Overview:

The global chemical industry which is over $3 trillion in size had a major setback in 2009. The US economic recession, exacerbated by the credit crisis had spread to all regions around the world. This was largely reflected among the major chemical manufacturers most of which had a significant decline in sales over 2008. Moreover, many chemical customers also reduced their purchases in the face of slower end market demand and reduced inventories in response to the adverse impact of the recent economic downturn.
Global Growth Strategies for Chemical Companies identifies and evaluates the key growth strategies for the global chemical industry and their impact on other sectors. This report also investigates the recent trends, opportunities, and challenges of the leading chemical players in the global chemical industry. The emerging trends, priorities and strategies of investors are also described to help entrepreneurs target the right type of investor and communicate their value proposition in the best possible manner.

Key features of this report

• Market segmentation and global distribution by region
• Consolidation within the chemical industry including key M&A strategies
• Key deals and alliances between 2008 and June 2010
• Key trends and opportunities in the global chemicals market
• Strategic growth analysis of leading companies in chemical markets across the globe
• Future outlook of the global chemical industry

Scope of this report

• Gain a detailed overview of M&A activity, key partnerships and alliances and how these are shaping the global chemical industry
• Assess the growth strategies of the global chemical market, including the role played by key societies and associations, market segmentation, and case studies
• Understand the major issues affecting the global chemical industry
• Evaluate the growth strategies of key chemical players in the global chemical industry
• Understand the key drivers and resistors to growth for chemical companies

Key Market Issues

• Transitioning from commodities to specialties is taking place as many chemical companies across the globe shift their focus from commodities to specialties. However, for many European companies, this shift was a necessity rather than advancement, due to the high cost of raw materials. Specialty chemical producers provide eloquent, high value solutions to a number of niche segments. During the 2008–09 period, Rohm & Haas and Ciba’s acquisition by Dow and BASF respectively, showed an increasing focus on specialties (in search of improved profitability margins).
• Leading chemical manufacturers are entering emerging markets through joint ventures or acquisitions (mainly in the Middle East to gain access to feedstocks, and in China and India to develop a local market presence). The most successful chemical producers in the near future are likely to be those that embrace the changing dynamics in the global chemical industry and effectively position themselves in emerging markets.
• Chemical companies have started to increase their customer relationships through strategic partnerships and joint initiatives with researchers, engineers, and other professionals from different companies, working on collaborative research and development projects. Moreover, chemical manufacturers need to keep their sales force engaged to drive value through strong customer relationships, rather than simply getting drawn into competition with lower-cost rival producers. For instance, BASF introduced a global Non Conformance Management System (NCM) in 2009, which records and investigates customers’ problems with their products and processes.

Key findings from this report

• Overall activity in the global chemical industry (which is $3 trillion in size) fell by 4.6% in 2009.
• The Middle East chemical industry is currently experiencing significant growth, mainly in the specialty sector. The region has historically concentrated on oil production, but more recently many companies have started to build their own chemical production facilities in the region.
• Although specialty chemical companies were hard hit by the recent economic downturn, many of the US and European chemical companies are still focused on this sector, as specialty products are more profitable than commodity chemicals in the longer term.
• Mergers and acquisitions form an integral part of the global chemical industry. More recently, many chemical companies have started to focus on cross-border M&A activities in Asia.
• Managing and rationalizing existing assets in the EU and investing in new facilities in emerging and fast growing markets has been a key trend in the global chemicals sector recently. Growth in Western Europe started to decline in recent years, making Asia, the Middle East, and Latin America the new markets driving growth.
• The Asian chemical market is highly fragmented and is still dominated by a plethora of relatively small players in terms of market capitalization. Thus, they present as attractive takeover targets for many European and US chemical players.

Key questions answered

• What are the recent trends in global chemical industry?
• What are the key growth strategies for major players in the global chemical market?
• Which companies will drive the future of the global chemical market?
• How will the new healthcare reforms and climate change protocols impact the global chemical industry?
• Which are the key areas of focus for both commodity and specialty chemicals?
• What are the roles of key organizations (societies and associations) in the global chemical industry?

