ICIS Chemical Business presents the top 10 regional chemical players

Racing to the front

19 September 2008 16:28  [Source: ICB]

Which region dominates the global Top 100 table? Who are the players pulling the strings and which ones are emerging from the shadows?

Joseph Chang/New York

YOU NEVER see them coming. Just as Google dominated the market for search, even in the midst of established media players with solid capabilities, the new top players in any category may stake their claim with surprising power. Don't be caught off guard.

While the ICIS Top 100 (see ICIS Chemical Business, 15 September) holds the comprehensive list of the premier global chemical companies based on annual sales, no doubt emerging players from key regions will one day lay their claim to the top spots.

From the Middle East to Asia to Latin America and Central and Eastern Europe (CEE) and Russia, the new crop of emerging players will be the ones to watch in the coming decade and beyond.

The Western world should look to the emerging regions for the fastest-growing, most innovative and most ambitious players - those that will make a play for their place in history. It will pay to watch these players - not for the sake of spectacle, but to realize who will seek to make a name for themselves in the new world order.

Don't say we didn't warn you.

You can download the table of top ten Middle Eastern Players here.

You can download the table of top 10 Latin American Players here.

You can download the table of top 10 Asian companies here.

You can download a table of the top 10 Russia/CEE chemical companies here.

You can download the top 100 table here.

 

MIDDLE EAST

You can download the table of top ten Middle Eastern Players here.

John Baker/London

FOR ALL the fuss over the huge increases in petrochemical capacity in the Middle East, few major companies are located in the region. Many plants are single cracker-based joint ventures (JVs), albeit with some moving to expand with their second cracker units. Many other players form small parts or JVs of state-held oil companies, as in Abu Dhabi, Egypt and Oman.

Only two petrochemical producers from the region feature in the ICIS overall Top 100: SABIC, of Saudi Arabia, which, with sales of $33.7bn (€23.8bn), is ranked seventh, and National Petrochemical Co. (NPC) of Iran, with sales of $8.4bn and a rank of 45. The next largest player is Petrochemical Industries Co. (PIC) of Kuwait, with sales of $1.9bn, made up largely through its Equate, Equipolymer and MEGlobal JVs with US-based Dow Chemical.

In specialty chemicals, Israel provides two major players. Israel Chemicals Ltd is ranked 80th in the Top 100, with sales of $4.1bn, and agrochemical producer Makhteshim-Agan has sales of $2.1bn.

South Africa's Sasol and AECI are two major players in the extended Middle East and Africa region. Sasol was 57th, with sales of $6.7bn, while AECI had sales of $1.7bn.

Two other firms have emerged into the limelight by publishing their financial figures: Qatar Petrochemical Co. (Qapco), with sales of $740m and Saudi International Petrochemical (Sipchem) of Saudi Arabia, with sales of $400m. But beyond this, financial transparency on chemical operations is lacking.

SABIC and NPC have seen sales climb, through increased production after intense capital investment and steeply rising selling prices. This looks set to continue as SABIC is building and planning new plants, in Saudi Arabia, Europe and China, the latter with Saudi Aramco and local partners.

NPC is still expanding capacities with cracker projects, after delays to start-ups and changes in top management in the past few years. Sipchem also stands to boost sales in 2009 and in 2013, as the private Saudi firm brings Phase II and then Phase III of its investment program on stream, adding to its methanol and butanediol (BDO) output with acetyls and vinyl acetate. Phase III includes a number of olefin-derivatives units. These will use olefins toll-produced by SABIC, which is expected to take a stake in the Phase III projects.

PIC has new ethylene and derivatives capacity coming on stream soon, and will be forming a JV with Dow that will take in much of the latter's commodity petrochemicals business. The JV - K-Dow Petrochemicals - will be based in the US and thus not boost PIC's reported sales figures.

TOP 10 MIDDLE EAST AND AFRICA CHEMICAL COMPANIES ($M)

Company name Sales '07 % Change to '06* Operating profit '07 % Change to '06* Net profit '07 % Change to '06*
SABIC 33,724 46.2 10,968 33.2 7,221 33.4
NPC 8,388 69.8 1,184 71.6 235 -15.0
Sasol 6,708 19.2 282 n/a - -
Israel Chemicals Ltd. 4,100 25.8 715 33.4 536 43.3
Makhteshim-Agan 2,081 17.0 288 41.2 178 111.9
PIC*** 1,902 3.2 231** -26.7 496 -7.2
AECI 1,661 11.0 118 -27.0 67 -50.0
Qapco 740 23.6 572** 33.2 388 35.7
Sipchem 400 15.4 239 15.9 159 20.2
Sonatrach**** 223 -3.9 - - - -
 *In local currencies ** Gross profit ***year ended March 2007 **** ENIP plus argon JV n/a not available  source: company data

LATIN AMERICA

You can download the table of top 10 Latin American Players here.

