Demand for inorganic chemicals will return, though imports will offset major growth
Los Angeles, CA (PRWEB) May 18, 2012
Following years of volatile revenue brought on by the recession, the Inorganic Chemical Manufacturing industry, which produces intermediate chemical inputs like chlorine for downstream consumers that include the housing and construction sectors, is expected to expand in 2012. Despite growing revenue, the industry has experienced changing demand as the recession weakened the economy. “Inorganic chemical manufacturing is vulnerable to economic shifts because it depends on end-user manufacturers that rely on consumer demand for production,” says IBISWorld industry analyst Radia Amari. In 2012, as buyer markets stabilize and demand for their products increases, demand for inorganic chemicals is also expected to rise.
Over the five years to 2012, Inorganic Chemical Manufacturing industry revenue is expected to drop at an average annual rate of 0.4% to $31.6 billion; however, this decline has not been consistent. Following a 17.3% jump in revenue in 2007, the industry declined during the recession. Downstream customers, such as construction manufacturers and pulp and paper producers, decreased production, reducing inorganic chemical purchases. Revenue then rebounded when the economy began to recover in 2010, and downstream consumers increased manufacturing output. “The industry has also needed to adjust to rising energy costs,” says Amari, “because electric power prices have increased during this period.” In 2012, revenue is expected to rise as industry selling prices increase. Higher selling prices that offset feedstock costs, together with increased demand for exports and a decline in establishments, will increase industry profit.
Over the five years to 2017, the industry will expand, led by improved chlorine and carbon black demand. However, infiltrating imports will likely offset high revenue growth as Chinese imports are set to cause many domestic firms to lose market share. While industry revenue is expected to increase, inorganic chemical manufacturers are projected to consolidate. Some firms, including industry player Olin Corporation, have already acquired other companies to increase capacity and efficiency. This strategy will likely alleviate some costs. Other firms have implemented restructuring programs, closed slow-growing manufacturing plants and reduced employment. Over the next five years, firm numbers are expected to decrease. Because each company focuses on a few specific products, the industry has a low level of concentration. Medium barriers to entry, including low technological change, will continue to support low market concentration over the five years to 2017. For more information, visit IBISWorld’s Inorganic Chemical Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures a variety of basic inorganic chemicals. Inorganic chemicals are generally mineral-based; most organic chemicals, on the other hand, are carbon-based. Inorganic chemicals are used as inputs in a number of manufacturing and industrial processes. Key identifiable industry segments include chlor-alkali and carbon black products.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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