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BD2402Q
MBD INORGANIC CHEMICALS MARKET DEVELOPMENT : August 2003
Overview

This report covers: Chemicals, Chlorides, Phosphoric Acid, Potassium Carbonates, Inorganic Chemicals, Trisodium Phosphate, Rare Earth Compounds, Precious Metal Compounds, Silicates, Liquid Sodium Hydroxide, Bromides, Silicon, Carbides, Fluorides, Silicon Dioxide, Aluminium Hydroxide, Iodine, Sodium Triphosphate, Sulphuric Acid, Boron Oxides, Dicalm Phosphate, Strontium Carbonate, Sulphates

Companies covered include: BASF, Bayer, Croda International, Du Pont (UK), Great Lakes Europe, Arch Chemicals, ICI, ICI Chemicals & Polymers, Degussa UK Holdings, Rhodia, Rohm & Haas UK, Solutia,

All MBD reports are updated every quarter to ensure that you receive the latest information. You can either choose to buy just the latest quarterly update, or you can elect to receive the latest report and the next three quarterly updates for £95 more by ticking the annual update service box.

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TABLE OF CONTENTS

No.

Title

Page
1 EXECUTIVE SUMMARY 1
2 INTRODUCTION 4
2.1 Definitions 5
2.2 Abbreviations 5
2.3 Market Positioning 6
2.4 UK Economy 7
2.5 Market Factors 13
3 MARKET SIZE AND TRENDS 15
3.1 Chapter Summary 16
3.2 Market Size 17
3.3 Market Segmentation 19
3.4 Market Trends 21
3.5 Seasonality of Sales 28
3.6 Distribution 28
4 SUPPLY SOURCES 31
4.1 Chapter Summary 32
4.2 Production 33
4.2.1 Overview 33
4.2.2 Segmentation 35
4.3 Imports 37
4.3.1 Overview 37
4.3.2 Segmentation 38
4.4 Exports 40
4.4.1 Overview 40
4.4.2 Segmentation 41
4.5 Trade Deficit 43
5 INDUSTRY STRUCTURE 44
5.1 Chapter Summary 45
5.2 Industry Development 46
5.3 Structure by Employment 49
5.4 Structure by Turnover 49
5.5 Company Profiles 50
5.5.1 Haltermann 50
5.5.2 BASF 51
5.5.3 Bayer 53
5.5.4 Clariant Chemicals 54
5.5.5 Croda International 56
5.5.6 Du Pont (UK) 58
5.5.7 Great Lakes Europe 60
5.5.8 Arch Chemicals UK Holdings 61
5.5.9 ICI Chemicals & Polymers 63
5.5.10 ICI 64
5.5.11 Degussa UK Holdings 67
5.5.12 Rhodia 70
5.5.13 Rohm & Haas (UK) 71
5.5.14 Solutia UK 72
6 FORECAST 75
6.1 Chapter Summary 76
6.2 Market Size 76
6.3 Production 77
6.4 Imports 78
6.5 Industry 79
7 FURTHER SOURCES & CONTACTS 80
7.1 Trade Associations 81
7.2 Trade Magazines 81

List of Tables

No.

