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Editor: Emily Pattullo
ISBN: 1-84168-267-5

This report covers: chemicals, fine chemicals, pharmaceutical products, organic base chemicals, plastics, perfumes, toiletries, paints, varnishes, printing inks, sealants, mastics, soaps, detergents, cleaning agents, inorganic base chemicals, dyes, pigments, pesticides, agrochemicals, fertilisers, nitrogen compounds, man-made fibres, photographic chemicals, industrial gases, essential oils, synthetic rubber, glues, gelatines, explosives,

Companies covered include: AstraZeneca, The BOC Group, BP Chemicals, Cookson Group, Croda International, ICI Chemicals & Polymers, Johnson Matthey, Yule Catto & Company, Albion, Albright & Wilson, Basell, BTP, Burmah Castrol, Elementis, ExxonMobil Chemical, Henkel, Laporte Chemicals, Rohm & Haas International, Syngenta, Vopak Logistics Services,

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Executive Summary

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EXECUTIVE SUMMARY

Apparent UK demand for chemicals barely increased, by value, during the period 1996 to 2000. Gross domestic product (GDP), in real terms, increased at market prices by a total of 12 percent over the same period. The lack of progress in adding value to chemicals led to a massive restructuring in Europe, as well as in the UK. This has been through mergers, some trans-national, such as Rhone-Poulenc Participations SA (France) and Hoechst (Germany), an increased focus on core activities and more emphasis on speciality chemicals. Ostensibly, speciality chemicals have a higher value and demand is usually less cyclical than for commodity chemicals. However, the market has become overcrowded with speciality-chemicals manufacturers because of the imperative need to move away from low-value into higher-value chemicals. The resulting overcapacity brought intense pressure on prices, just as raw material costs started rising steeply.

The wide range of natural and synthetic chemicals produced are consumed by an equally wide range of industries. Chemicals include pharmaceutical products; organic base chemicals; resins, made for the plastics and man-made fibre industries; perfumes, cosmetics and toilet preparations; dyes and pigments for textiles; paints and varnishes; soaps, detergents, cleaning and polishing preparations; inorganic base chemicals; pesticides and other agrochemicals; fertilisers; photographic materials; industrial gases; essential oils; synthetic rubber; glues and gelatines; explosives and other chemicals.

From 1995 onwards, the bulk of chemical manufacturing in the UK came under the control of foreign-owned companies, principally those based in the US, Germany, France and Switzerland. ICI Chemicals & Polymers Ltd still dominates chemical industry sales in the UK, but the importance of the UK to its operations is declining as more of its investments are located in overseas markets. It has also totally changed direction since 1995, to become a purely speciality-chemicals manufacturer, having sold its commodity chemicals businesses to mainly foreign companies that are already in Europe.

The new scenario for chemicals in Europe is of a supply chain dominated by fewer established companies. New and powerful sources of competition from the Middle East and the Far East are beginning to make their presence felt in European markets as new capacity is still being added, despite a worldwide surplus in chemical supply. New markets are helped by US and European chemical companies, which are forming joint ventures with chemical organisations in many of the leading developing countries. The US and European countries will eventually be importing some of the products from their new partners. In western Europe, the trend towards developing speciality chemicals will intensify, as this is the best way to avoid direct competition from chemical producers in the developing countries. More emphasis will be placed on serving higher-value niche markets, but, to be successful, companies supplying niche markets will require greater expenditure on research and development (R&D).

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Last updated by Jacob van Eldik 20th December 2001