Thel Top Ten Chemical Companies 2014

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SPECIAL REPORT TOP 100 ANALYSIS

M a r i e

E m m e r m a n n

/ S k i z z o m a

t

WILL BEACHAM LONDON

Economic challenges continued to impact chemical

companies in all regions in 2013. This year, the US shalegas boom takes centre stage as construction gets started

ICIS Top 100regions

Regional leaders faced tough tradingconditions in 2013 as the globaleconomy continued to sputter.Stronger economic performance in

the US was offset by contraction in Europe andslower growth in Asia.

Since then, European chemical companieshave become sharply focused on improvingtheir competitive position, especially in com-modities where consolidation is ongoing.

Meanwhile, the US race for shale gas con-tinues, with a building programme that willsee new capacity on stream in 2017-2018. ■


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2013 WAS a solid year for bothsales and prot gains for the top10 chemical companies based in

North America as the US economycontinued its recovery, althoughat a slow and steady pace.Producers with petrochemical as-sets in the US also beneted fromthe shale gas boom as naturalgas liquids (NGL) feedstock costsremained low.

On the top line, PPG Industriesand Ecolab showed notable rev-enue gains of nearly 12% each,aided by mergers and acquisitions(M&A). The bottom line was evenbetter as earnings surged 38% for

both PPG and Ecolab.Coatings giant PPG Industries

received a boost from the acquisi-tion of AkzoNobel’s North Americanarchitectural coatings business butalso saw higher organic salesgrowth in 2013, propelling it fromthe #6 slot in 2012, to #5 for 2013with $15.1bn in sales. Expect evenhigher sales and earnings growthfrom PPG in 2014 and beyond. InJune 2014, it agreed to buy Mexico-based coatings company Comex for$2.3bn. Comex has annual sales

of around $1bn.Ecolab, which specialises in in-

stitutional cleaning, water treat-ment and oileld chemicals,booked $13.3bn in sales in 2013,also moving up a notch to the #6position on the leaderboard.

Ecolab acquired US-based oil-eld chemicals company ChampionTechnologies for $2.3bn in April

2013, tacking on around $1.3bn inannual sales.

Coatings company Sherwin-Williams made its way into the Top10 with a 6.8% sales gain to$10.2bn for 2013, also aided byacquisitions, while earnings roseby 19%.

Looking ahead, there are two

diverging trends. On the growthside, three of the top 10 –ExxonMobil Chemical, DowChemical and Chevron PhillipsChemical and are building majorpetrochemical and derivatives pro-

jects, primarily on the US GulfCoast to take advantage of shalegas economics. That will add to

revenues, but mostly starting in2017-2018.

Also on the growth side, compa-

nies such as PPG Industries,Sherwin-Williams and Ecolab arestill seeking growth through M&A,boding well for future moves up therankings. Huntsman will get a bigboost if it is able to complete itsplanned $1.1bn acquisition ofRockwood Holdings’ titanium diox-ide (TiO2) and performance addi-tives business. The acquisitionhas been awaiting EuropeanCommission approval.

On the other side of the equa-tion, companies such as DuPont

and Dow Chemical are seeking totrim their portfolios – Dow throughsales of non-core assets and theseparation of its chlorine and de-rivatives business, and DuPontthrough the separation of its perfor-mance chemicals segment, whichconsists mostly of TiO2. Thesemoves could impact sales signi-cantly in the years to come. ■

NORTH AMERICA JOSEPH CHANG NEW YORK

NORTH AMERICA TOP 10 LIFTED BY ECONOMY, SHALE GAS, M&A

NORTH AMERICA TOP 10 LEADERS, $M

Rank Company Sales Operating prot Net prot

2013% change

(reporting currency) 2013 2012 2013 2012

1 ExxonMobil 59,273 -2.6 5,180 4,885 3,828 3,8982 Dow Chemical 57,080 0.5 6,804 1,665 4,447 8423 DuPont 35,734 2.6 3,489 3,088 4,862 2,7804 Agrium 15,727 -1.9 1,630 2,216 1,063 1,4985 PPG Industries 15,108 11.8 1,489 1,057 1,156 8366 Ecolab 13,253 11.9 1,561 1,289 968 7047 Chevron Phillips Chemical 13,147 -0.7 - - 2,743 2,4038 Praxair 11,925 6.2 2,625 2,437 1,755 1,6929 Huntsman 10,847 -1.1 510 845 128 363

10 Sherwin-Williams 10,186 6.8 1,086 907 753 631

NOTE: Please refer to main Top 100 listing (publ ished 8 September) for footnotes.

Companies suchas PPG Industries,Sherwin-Williamsand Ecolab are stillseeking growththrough M&A, boding well for future movesup the rankings


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EUROPE WILL BEACHAM LONDON

COMMODITY CONSOLIDATION BECOMES A KEY THEME FOR EUROPE

EUROPE TOP 10 LEADERS, $M

Sales Operating profit and EBIT Net profit

Rank Company 2013% change


1 BASF 101,906 2.6 10,019 8,889 6670 63542 LyondellBasell Industries 44,062 -2.8 5,102 4,676 3857 28483 Shell 42,279 -7.6 - - 1843 13744 Bayer 29,251 0.5 2,306 2,272 - -5 INEOS 27,864 -10.8 - - - -6 Total 25,743 1.4 - - - -7 Linde Group 22,944 5.2 2,991 2,709 1814 16248 Air Liquide 20,974 -0.7 3,591 3,330 2347 21859 AkzoNobel 20,099 -5.2 1,320 1,197 911 676

10 Johnson Matthey 18,598 4.0 747 581 565 412NOTE: Please refer to main Top 100 listing (published 8 September) for footnotes


THE TOP 10 European leaders ta-ble is only slightly reshufed fromthe previous year. UnsurprisinglyBASF retains its top position withmore than double the sales of itsnearest rival, LyondellBasell, whichswapped places with Shell toreach second place. Bayerswapped with INEOS to reachfourth place.

