well as expanding its sites in Suzhou, China Rayong, in Thailand and Ensenada, Argentina.

It has also increased attempts to stave off the effects of soaring naphtha prices by shifting more of its US ethylene production away from the costly feedstock to natural gas liquids (NGL).

6. INEOS - UNCHANGED

Expansion has been the mantra of UK-based INEOS this year. Although it keeps sixth place in the table, its flurry of acquisitions could see it climb next year.

Back in January, INEOS finalized the deal to buy compatriot oil major BP's vinyl acetate monomer (VAM) and ethyl acetate (etac) businesses for an undisclosed sum. This saw a 250,000 tonne/year VAM plant and an etac plant of the same capacity in Hull, UK, change hands, along with the UK's Teesside-to-Saltend ethylene pipeline.

It then agreed to buy Norwegian oil company Norsk Hydro's polymer operation, which included the remaining 50% interest in the Noretyl ethylene cracker at Rafnes, Norway. INEOS already holds the other half. Then, in August, INEOS Nitriles finally received clearance from the European Commission to buy German chemical major BASF's Seal Sands acrylonitrile (ACN) site on Teesside in the UK. The deal includes a 230,000 tonne/year ACN plant.

Aside from its buying activity, INEOS has also again fervently pushed for a shift to monthly pricing for olefins to offset volatility. Such a move has been mooted in the industry for years.



7.SABIC - UP FROM 10

Despite rocketing raw material costs and the global economic slowdown, advantaged natural gas costs has helped SABIC take the mantle of the seventh-largest chemical company by sales.

Its ascent has clearly been helped by the $11.6bn (€8.2bn) deal to acquire the US's GE Plastics in August 2007, which boosted SABIC's turnover by nearly 30%. But the year ahead is looking strong, too SABIC has five major expansion projects due on stream in 2008, with another starting production by the end of the decade. These include Eastern Petrochemical (Sharq) and Yanbu National Petrochemical (Yansab).

The Saudi major has also agreed to market polyolefin products made by oil company Saudi Aramco's Fujian joint venture in China - the country's first refining and petrochemical industries integrated project established with a foreign company.

However, it is not all about expansion and growth. SABIC Europe opted to close two UK aromatics units it no longer deemed to be economically viable. The plans will see the closure of the Aromatics 2 unit at North Tees, near Seal Sands, and the paraxylene (PX) plant at Wilton by the end of 2008.

The company has also informed customers that it is exiting the melamine market from the fourth quarter because of poor economics. This will see its fertilizer subsidiary, Saudi Arabian Fertiliser, shut down its 20,000 tonne/year unit at Al-Jubail.

8. SINOPEC - DOWN FROM 7

Having added plenty of capacity in 2006 and creeping up the rankings to seventh place, Chinese energy giant Sinopec has had a largely underwhelming time since then.

Soaring crude values, combined with the government's vice-like grip on domestic oil product prices, contributed to the company's dismal first-half results. The oil and gas major's operating profit fell by 87% to yuan (CNY) 7.2bn ($1.1bn) from CNY 53.6bn year on year. This was accompanied by a 77% year-on-year dip in net profit for the first half ending June 30, to CNY 8.3bn from CNY 36.4bn.

The greatest erosion of the company's earnings came from its refining segment, which saw an operating loss of CNY 46bn, rather than the operating profit of CNY 5.7bn in the previous period. Sinopec blames this on having to run the refineries at full capacity to meet market demand, despite price control measures imposed by the authorities.

As a result, US-based ratings agency Fitch Ratings downgraded to Ratings Watch Negative, raising concerns over its reliance on subsidies to offset declining profitability. Slow sales and bearish downstream demand also forced the reduction of operating rates at its subsidiaries' crackers by 10-20%.

Sinopec says it is raising efforts to optimize its product structure, unit operations and the implementation of energy and cost savings in its chemical segment. It will also focus on researching and developing new products and manufacturing high value-added products.

9 MITSUBISHI CHEMICAL - UP FROM 12

Japan's largest cracker operator, Mitsubishi Chemical Corp. (MCC), has bounded up the chart to ninth position, and is aiming for further improvement over the coming years. It has pledged that by the end of the decade, it will focus on high-performance products and high-value businesses, with growth and innovation high on its agenda.

Earlier this year, a major investment was finalized between MCC, its partner Mitsubishi Engineering-Plastics and Chinese oil company Sinopec to form a $300m (€212m) joint venture to build bisphenol A (BPA) and polycarbonate (PC) plants in Beijing, China by mid-2010.

