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| BD2403Q |
| MBD ORGANIC CHEMICALS MARKET DEVELOPMENT : August 2003 |
| Overview |
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This report covers: Propane, Heterocyclic Compounds, Hydrocarbon Derivatives, Fluorinated Hydrocarbons, Organic Chemicals, Chemicals, Carboxylic Acids, Ethene, Acetic Acid, Esters of Acetic Acid, Phosphoric Esters, Acrylic Hydrocarbons, Phenols, Halogenated Hydrocarbon Derivatives
Companies covered include: Haltermann, BASF, Bayer, BP Chemicals, Croda International, Du Pont, Voridian, Exxon Mobil Chemical, Great Lakes Europe, ICI, Degussa UK Holdings, Shell Chemicals,
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Engine| No. | Title | Page |
| 1 | EXECUTIVE SUMMARY | 1 |
| 2 | INTRODUCTION | 5 |
| 2.1 | Definitions | 6 |
| 2.2 | Abbreviations | 7 |
| 2.3 | Market Positioning | 7 |
| 2.4 | UK Economy | 8 |
| 2.5 | Market Factors | 14 |
| 3 | MARKET SIZE AND TRENDS | 15 |
| 3.1 | Chapter Summary | 16 |
| 3.2 | Market Size | 18 |
| 3.3 | Market Segmentation | 20 |
| 3.4 | Market Trends | 22 |
| 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 | 34 |
| 4.3 | Imports | 37 |
| 4.3.1 | Overview | 37 |
| 4.3.2 | Segmentation | 38 |
| 4.4 | Exports | 40 |
| 4.4.1 | Overview | 41 |
| 4.4.2 | Segmentation | 42 |
| 4.5 | Trade Surplus | 42 |
| 5 | INDUSTRY STRUCTURE | 44 |
| 5.1 | Chapter Summary | 45 |
| 5.2 | Industry Development | 45 |
| 5.3 | Structure by Employment | 47 |
| 5.4 | Structure by Turnover | 48 |
| 5.5 | Company Profiles | 49 |
| 5.5.1 | Haltermann | 49 |
| 5.5.2 | BASF | 50 |
| 5.5.3 | Bayer | 51 |
| 5.5.4 | BP Chemicals | 53 |
| 5.5.5 | Croda International | 54 |
| 5.5.6 | Du Pont (UK) | 56 |
| 5.5.7 | Voridian (UK) | 57 |
| 5.5.8 | ExxonMobil Chemical | 58 |
| 5.5.9 | Great Lakes Europe | 59 |
| 5.5.10 | ICI | 61 |
| 5.5.11 | Degussa UK Holdings | 63 |
| 5.5.12 | Shell Chemicals UK | 65 |
| 6 | FORECAST | 67 |
| 6.1 | Chapter Summary | 68 |
| 6.2 | Market Size | 68 |
| 6.3 | Production | 69 |
| 6.4 | Imports | 70 |
| 6.5 | Industry | 71 |
| 7 | FURTHER SOURCES & CONTACTS | 72 |
| 7.1 | Trade Associations | 73 |
| 7.2 | Trade Magazines | 73 |
| List of Tables | |
| No. | Title |
| 1 | UK Chemicals Industry Sector Shares of Gross Value Added, 2000 |
| 2 | UK Demand for Chemicals, by Sector, 2002 |
| 3 | UK Market for Organic Chemicals, 1998-2002 |
| 4 | Segmentation of the UK Market for Organic Chemicals, by Type, 1998-2002 |
| 5 | The UK Market for Chemicals, 1998-2002 |
| 6 | UK Capital Expenditure by the Chemical Industry, 1998-2002 |
| 7 | Regional Analysis of UK Chemical Industry Capital Expenditure, 1994-2000 |
| 8 | Forecast UK Capital Expenditure by the Chemical Industry, 2003-2007 |
| 9 | Seasonality of Sales of Organic Chemicals, 1998-2002 |
| 10 | Chemical Distributors’ Share of the UK Chemical Market, 2002 |
| 11 | UK Production of Organic Chemicals, 1998-2002 |
| 12 | Segmentation of the UK Production of Organic Chemicals, by Type, 1998-2002 |
| 13 | UK Volume Production of Selected Organic Chemicals, by Type, 1998-2002 |
| 14 | UK Imports of Organic Chemicals, 1998-2002 |
| 15 | Segmentation of UK Imports of Organic Chemicals, by Type, 1998-2002 |
| 16 | UK Exports of Organic Chemicals, 1998-2002 |
| 17 | Segmentation of UK Exports of Organic Chemicals, by Type, 1998-2002 |
| 18 | Analysis of the Changes in the Structure of the Organic Chemicals Industry,1998-2002 |
| 19 | Analysis of the Employment Structure of the Organic Chemical ManufacturingIndustry, 2001 and 2002 |
| 20 | Analysis of the Financial Structure of the Organic Chemical Manufacturing Industry,2001 and 2002 |
| 21 | Financial Analysis of Haltermann, 1996-2000 |
| 22 | Key Financial Ratios for Haltermann, 1999-2000 |
| 23 | Financial Analysis of BASF, 1997-2001 |
| 24 | Key Financial Ratios for BASF, 2000-2001 |
| 25 | Financial Analysis of Bayer, 1997-2001 |
| 26 | Key Financial Ratios for Bayer, 2000-2001 |
| 27 | Financial Analysis of BP Chemicals, 1997-2001 |
| 28 | Key Financial Ratios for BP Chemicals, 2000-2001 |
| 29 | Financial Analysis of Croda International, 1997-2001 |
| 30 | Divisional Analysis of Croda International, 2000 and 2001 |
| 31 | Key Financial Ratios for Croda International, 2000-2001 |
| 32 | Financial Analysis of Du Pont Textiles & Interiors, 1997-2001 |
| 33 | Key Financial Ratios for Du Pont Textiles & Interiors, 2000-2001 |
| 34 | Financial Analysis of Voridian (UK), 1996-2000 |
| 35 | Key Financial Ratios for Voridian (UK), 1999-2000 |
| 36 | Financial Analysis of ExxonMobil Chemical, 1997-2001 |
| 37 | Key Financial Ratios for ExxonMobil Chemical, 2000-2001 |
| 38 | Financial Analysis of Great Lakes Europe, 1997-2001 |
| 39 | Key Financial Ratios for Great Lakes Europe, 2000-2001 |
| 40 | Financial Analysis of ICI, 1997-2001 |
| 41 | Key Financial Ratios for ICI, 2000-2001 |
| 42 | Financial Analysis of Degussa UK Holdings, 1996-2000 |
| 43 | Key Financial Ratios for Degussa UK Holdings, 1999-2000 |