Anna Jagger/London

BRAZIL'S NEWLY created chemical company, Quattor, has been catapulted into fourth position in the ranking of Latin America's chemicals companies.

Quattor was created in June 2008 following a major restructuring of the country's chemicals sector that also bolstered the operations of Braskem, which remains top of the listing. The new company, owned 60:40 by chemicals holding company Unipar and state-owned energy group Petrobras, will benefit from Brazil's booming economy. At a time of rising global demand for food and energy, the country is a major producer of agricultural products, including ethanol from sugar cane, and aims to become an important oil exporter.

Braskem continues to dominate Latin America's chemicals sector, with double the revenues of the No. 2 player, Mexico's Pemex Petroquimica. The Brazilian restructuring enabled Braskem to boost its market share by gobbling up petrochemicals producers Ipiranga Petroquimica and Copesul.

Bernardo Gradin, Braskem's new CEO, has been asked to position the firm in the top 10 global petrochemical players, in terms of stock market value, by 2012. A string of new investments in Brazil and Venezuela, coupled with Brazil's economic boom, should help the new incumbent.

Three Mexican producers made the top 10: Pemex Petroquimica, the petrochemicals arm of state-owned energy group Pemex Alpek, the petrochemicals subsidiary of industrial group Alfa and vinyls and industrial chemicals major Mexichem.

The development of Mexico's chemical sector has been hampered by restrictions in investments by private companies and in the way Pemex sells petrochemical feedstock. Pemex Petroquimica has been unable to implement its long-awaited Phoenix projects, although reforms are under discussion and the company is promoting a major new ethylene and derivatives project based on a guaranteed long-term supply of raw materials.

Mexichem and Alpek, and their compatriot Idesa, are all said to be interested in Pemex Petroquimica's proposed project.

TOP 10 LATIN AMERICAN CHEMICAL COMPANIES ($M)

Company name Sales '07 % Change to '06* Operating profit '07 % Change to '06* Net profit '07 % Change to '06*
Braskem 10,646 11.0 854 92.8 321 385.5
Pemex (petrochemical products) 5,296 92.5 -1,204 n/a -1,356 -24.5
Alpek (Petrochemical business of Alfa) 4,007 17.5 177 -25.6 80 -51.5
Quattor (pro forma) 3,536 n/a - - 282 n/a
Mexichem 2,115 121 399 72.6 169 53.2
Fosfertil 1,368 17.5 357 106.1 251 93.9
Pequiven 1,200 n/a - - - -
SQM 1,190 14.4 260 18.0 180 27.7
Oxiteno 956 9.0 - - - -
Petrobras (petchem operations in Argentina owned by former ­Petrobras Energia) 973 22.9 29 -43.2 - -
 * In local currencies source: company data

ASIA

You can download the table of top 10 Asian companies here.

John Richardson/Singapore

IT WOULDN'T have taken a genius to work out that China's Sinopec would top our table of Asian companies (excluding Japan).

The emergence of ChemChina from nowhere demonstrates the potential for further local investment by local players and for more overseas investment.

Ren Jianxin borrowed yuan (CNY) 10,000 ($1,462) from his employer in 1984 to set up BlueStar - a teapot and boiler cleaning company, according to an interview with him in an e-newsletter from global consultancy McKinsey.

Ren is now president of ChemChina, Bluestar's parent, which has acquired 100 chemical companies from the Chinese ­government since 1990 and has won a $600m investment from US private equity firm Blackstone.

ChemChina has also bought the Australian cracker operator Qenos.

India's Reliance Industries seems almost certain to be challenging for a higher slot in the table in future years as it brings on stream more refinery-based polypropylene (PP), paraxylene (PX) and a cracker complexes. It is also looking to build overseas gas crackers with GAIL (India).

LG Chem, No. 1 among the South Koreans, has a reasonably strong overseas presence in vinyls in China, and is looking to build a gas cracker in the Middle East.

