The latest issue of the US “Chemical Weekly†published news that the US basic chemicals industry is expected to rebound strongly in 2006 following the recovery of the US manufacturing industry. The average growth rate of US chemical industry will reach 2.7%. For the trend of the US chemical industry in 2006, the publication made ten predictions.
The high price of raw materials to transfer natural gas to coal has prompted the chemical industry to rekindle the interest in using coal as raw material for fuels and chemical products. Eastman Chemical and Sasol are each brewing to build such projects in the United States and may be announced sometime this year.
Foreign companies will take over the competitiveness of an American petrochemical company, US petrochemicals, and are waning. Some companies with developing ambitions from developing countries want to get a seat in the US petrochemical industry. In 2006 at least one major US petrochemical company will be attributed to a foreign company.
Dow Chemical's development strategy will clarify that BASF, the world's largest chemical company, is currently conducting a series of M&A activities to become bigger and stronger. Dow Chemicals claims to be the world's largest, most profitable and respected chemical company. How to keep pace with BASF's development will be clear this year.
The policy environment is more rigorous. Democrats and even some Republicans are paying more attention to the issues of energy, environment, plant safety, and global warming. Therefore, the US chemical's policy environment will be further tightened in 2006.
The reorganization of DuPont will speed up the management of DuPont, which has indicated that it will strip the businesses with profit margins of less than 10% as soon as possible, which indicates that the company will spin off its engineering plastics and automotive coatings business and accelerate the pace of its business integration.
More IPO deals will take place Private capital owned Celanese, Huntsman and Rockwood companies all experienced initial public offerings (IPOs) in 2005, and Hexion Specialty Chemicals is also expected to be IPO this year. It is expected that in 2006, more similar private capital management companies will accelerate their participation in the chemical market.
Profits are under pressure. The prices of American chemical companies' products have risen sharply recently. However, the weak retail market may cause downward pressure and force these companies to cut their prices. The profitability of chemical companies will be tested.
Industrial biotechnology is on the stage Cargill’s polylactic acid has finally entered the packaging market, and other companies are targeting chemicals projects based on natural raw materials; ArcherDanielsMidland is building a device to produce polyols from carbohydrates in the United States; DuPont is also developing a The bio-based route produces nylon plastic.
Agricultural biotechnology/seed business starts to flourish Although Monsanto's current profitability is not high, its market value of $21 billion has already exceeded half of Dow's or DuPont's market value. Investors are currently very optimistic about the agrochemical business. Dow Chemical, DuPont and others may try to spin off or merge their agrochemicals business.
The weak real estate and auto market in the United States will adversely affect the chemical industry The US real estate and auto market will be weak in 2006, which is causing concern among chemical company managers. Because the high cost of raw materials is impeding the growth of exports, the weakness in the domestic market will quickly ease the tight supply and demand situation in the US chemical market, thus affecting the profits of chemical producers.
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