| 44 | Financial Analysis of Shell Chemicals UK, 1997-2001 |
| 45 | Key Financial Ratios for Shell Chemicals UK, 2000-2001 |
| 46 | Forecast UK Market for Chemicals, 2003-2007 |
| 47 | Forecast UK Market for Organic Chemicals, 2003-2007 |
| 48 | Forecast UK Production of Organic Chemicals, 2003-2007 |
| 49 | Forecast UK Imports of Organic Chemicals, 2003-2007 |
| List of Diagrams | ||
| No. | Title | Page |
| 1: | Development of the UK Market for Organic Chemicals, 1998-2002 | 20 |
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| 1 | The UK market for organic chemicals has demonstrated growth during much of the review period, although growth is believed to have slowed somewhat towards the end of the period. The UK market for organic chemicals is estimated to have increased by a nominal 2 percent in 2002 to £4202.8 million, representing a nominal 24 percent growth compared with 1998. |
| 2 | However, the market has experienced downturn in the early part of the review period. Indeed, in 1998 sales have declined by an estimated 12 percent to £3377 million. Prices of organic chemicals remained relatively weak in that year due to weaker domestic demand, while the strengthening of the pound Sterling stimulated import penetration and this resulted in an increasingly competitive market in value terms. Moreover, due to the strong value of the Sterling, the exporting conditions for UK manufacturers became extremely unfavourable. Thus, while volume growth in many market sectors was still recorded, in value terms sales fell sharply as overcapacity of supply forced prices downwards. |
| 3 | However, in both 1999 and 2000 economic confidence grew as the economy proved more robust than many anticipated. However, demand in many manufacturing sectors remained constrained by the strength of the pound, although there is also some evidence that many sectors have adapted to this by improved profitability and operating efficiency. Rising oil prices throughout 1999 and again in the latter part of 2000 resulted in increasing raw material prices for organic chemical producers and many of these increased costs were passed onto consumers as margins in the chemical sector were already tight limiting the ability to absorb further costs. Both these factors increased demand in the latter part of the review period. A further significant feature of demand in 1999 was the increase in stock levels as customers sought to allay fears of supply chain problems that may have occurred as a result of the Y2K software concerns. This stock piling artificially boosted sales in the final quarter of the year resulting in market growth of 7 percent in nominal terms, taking sales to a level of £3606 million at MSP. A further 10 percent increase in believed to have taken sales to £3959 million in 2000. The market is believed to have demonstrated further growth in 2001 and 2002, albeit at more moderate levels due to higher raw material prices and as the slowdown of the world economies has reduced demand in some sectors. |
| 4 | The UK market for ethene enjoyed strong growth throughout the review period. In 2002, the value of this sector is estimated at £502 million, accounting for an increased 12 percent of the total organic chemicals market compared with just 3 percent in 1998. This sector is now the largest individual sector within the organic chemicals market. |
| 5 | The performance of the propene market has demonstrated similar trends during the review period to the ethene market. This market increased by an estimated 23 percent in 2002, taking the value to £174.6 million. The proportional importance of propene to the total market has also increased from 2 percent in 1998 to 4 percent in 2002. |
| 6 | In recent years, strong growth has also been recorded in the market for other acrylic hydrocarbons, with the market increasing from £33.9 million at MSP in 1998 to an estimated level of £86.2 million at MSP in 2001. However MBD estimate a moderate 3 percent decline in this sector for 2002. |
| 7 | The market for hydrocarbon derivatives is also one of the larger individual sectors of the organic chemicals market. However, the market suffered from lower demand from the manufacturing sector while price competition also restricted the value development of the market, with sales falling from £82.4 million at MSP in 1998 to £74.8 million in 2000, representing a 9 percent decline. MBD believe that the market increased moderately during the remaining years of the review period, with the market value reaching £76.8 million in 2002. The proportional importance of this sector is believed to have been maintained at 2 percent throughout the review period. |
| 8 | Demand for benzene increased relatively strongly during the review period with sales rising from £52.9 million in 1998 to an estimated level of £107.1 million at MSP in 2002, reflecting strong price increases. |