SK Energy, also South Korea, has taken a 35% stake in a cracker project in China with Sinopec, to capitalize on its refinery expertise. The Formosa group could eventually crack the China conundrum by overcoming a ban on investing in a refinery-cracker on the mainland. Its companies are already a formidable force through expansions in Taiwan and in downstream plants in China.

Thailand's Cementhai Chemicals, the chemicals subsidiary of the Siam Cement Group, makes the overall Top 100 and could be on the rise through new capacity.

PTT Chemical, its partly state-owned domestic rival, is "bubbling under" - just outside the Top 100. It, too, is adding capacity.

Both firms could also move up the table if they become big suppliers to underdeveloped Southeast Asian neighbors, and possibly even Southern China, through direct investments and improved road links.

TOP 10 ASIAN CHEMICAL COMPANIES ($M)

Company name Sales '07 % Change to '06* Operating profit '07 % Change to '06* Net profit '07 % Change to '06*
Sinopec 32,998 12.0 - - - -
ChemChina 17,400 69.6 - - - -
Reliance Industries 13,210 14.0 1,773 17.2 - -
LG Chem 11,551 16.3 817 122.7 734 113.0
SK Energy 7,937 35.3 543 10.7 - -
Formosa Chemicals & Fibre 7,398 n/a - - 1,558 48.5
Formosa Plastics 5,598 n/a - - 1,562 58.6
Orica 4,910 3.1 722 47.0 434 7.7
Cementhai Chemicals 4,374 6.2 462 -6.2 570 15.7
Petronas 3,844 14.4 - - - -
 * In local currencies source: company data

RUSSIA/CEE

You can download a table of the top 10 Russia/CEE chemical companies here.

Will Beacham/London

WHAT REALLY stands out from an analysis of the Central and East European and Russian chemical sector is the astounding growth in the fortunes of the Russians.

Strong economic growth, buoyed by oil and gas revenues, has allowed companies there to enjoy growth figures that old-world firms can only dream of. The star performer is Sibur. Its petrochemical division enjoyed 12% sales growth to $4.85bn (€3.41bn) in 2007, pushing it into the Top 100 at number 73.

Ownership structures within Russian industrial groups are often opaque, and Sibur is no exception. It is owned by the country's gas giant, Gazprom. Earlier efforts by Sibur's management to buy out the firm ended when Gazprom blocked the move and several top executives ended up in jail.

Yet similar moves to sell out may be on the horizon. Gazprombank, which owns 75% of Sibur, is planning to sell the company to management for $5.4bn ($262m).

The Gazprombank management team includes Dmitry Konov, the CEO of Sibur, and his deputies, Vladimir Razumov, Alexey Filippovsky, Vitaly Baranov and Mikhail Karisalov.

Other star performers in Russia include Nizhnekamskneftekhim which earlier this year announced it would invest roubles 6.7bn this year in expanding and upgrading its polystyrene (PS), polyethylene (PE) and rubber production facilities.

When and if this, and other Russian petrochemical projects, will ever come to fruition is questionable, however. Players have previously announced ambitious projects, which seldom get off the ground.

Getting through the necessary bureaucratic hurdles and obtaining finance seem to prevent many projects succeeding. The result is that the industry there is still in desperate need of modernization, relying, as it does, on fairly ancient production facilities.

Escalating tension between Russia and the West will probably make the climate for investment there even less inviting. This may create new difficulties for Russian companies wishing to raise finance or ­partner with Western firms for engineering and technology.


TOP 10 RUSSIAN/CENTRAL AND EASTERN EUROPE CHEMICAL COMPANIES ($M)

Company name Sales '07 % Change to '06* Operating profit '07 % Change to '06* Net profit '07 % Change to '06*
PKN Orlen (chems/petchems) 6,741 1.2 537 46.6 - -
Sibur 4,846 11.8 1,282 15.7 - -
Salavatnefteorgsintez 3,960 40.0 - - 1,630 50.0
MOL (petchems division) 2,300 12.0 236 75.0 - -
Agrofert 2,870 3.0 - - - -
Nizhnekamskneftekhim 2,400 24.0 287 (profit from sales) 20.0 1,670 23.0
Lukoil (petrochemicals) 2,300 26.0 - - - -
Petkim 1,860 -2.0 96 -3.0 61 23.0
BorsodChem 1,510 19.0 - - - -
Uralkaliy 1,190 87.0 - - - -
Note: OMV is excluded because it includes petrochemicals with refining and marketing* In local currencies sources: company data, Accenture, CIREC

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