Title

Page
1 UK Chemicals Industry Sector Shares of Gross Value Added, 2000 6
2 UK Demand for Chemicals, by Sector, 2002 7
3 UK Market for Inorganic Chemicals, 1998-2002 18
4 Segmentation of the UK Market for Inorganic Chemicals, by Type, 1998-2002 20
5 The UK Market for Chemicals, 1998-2002 23
6 UK Capital Expenditure by the Chemical Industry, 1998-2002 24
7 Regional Analysis of UK Chemical Industry Capital Expenditure, 1994-2000 26
8 Forecast UK Capital Expenditure by the Chemical Industry, 2003-2007 27
9 Seasonality of Sales of Inorganic Chemicals, 1998-2002 28
10 Chemical Distributors’ Share of the UK Chemical Market, 2002 29
11 UK Production of Inorganic Chemicals, 1998-2002 34
12 Segmentation of the UK Production of Inorganic Chemicals, by Type, 1998-2002 35
13 UK Volume Production of Selected Inorganic Chemicals, by Type, 1997-2001 36
14 UK Imports of Inorganic Chemicals, 1998-2002 38
15 Segmentation of UK Imports of Inorganic Chemicals, by Type, 1998-2002 39
16 UK Exports of Inorganic Chemicals, 1998-2002 41
17 Segmentation of UK Exports of Inorganic Chemicals, by Type, 1998-2002 42
18 Analysis of the Changes in the Structure of the Inorganic Chemicals Industry.1998-2002 48
19 Analysis of the Employment Structure of the Inorganic Chemical ManufacturingIndustry, 2001 and 2002 49
20 Analysis of the Financial Structure of the Inorganic Chemical Manufacturing Industry.2001 and 2002 50
21 Financial Analysis of Haltermann, 1996-2000 51
22 Key Financial Ratios for Haltermann, 1999-2000 51
23 Financial Analysis of BASF, 1997-2001 52
24 Key Financial Ratios for BASF, 2000-2001 53
25 Financial Analysis of Bayer, 1997-2001 54
26 Key Financial Ratios for Bayer, 2000-2001 54
27 Financial Analysis of Clariant Chemicals, 1998-2001 55
28 Key Financial Ratios for Clariant Chemicals, 2000-2001 56
29 Financial Analysis of Croda International, 1997-2001 57
30 Divisional Analysis of Croda International, 2000 and 2001 57
31 Key Financial Ratios for Croda International, 2000-2001 58
32 Financial Analysis of Du Pont Textiles & Interiors, 1997-2001 59
33 Key Financial Ratios for Du Pont Textiles & Interiors, 2000-2001 59
34 Financial Analysis of Great Lakes Europe, 1997-2001 60
35 Key Financial Ratios for Great Lakes Europe, 2000-2001 61
36 Financial Analysis of Hickson International, 1995-1999 62
37 Analysis of the Turnover of Hickson International, by Activity, 1999 62
38 Financial Analysis of Arch Chemicals UK Holdings, 2000 63
39 Key Financial Ratios for Arch Chemicals UK Holdings, 2000 63
40 Financial Analysis of ICI Chemicals and Polymers, 1997-2001 64
41 Key Financial Ratios for ICI Chemicals and Polymers, 2000-2001 64
42 Financial Analysis of ICI, 1997-2001 66
43 Key Financial Ratios for ICI, 2000-2001 67
44 Financial Analysis of Degussa UK Holdings, 1996-2000 69
45 Key Financial Ratios for Degussa UK Holdings, 1999-2000 69
46 Financial Analysis of Rhodia, 1997-2001 70
47 Key Financial Ratios for Rhodia, 2000-2001 70
48 Financial Analysis of Rohm & Haas, 1996-2000 71
49 Key Financial Ratios for Rohm & Haas, 1999-2000 72
50 Financial Analysis of Solutia UK, 1998-2001 73
51 Key Financial Ratios for Solutia UK, 2000-2001 73
52 Forecast UK Market for Chemicals, 2003-2007 77
53 Forecast UK Market for Inorganic Chemicals, 2003-2007 77
54 Forecast UK Production of Inorganic Chemicals, 2003-2007 78
55 Forecast UK Imports of Inorganic Chemicals, 2003-2007 79

List of Diagrams

No.

