According to Chemical & Engineering News (C&EN), sales for almost all of the top 50 US chemical firms declined in 2016 due to low prices of raw materials. Dow Chemical topped the list of 50 companies, followed by ExxonMobil, DuPont, PPG Industries and Praxair rounding out the top 5. Revenues for all 5 companies declined, except PPG Industries.

Collectively, the 50 chemical companies brought in a total combined revenue of $259.9 billion in 2016, a 5.6% drop. The decline was not due to low sales at a handful of companies, which then affected the group as a whole­; rather, the fall in sales revenue was apparent at virtually all companies. Only 9 out of the 50 firms had increases in revenues, which were mostly due to large acquisitions. M&A has been responsible for major changes in the chemical industry, namely Dow Corning’s merger with Dow; Merck KGaA’s purchase of Sigma-Aldrich; Solvay’s purchase of Cytec Industries; Axiall’s acquisition by Westlake Chemical; and Arizona Chemical’s acquisition by Kraton.

Low oil prices are partly to blame for the revenue decline across the top chemical companies, as prices fell to $30 per barrel in early 2016, a 14-year low. Though oil prices bounced back by the end of 2016, the effects were still impacting the chemical industry. The revenue decline is also attributable to lackluster US trade, as US GDP grew by only 1.6% in 2016, as did the US chemical industry’s increase in volume.

Profits for the top 50 chemical firms also fell in 2016, with 44 companies reporting combined profits of $33.6 billion last year, a 9.6% decline. However, 2017 is looking brighter for the chemical industry. Market capitalization for the 31 publicly traded companies in the top 50 list grew to $347.6 billion in 2016, a 12% increase, and the American Chemistry Council predicts a 3.6% growth in volume for 2017.

Source: C&EN