ICIS Top 100 Chemical Companies: North American Top 10 face challenging 2012

17 September 2012 00:00  [Source: ICB]

North American leader ExxonMobil Chemical pulled further away from number-two player Dow Chemical in 2011 with 20.7% sales growth to $64.7bn (€51.5bn). At the end of 2010, the two US-based companies were neck and neck, with ExxonMobil at $53.7bn in sales versus Dow's $53.6bn. Dow's sales growth clocked up a none-too-shabby 11.8%.

North AmericaMost of the Top 10 North America-headquartered companies posted solid profit gains on double-digit sales growth. Major commodity chemical players benefited from higher prices as well as lower feedstock costs from the abundance of shale gas on the continent

However, industry leader ExxonMobil was hit by lower volumes, a higher tax rate and increased maintenance spending.

Canada-based fertilizer producer Agrium jumped into fourth place with a 44.0% gain in sales to $15.5bn, boosted by acquisitions and strong selling prices.

US-based Huntsman saw a notable 22.0% gain in sales to $11.0bn, propelled by higher sales of white pigment titanium dioxide.

After 2011's overall strong performance, players will be hard-pressed to beat these results in 2012. The global economic slowdown has been led by a recession in the eurozone, followed by a dramatic growth decline in China, a struggling US recovery and weaker growth in Latin America. Global chemical prices as measured by the ICIS Petrochemical Index (IPEX) have also fallen substantially through late August.

For the first half of 2012, ExxonMobil Chemical's earnings were down 24.2% to $2.15bn on a 1.6% decline in sales volumes. Dow Chemical's profits slid 29.9% to $1.26bn on 5.0% lower sales of $29.2bn.

Although 2012 is shaping up to be a challenging year for the North American chemical sector, a number of companies are poised for tremendous organic growth on the back of cheap shale gas.

There are already plans for seven new US ethane crackers, five expansions of existing crackers, and one restart of an idled facility that could add 35% to existing US ethylene capacity by 2016-2017. The latest announcement came on 15 August from Occidental Chemical and Mexichem for a $1bn-plus 500,000 tonne/year cracker at Ingleside, Texas.

All these crackers will be accompanied by downstream units, producing everything from polyethylene (PE) to monoethylene glycol (MEG) to vinyl chloride monomer (VCM). Projected capital spending in the US chemical sector will be several tens of billions of dollars.

North America table

Among the Top 10 North American chemical companies building crackers are ExxonMobil Chemical, Dow Chemical and Chevron Phillips Chemical.

Mergers and acquisitions (M&A) have played a role in the North American chemical sector in 2012, with a number of US deals, including one that could affect next year's Top 10. Eastman Chemical bought Solutia for $3.4bn in July, and in the same month, US-based polyvinyl chloride (PVC) producer Georgia Gulf agreed to merge with US-based PPG Industries' chlor-alkali business in a $2.1bn deal.

Eastman Chemical stands on the brink of breaking into the Top 10 in 2012 because its sales, along with those of Solutia, ­totalled $9.3bn in 2011 - less than $1bn away from number 10 player Air Products.

By: Joseph Chang
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