Los Angeles, CA (PRWEB) February 11, 2013
The Organic Chemical Manufacturing industry will grow during the five years to 2018. The industry, which provides raw materials to different industries like plastic, paint and adhesive manufacturing, is expected to increase at an average annual rate of 2.4% to $131.2 billion over the five years to 2018. According to IBISWorld industry analyst Radia Amari, “Although the recession lowered demand from end-use customers that caused revenue to drop in 2009, the industry has benefited from increasing demand and consumer spending, with large jumps in revenue occurring before the recession set in.”
The economic downturn caused many of the industry's customers to reduce their production levels as consumer spending fell and the housing and construction sectors – key buying markets for the industry – declined. Additionally, says Amari, “changing raw material costs, including oil prices, compressed industry margins.” (Over the past five years, the price of oil had notable spikes in 2008, 2010 and 2011.) However, the economy began to recover in 2010, with higher manufacturing levels increasing demand for organic chemicals. In line with these trends, revenue in 2013 will increase about 3.2% as demand from customers strengthens. Revenue will be further supported by a lower global price of crude oil, a key input, which is expected to decline 6.6% during the year. Therefore, lower operating costs, together with significant demand for exports and a decline in establishments, will increase industry profit to 6.7% of revenue in 2013.
The Organic Chemical Manufacturing industry has a low level of concentration, with the top four players accounting for less than 5.0% of industry revenue in 2013. According to the US Census Bureau, about 46.9% of industry companies have fewer than 20 employees, while 76.0% of companies have fewer than 100 employees. Additionally, low barriers to entry, including moderate technological change, will support a low market concentration over the next five years. However, the degree of concentration varies between different product segments. For example, within the gum and wood chemicals product segment, the top four companies account for over 80.0% of the market.
Over the five years to 2018, IBISWorld expects industry revenue to grow. Demand from key buying industries will expand, driven by higher consumer consumption and an increase in exports. While industry revenue will increase, rising input costs (beginning in 2014) and potential government regulation will put downward pressure on profitability. Because of rising material and operating costs, companies will close underperforming plants and improve production facilities that make the cut. During this period, manufacturing facility numbers are expected to decrease.
For more information, visit IBISWorld’s Organic Chemical Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures basic organic chemicals (other than petrochemicals), industrial gases and synthetic dyes and pigments. Key product groups include gum and wood products, cyclic crudes and intermediates, ethyl alcohol and other basic organic chemicals. These products are predominantly intermediates that are used as raw material inputs by other manufacturing industries in the production of downstream 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
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.