| 9 | In contrast, demand for fluorinated hydrocarbons has declined between 1998 and 2000, reaching a review period low of £26 million in the latter year. However this decline was more than offset by an estimated 36 percent and 62 percent increase in 2001 and 2002 respectively, taking sales to £57.1 million. |
| 10 | The market for halogenated hydrocarbon derivatives has fluctuated somewhat over the review period. However overall this market is believed to have increased by 21 percent between 1998 and 2002, although the proportional importance has declined from 5 percent in 1999 to 4 percent in 2002. The sector has remained one of the largest individual sectors of the organic chemicals market throughout the review period. |
| 11 | The ethylene glycol market has suffered during the late 1990s from weak pricing in the polyester chain, although volume consumption has continued to increase. Prices have suffered from the continued global overcapacity of production in the sector and this has combined with slow demand for anti-freeze blending which is a major end user of ethylene glycol. However the market value is believed to have increased over the review period to an estimated £48 million in 2002. |
| 12 | Production overcapacity has also placed considerable pressure on the price of propylene glycol during the 1990s. However during the review period sales increased from £16.2 million in 1998 to an estimated £32.5 million in 2002. |
| 13 | The value of sales of esters of acetic acid has fluctuated during the review period, peaking in 2000 at £48 million at MSP before declining to £45 million in 2001. A further 8 percent decline is estimated for 2002. |
| 14 | During the first half of the review period, demand for lauric acid increased strongly, rising to a level of £45.3 million at MSP in 2000, and representing a strong 44 percent increase compared with 1998. This was followed by an 11 percent decline in 2001, which was fully negated by a nominal 22 percent growth in 2002, taking sales to an estimated £48.6 million. |
| 15 | The market for carboxylic acid increased consistently throughout the review period. In 2002, the market value is estimated at £80.4 million, representing 26 percent growth compared with 1998. |
| 16 | The value of the phosphoric esters sector has declined during the first part of the review period. Indeed, sales fell by 26 percent between 1998 and 2000 to a level of £22.2 million in the latter year. However MBD estimate a nominal 13 percent growth for 2001 and a further 9 percent increase for 2002, with sales reaching £27.4 million in the latter year. |
| 17 | The highly diverse nature of the organic chemicals market which includes several hundred individual chemicals and compounds, each with relatively low sales value in relation to the total market size, means that the majority of sales are classified under “other” organic chemicals. Indeed, in 2002 the value of this sector is believed to have totalled almost £2.7 billion at MSP, representing as much as 65 percent of sales in the industry. |
| 18 | There is moderate seasonal variation in demand in the organic chemicals sector, although variations are inconsistent between the years. Typically, demand tends to be stronger during the early part of the year, although there are exceptions to this trend, such as in 1999 when the growth in sales during the year reflected the continued improvements in the strength of the UK economy and the impact of stock building prior to the millennium as customers sought to allay any problems that might have accrued with supply chain interruptions as a result of the Y2K software problems. |
| 19 | Although sales through distributors are increasing, 85 percent of sales are be believed to be still direct. |
| 20 | UK demand for organic chemicals is believed to increase in real terms throughout much of the forecast period, although growth levels are believed to remain moderate. In 2007, UK organic chemicals sales are estimated at £4370 million, representing real growth of 2 percent compared with 2003. |
| 21 | The increasing concentration of UK manufacturers on speciality, value-added chemicals is likely to generate improved conditions for UK manufacturers over the forecast period. However UK output is expected to fluctuate moderately over the review period, and is estimated to reach £4931.2 million in 2007, representing a modest 1 percent real growth compared with 2003. |
| 22 | UK imports of organic chemicals are anticipated to increase during much of the forecast period, reflecting the favourable exchange rate conditions of imports and the development of organic chemical manufacturing facilities in the emerging countries with lower labour costs and, frequently, less regulated industries in terms of environmental requirements resulting in lower production costs. In 2007, imports are estimated at £2232 million, representing real growth of 3 percent compared with 2003. |
Text © 2003 MBD - Market & Business Development
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