Global chemical sales have been three times bigger in 2018 than twenty years ago. Global chemical sales are growing consistently since 1998, over three times in value in 2018 ($1,218 Billion vs $3,715 billion). This trend is expected to continue in the future. Data analysis shows strong chemicals demand growth from China, and other emerging countries as well and low growth in Europe and North America, where Europe sells most of its chemicals. Besides, increased competition from other regions, there are other potential reasons for this relative decline to continue further, including comparably high energy prices, lagging innovation, currency appreciation, high labour costs, and regulatory and tax burdens. Sector research and development (R&D) intensity, energy prices and the exchange rate have strong quantitative links to competitiveness.
- The top 10 chemical-producing countries had a combined turnover of $3,220 Billion, accounted for about 87% of global chemical sales
- Six countries of the top 10 biggest Chemical producers are Asian (China, Japan, South Korea, India, Taiwan, and Saudi Arabia), generating chemical sales of $2,093 Billion which equals to 51.5% of the world market.
- China’s sales levels are higher than the EU and US markets combined ($1,329 Billion compared to $627 Bn + $520 Bn).
- Two among the top 10 country sales are American producers (the USA and Brazil), generating chemical sales of $597 Billion (16.1%)
- The EU contribution to world chemical sales dropped from 26.5% in 2008 to 16.9% in 2018
The chemical industry has been slow to invest in technology as a business differentiator since the past. But the times are changing. The chemical sector spent $3.0 trillion on goods and services from suppliers worldwide in 2017. A third of this spending goes back into the chemical industry (e.g. as chemical firms purchase chemical inputs from other companies to include in their production process), as expected. The Asian chemical industry accounted for $1.9 trillion of these supply-chain purchases, followed by the European industry ($0.6 trillion) and North America ($0.4 trillion). The industry’s supply-chain investments also stimulate high levels of employment. 60 million jobs were supported through the purchase of goods and services by chemical companies in 2017, three-quarters in APAC alone. Across all non-chemical sectors, it is found that the supply-chain spending of the chemical industry supported a $2.6 trillion contribution to global GDP in 2017, of which roughly 50% was in the Asia-Pacific region.
- The chemical sector invested $51 billion in R&D in 2017
- Sadara chemicals complex, a JV between Saudi Aramco and Dow Chemical, is an example of large-scale investments aimed to develop the region’s downstream chemical sector
- The APAC region had the largest number of jobs supported by chemical manufacturers’ R&D spending, at almost 1.1 million
- The next largest was Europe, where some 335,000 jobs were supported––around one-fifth of the total global employment supported through the chemical industry’s R&D investments
- In total, accounting for all the channels of impact, we estimate that this R&D investment supported 1.7 million jobs and a $92 billion contribution to worldwide GDP in 2017
The chemical industry may finally be reaching a tipping point, pushed by accelerating technology advances, which are shaping customer purchases and needs, some chemicals companies have begun to rethink their growth strategies, finally moving away from cost-cutting and retrenchment, toward more nimble, coherent, and aggressive business models. The new trends in the chemicals industry and chemicals companies that can best profit from digital transformation can be identified as the five strategic imperatives stand out as follows: Margin Pressure, Customer Expectations, Regulations, M&A Activity & opportunity for business model innovation
- China is estimated to account for almost 50% of global sales by 2030.
- Following to NAFTA implementation, employments in this industry sector grew 5% from 1992 to 1998 but declined in the following years during the global economic downturn, resulting in an overall decline of 5% from 1992 to 2002
- Wages in the chemicals sector increased 35% during this ten-year period
- The Chemical Industry is contributing on ideas and innovations which can turn into sophisticated products such as; touch screens, drones, rechargeable batteries in portable devices, organic light-emitting diodes in flexible electronics and more
- M&A activity in the U.S is growing rapidly with companies spending more as they see increased cash levels, M&A is still the primary focus of those funds