Chemical Industry

The chemical industry has benefited from globalisation and liberalisation. The lifting of trade barriers together with an upsurge in global economy has driven the chemical industry to new heights. The chemical industry expanded in 2004 with North America Latin America and Asia posting good growth rates. Europe, meanwhile, grew at a slower rate due to the appreciation of Euro against the US dollar and weak demand in select European markets.

Today, the chemical industry figures among the leading industries in the world with major chemical companies such as BASF operating across borders. Not surprisingly chemicals figure prominently in the exports and imports of most countries.

Now there are very few areas of life that are untouched by chemicals and the chemical industry. Indeed the chemical industry is a critical industry, with deep linkages with most industries. The top consumers of chemicals, for instance, include industries such as metals; mechanical and electrical industries; textiles and clothing; automotive industry; and paper and printing products.

Major products of the chemical industry

The chemical industry makes thousands of products from air, earth and water. These products can be broadly classified into:

• base chemicals;
• specialty and fine chemicals;
• pharmaceuticals; and
• consumer chemicals.

The base chemicals can be further divided into petrochemicals; plastics and synthetic rubber; man-made fibres; other basic in-organics; industrial gases; and fertilisers. The specialty and fine chemicals, meanwhile, includes fine chemicals; other specialty chemicals, paints and inks; and crop protection.The consumer chemicals include perfumes and cosmetics in addition to soaps and detergents.

The base chemicals are the biggest category in the chemical industry followed by specialty and fine chemicals; pharmaceuticals and consumer chemicals. In terms of regions, North America, European Union and Asia dominate the global chemical trade. Global chemicals sales, for instance, were estimated at €1,736 billion in 2004—85 per cent of which came from European Union-25, Asia and the USA.

Most of the top chemical companies are concentrated in European Union, the USA and Japan. The major chemical companies in the world include BASF, Dow Chemical, Bayer, Dupont, Atofina, Mitsubishi Chemical, Air Liquide and Sinopec among others.

Challenges in the chemical industry

Though the chemical industry has helped in raising the quality of life, it gets little credit for its efforts. The agrochemicals, for instance, protect plants and increase yields. Similarly, pharmaceuticals have led to an increase in life expectancy. Now the problem of environmental damage from the chemical industry is being addressed at country, region and global level. New regulations no doubt thrust additional costs on chemical companies, but compliance will help in gaining the goodwill of the public.

The compliance costs may not weigh heavily on the chemical industry in the near term with demand remaining robust worldwide. Globally, the chemical industry is expected to carry last year’s growth momentum into 2005 though the global economic slowdown could moderate growth. The volume and price trend in USA is expected to be firm in 2005 while strong demand may encourage Latin American chemical industry to expand capacity. The chemical industry in Asia is expected to continue on the growth path while Europe may report slower growth due to the strengthening of Euro and sluggish growth in key markets.