In a separate agreement signed last month, MCC subsidiary Tokyo-based Japan Polypropylene announced that it planned to work with Austrian polymers producer Borealis to supply polypropylene (PP) compounds for the automotive industry in the US and Europe.

However, like all producers, MCC has been feeling the pinch in an increasingly tough trading environment. In July, it revealed that rising crude oil values and a depressed PC resin market meant it was going to postpone the start-up of its newly constructed 60,000 tonne/year plant in Kurosaki, Fukuoka prefecture, until the situation improved.

Poor profitability also forced it to cut the operating rates of its three crackers to 80-85% between September and late December, thanks to weak demand.

Earlier this year, MCC had also decided to slash its production of purified terephthalic acid (PTA) by up to 30% in Asia.

Separately, Tokyo-based subsidiary V-Tech had closed its 110,000 tonne/year polyvinyl chloride (PVC) unit in Mizushima, Okayama prefecture, because of declining profits.

10 DUPONT - DOWN FROM 8

Despite US major DuPont seeing its sales creep higher, it has fallen down our rankings and now resides at 10th place.

Perhaps plans to harness the potentially lucrative solar photovoltaic (PV) market will help it reclaim its position next year. Its strategy is to more than triple sales to the PV industry.

With market growth of more than 30% anticipated each year, the company expects sales in several product lines to exceed $1bn (€707m) within the next five years. As a result, it has announced numerous plans, including a project to establish a PV lab in Hyderabad, India. The country is identified as having huge potential for market growth in solar energy. DuPont is also looking to install a PV array in Hyderabad to generate some of its energy requirements.

Furthermore, the company plans to more than double capacity for its Tedlar films by late 2009, to meet growing demand, although site selection is underway.

Other projects include doubling its capacity of thick film metallization pastes at its Dongguan plant, in China, and building a research facility and production plant in Hong Kong and Shenzhen, respectively. Both are expected to open in 2010.
The European Chemicals industry employs around 1.2 million people and is a world trade leader. Today the High Level Group on the Competitiveness of the European Chemicals industry has met for the last time and adopted its report. The report analyses the key challenges this sector is facing in the medium to long term and makes recommendations on how they can be successfully addressed. The Group has looked into a number of areas, which are strategically relevant for the future of this important industrial sector such as innovation, energy, climate change and trade. It developed some forty recommendations which aim at fostering the competitiveness of the European chemicals industry while contributing to sustainable development. They confirm the need for setting stable and foreseeable framework conditions and orientations, notwithstanding the current economic crisis which has also hit the chemicals sector.
European Commission Vice President Günter Verheugen, responsible for enterprise and industry policy, said: “The European Union has a strong interest to have a world class chemicals industry which is innovative and contributes to sustainable growth and employment. The innovations in this important sector are indispensable to tackle pressing global issues related to energy and climate change, water, food and health. It is of utmost importance that the potential of this sector is freed and that our societies understand that the European chemical industry is not backward looking but belongs to the dynamic drivers of innovative solutions, which are good for people and for the climate. The chemical industry is a true asset of the European Union.”
The Chemicals Industry significantly shapes other economic activities and has a vital importance for Europe’s economy. The High Level Group identified three key challenges for the European chemicals industry:
• The increasingly difficult energy and feedstock situation with a high impact on costs.
• Climate change, and global environmental challenges more generally
• Strong competition from industry in emerging countries and barriers to market access in these countries
In its conclusions the High Level Group highlighted three key factors for the continuing success of the chemical industry:
I. More innovation and research and strengthening networks and clusters are keys to securing competitiveness and sustainability. More innovation needs greater private commitment and a favourable policy framework.
II. Responsible use of natural resources and a level playing field for sourcing energy and feedstock are success factors. Constant efforts to improve efficiency and to provide innovative solutions to contribute to Europe’s energy saving targets are needed.

III. IA competitive chemicals industry needs open world markets with fair competition to fully unlock its potential to ensure a successful future of this industry in Europe.
The High Level Group had 27 members which comprised Ministers and high-level representatives of Member States, representatives from the EU chemicals industry and its downstream industries, the chemical regions network, academia, trade unions, environmental non-governmental organisations (NGO's) and consumer organisations. It was chaired by Vice-President Günter Verheugen. Commissioners Janez Potočnik and Andris Piebalgs played a key role in the discussions on research, innovation and energy















11. CONCLUSION

It is one of the most prosperous and developing industries of the present time because of its application in the present world. Significance of this industry is seen in the various bye products.