Global Growth Strategies for Chemical Companies
Executive summary 10
An overview of the chemical industry 10
Market segmentation 11
Consolidation within the chemical industry 12
Growth strategies for the chemical market 13
Growth strategies of key chemical players 14
Chapter 1 Introduction 16
What is the report about? 16
Chapter 2 An overview of the chemical industry 18
Summary 18
Overview of the global chemical industry 19
Characteristics of the chemical industry 20
Key organizations in the chemical industry 21
The American Chemistry Council (ACC) 21
The American Chemical Society (ACS) 22
Cefic – European Chemical Industry Council 22
The European Association of Chemical Distributors (FECC) 23
The International Council of Chemical Associations (ICCA) 23
The International Council of Chemical Trade Associations (ICCTA) 23
Global distribution by region 24
European chemical industry 24
US chemical industry 26
The Asia-Pacific chemical industry 27
The Chinese chemical industry 27
The Indian chemical industry 29
The Japanese chemical industry 31
The Middle East chemical industry 32
The Latin American chemical industry 34
Chapter 3 Market segmentation 38
Summary 38
Introduction 39
Commodity chemicals 39
Impact of commodity chemicals on the global chemical industry 40
Key areas of focus for commodity chemical companies 41
Specialty chemicals 41
Impact of specialty chemicals on global chemical industry 42
Key areas of focus for specialty chemical companies 43
Fine chemicals – an overview 44
Global chemical shipments/output by region 45
Recent adjustments in the supply side, post recession 46
Chapter 4 Consolidation within the chemical industry 50
Summary 50
Introduction 51
M&A strategies 51
Major focus on China and the Middle East 52
Saudi Arabia and Abu Dhabi’s strong presence 52
China – the other key destination 53
Restructuring of chemical production 54
Recent key deals 55
Future outlook of global chemical deals 55
New healthcare reforms and climate change protocols 57
Commodity price fluctuation 57
Private equity firms in M&As 57
Case study insights 58
Mitsubishi Chemicals and Asahi Kasei’s joint venture company – May 2010 58
Mitsubishi Rayon and SABIC’s joint venture – August 2009 58
Dow Chemicals and Denbury’s MoU – November 2009 59
Evonik’s precious metal powder catalyst acquisition from Ravindra Heraeus –
June 2010 59
Chapter 5 Growth strategies for the chemical market 62
Summary 62
Introduction 63
Recent trends in the global chemical industry 63
Advancement from commodities to specialties 63
Establishing customer relationships 64
Developing joint ventures in emerging markets 64
Investment in biotechnology 64
Shifting manufacturing units to emerging and fast growing markets 65
Higher oil prices will drive the pricing trends of chemicals 66
Global policies to curb greenhouse gas emissions 66
Renewable energy initiatives 68
Petrochemical shift in emerging countries 69
ICCA’s GMP guidelines 70
Potential benefits of the guidelines 71
Future outlook of the global chemical industry 72
Industry leaders’ predictions for 2010 73
Chapter 6 Growth strategies of key chemical players 76
Summary 76
Introduction 77
Leading chemical players by emerging region 78
Key players and their growth strategies 79
BASF 79
Leading supplier of chemical intermediates 79
Concept of Verbund, an innovative approach 79
Diversified product portfolio 79
Changing focus from commodity chemicals to specialty category 80
DSM 80
Increasing R&D activity in emerging markets 80
Micro reactors: a new technology for pharmaceutical production 81
Dow Chemicals 81
Targeting high-growth sectors with new products and technologies 81
Innovation in healthcare, energy, and consumerism 81
Commitment to inventory lifecycle analysis 82
Evonik Chemicals 83
Specialty chemicals remain a key focus area for Evonik 83
Strong commitment to custom manufacturing business 83
Saudi Basic Industries Corporation (SABIC) 83
Strong research and technology capabilities 83
Strengthening its ties with emerging countries like China 84
Lonza 84
Chemical manufacturing continues to strengthen its technology platform 84
Continued business partnerships with biopharmaceutical and chemical companies 85
Lanxess 86
Expansion in BRIC countries to strengthen business activity in the coming years 86
Custom manufacturing remains key for Lanxess’s fine chemical subsidiary (Saltigo) in Japan 86
Largest rubber chemicals production site in India 86
Sigma-Aldrich 87
Targeting high-growth life-sciences segment with new products and technology 87
Partnerships and alliances continues to be a key strategy to expand its business portfolio 87
Strong focus on emerging markets to increase customer base 88
Mitsubishi Chemical Holdings 89
Prioritizing next-generation growth businesses 89
Increasing competitiveness in petrochemical sector 89
Sumitomo Chemicals 90
Strong response to EU’s REACH legislation for chemicals 90
Creation of next generation chemical safety information management database 90
Significant progress on major R&D projects 90
Pursuing a new strategy of creative hybrid chemistry 91
Appendix 92
Glossary 92
Index 95

List of Figures
Figure 2.1: Global chemical sales share by regional distribution, 1997 vs 2007 24
Figure 2.2: Sectoral breakdown of EU chemical industry sales, 2007 25
Figure 3.3: Global chemicals and their use in different sectors 39
Figure 4.4: Regional trends in global chemical M&As, Jan 2008 to June 2010 56

List of Tables
Table 3.1: Global chemical shipments ($bn) in major countries, 2001-08 46
Table 4.2: Major chemical deals, Jan 2008 to June 2010 55
Table 6.3: Top five chemical companies by emerging region, 2008 78