Title

Page
1: Development of the UK Market for Inorganic Chemicals, 1998-2002 19


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EXECUTIVE SUMMARY

1 Despite the relatively strong economic conditions in the UK in recent years, the UK market for inorganic chemicals has declined during much of the review period. There were a number of factors that contributed to this decline. Market conditions deteriorated in the late 1990s as the manufacturing sector in the UK suffered from the impact of the high value of the pound Sterling. The strong value of the pound has hindered the ability of UK manufacturers to penetrate export markets, thereby significantly reducing domestic demand. Furthermore, chemical prices remained relatively weak, exacerbated by sustained import penetration of low value products. Moreover, prices, and therefore margins, have remained under pressure during recent years, with little opportunity for product differentiation in what is essentially a commodity market.
2 Between 1998 and 2001, the UK demand for inorganic chemicals is believed to have declined by a notable 21 percent to £1200.7 million in the latter year. However, growth is estimated for 2002, albeit at a relatively moderate 5 percent in nominal terms, taking the market value to £1264.9 million at MSP.
3 The UK market for chlorine is believed to have oscillated around £43 million between 1998 and 2001. In 2002, sales of chlorine are believed to have increased by 6 percent, taking the value to £46 million. This sector has accounted for between 3 percent and 4 percent of the total market over the review period.
4 The market for carbon is believed to have declined during the first part of the review period, reaching a review period low of an estimated £79.4 million in 2000. However, sales have increased in the subsequent years of the review period, reaching an estimated value of £85.9 million in 2002.
5 The UK market for silicon has increased during much of the review period. Between 1998 and 2000, demand for silicon increased by a considerable 28 percent to £66.4 million in the latter year. However this was partially offset by a 7 percent decline in 2001. For 2002, MBD estimate a nominal 8 percent increase in sales of silicon.
6 The UK market for hydrochloric acid is relatively mature and consequently there have been moderate fluctuations in sales during the review period. Between 1998 and 2000, sales declined by a nominal 15 percent to a review period low of £27.4 million. However this was partially negated by a 2 percent increase in 2001, and a further 8 percent growth is estimated for 2002, taking the value to £30.2 million. The proportional importance of the sector to the total market has remained relatively stable at around 2 percent over the review period.
7 The market for sulphuric acid has been somewhat erratic during the review period. Sales peaked at an estimated £44 million in 1999, but declined be a significant 33 percent in 2000. Sales fell by a further nominal 10 percent to £26.4 million in 2001. However, the decline in the latter year is believed to have been more than offset by an 18 percent increase in 2002, taking the level to £31.2 million.
8 Demand for phosphoric acid has declined during the majority of the review period. In 2001, sales declined by an estimated 6 percent to £63.6 million, representing a nominal 26 percent decline compared with 1998. Nonetheless, for 2002, MBD estimate a 9 percent increase in sales of phosphoric acids. The proportional importance of that sector to the total market has remained at between 5 percent and 6 percent over the review period.
9 The market for chlorides has also declined during much of the review period. As conditions in the manufacturing sector have deteriorated, largely as a result of the strength of the pound Sterling, sales of chlorides have declined to just £36 million at MSP in 2001, representing a 34 percent decline compared with 1998. For 2002, MBD estimate sales growth, albeit at a negligible level.
10 Demand for hypochlorites has also followed a similar trend as chlorides as the sector also closely follows the manufacturing trends in the UK. Between 1998 and 2001, sales in this sector are believed to have declined by 16 percent to £94.9 million in the latter year. This decline is believed to have been partially offset by a nominal 9 percent growth in 2002, taking the market value to £103.7 million.
11 One of the largest market sectors within the UK inorganic chemicals market during the review period, has remained that of liquid sodium hydroxide, which has accounted for between 11 percent and 12 percent of the total market. Sales in this sector have fluctuated somewhat during recent years and are estimated at £149 million in 2002, representing a decline of 14 percent compared with 1998.
12 Demand for sulphates has fluctuated somewhat over the review period, reaching a review period low of £45 million in 1999. However sales increased in the following year, at 14 percent, taking the value to £51.5 million. This was followed by a moderate 2 percent decline in 2001, prior to an estimated 10 percent increase in 2002, taking sales to £55.4 million. The proportional importance of this sector has increased slightly from 3 percent in 1999 to 4 percent in 2002.
13 Sales of carbides have also fluctuated over the review period. Demand declined strongly in 1999, at 29 percent, taking sales to a review period low of £25 million. However sales are believed to have increased in the subsequent years of the review period, reaching an estimated £36.3 million in 2002.
14 Due to the highly fragmented nature of the UK market for inorganic chemicals, which includes a plethora of chemicals and compounds, each with relatively low sales in relation to the total value of the market, the majority of sales in the sector are classified under “other” inorganic chemicals. In 2002, sales in the “other” sector are estimated at £555.3 million, representing a nominal 24 percent decline compared with 1998.
15 There is little seasonal variation in demand in the inorganic chemicals sector and all variations are inconsistent between the years.
16 The market for inorganic chemicals is anticipated to fluctuate moderately over the forecast period, although a decline of 4 percent in real terms is expected overall. This reflects both the continued problems in the manufacturing sector in the UK, with the strength of the pound Sterling, continuing to hinder the opportunities for UK manufacturers to achieve export sales. Further, price competition in the sector is likely to continue, exacerbating in the downturn in the value of the market.
17 The slowdown of the UK economy combined with a further anticipated deterioration in the manufacturing sector is likely to restrict opportunities for the development of the inorganic chemical industry in the short term. Production is forecast to fluctuate somewhat over the forecast period, and a real term decline of 1 percent is anticipated between 2003 and 2007.
18 The market development for imports of inorganic chemicals in the UK is expected to be restricted during the forecast period, despite the relatively favourable economic conditions for importers in the short term. However, UK demand is expected to remain relatively weak compared with others in continental Europe due to the advanced nature of the UK in the business cycle and, in consequence, in real terms imports in the UK are expected to increase by just a negligible level between 2003 and 2007.

Text © 2003 MBD - Market & Business Development

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