The year 2013 was a tough onefor the global economy, which grewat only 2.3% compared with 2.5%the previous year while Europecontinued to be plagued by GDPcontraction in many countries. TheEU region only achieved 0.1%growth during the year, though thiswas a slight improvement on theprevious year’s contraction of0.3%. This impacted chemicalcompanies headquartered inEurope, many of which suffereddeclines in sales revenues.However the slight improvement indemand in Europe did allow all thecompanies in the top 10 to reportimproved operating earnings andnet prots compared to 2012’sdepressed levels.

During 2014 several of the topplayers have become very fo-cussed on major strategic movesto either exit or beef up and im-prove the competitive position insome of their commodities.

In June INEOS announced it isto acquire an additional 50% stakein styrenics producer Styrolutionfrom joint venture partner BASF for€1.1bn. The deal – which is ex-

pected to close in the fourth quar-ter of 2014 – will give INEOS fullcontrol of this global styrenicsleader. For BASF this is anotherstep away from commodities as ittries to focus on value-added ad-vanced materials.

INEOS also signed a deal withBelgium’s Solvay to put theirEuropean chlor vinyls activities intoa JV – to be known as INOVYN.The deal was given clearance bythe European Commission in May2014 though the remedy packagehas yet to be divested. INEOS hasto sell assets in Tessenderlo

(Belgium), Mazingarbe (France),Beek (The Netherlands),Wilhelmshaven (Germany) andRuncorn (UK).

These moves are signs of theEuropean chemical sector’s in-creasing preoccupation with thethreat to its competitive positionposed by the US shale gas revolu-tion. This has cut energy and feed-stock prices hugely in the USwhilst Europeans struggle withhigh energy costs and taxation aswell as a reliance on naphtha-based feedstocks.

Just in the last few weeks other

companies have joined INEOS inseeking to import US ethane as away of grabbing some of the USadvantage. INEOS – as ever thetrailblazer – was rst to announcethe construction of ethane importterminals at Rafnes in Norway andGrangemouth in Scotland. Thesefacilities are now approved andunder construction. Next Borealis– the other company withEuropean gas crackers – an-nounced a similar constructionproject plus a cracker upgradescheme for its Stenungsund,Norway, facility.

In August SABIC revealed plansto modify its cracker in Teesside inthe UK so it can use ethane. Thecompany plans to complete theproject in 2016. India’s Reliancealso announced a scheme to im-port 1.5m tonnes/year of USethane for ethylene cracking inIndia.

Dutch-headquarteredLyondellBasell is grabbing the USshale advantage too. In August itannounced plans to develop aworld-scale propylene oxide (PO)and tertiary butyl alcohol (TBA)plant on the US Gulf coast. Slatedto be operation by 2019, the unitwill have an estimated capacity ofover 400,000 tonnes/year of POand over 900,000 tonnes/year ofTBA and its derivatives.

This is on top of three US ethyleneexpansions it has announced whichwill add over 800,000 tonnes/yearof production capacity. ■


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SPECIAL REPORT ICIS TOP 100 ANALYSIS

ASIAN CHEMICAL companies man-aged to hold their positions in theICIS global top 10, with a few excep-

tions, despite facing a difcult year.With sales of $72.2bn, Sinopec,

China’s state-owned rening andpetrochemicals major, held on tothe #2 position on the global list.But the major faced difcult condi-tions in its home market with in-tense competition from low-costimports and entry of new local com-petitors. Operating prot for thechemicals segment declined toyuan (CNY) 868m fromCNY1,172m in 2012. To overcomethis threat Sinopec has focused on

optimising its feedstock and prod-uct mix to increase the share ofvalue-added products.

Ethylene production increased5.58% to 9.98m tonnes last yearwhile synthetic resins output wasup 2.87% at 13.726m tonnes. For2014, the company aims to pro-duce 10.58m tonnes of ethylene. Italso expects to complete a coal-to-chemicals project at Ningdong.

Mitsubishi, the second-largestchemicals company in Asia, sawstrong sales growth in the petro-

chemicals and chemicals derivativesegment in scal 2013-14 with thecompany managing to push throughprice hikes. Even in the puriedterephthalic acid (PTA) businesswhere the Asian market is reelingunder overcapacity, Mitsubishi wasable to boost numbers due tostrong sales in India and deprecia-tion of the yen.

But Mitsubishi continues to re-structure its chemicals business. Itis currently implementing an agree-ment signed with Asahi Kasei tounify cracker operations at theMizushima site in Japan in order tooptimize product conguration, in-crease efciency, strengthen com-petitiveness and boost protability.

Other Japanese chemical com-panies too enjoyed healthy growthin sales and prots last year.Sumitomo Chemical, ranked at#4 on the Asia list, posted 15%

growth in sales supported by high-er product prices and depreciationof the yen.

Mitsui Chemicals posted 11.4%growth in sales in 2013-14 despitevolatile market conditions in phe-nol, PTA and toluene diisocynate(TDI) businesses which were hit byweak demand in China and over-supply. Mitsui has embarked on an

aggressive restructuring pro-gramme for these businesses thatincludes closure of a 90,000tonnes/year bisphenol-A (BPA)plant in Chiba, Japan, in March2014 and suspension of 70,000tonnes/year of BPA production inSingapore.

It also plans to close a 250,000tonnes/year phenol plant and a60,000 tonnes/year linear low den-sity polyethylene (LLDPE) unit, bothat Chiba, in September andDecember respectively.

Among the other Asian chemicalcompanies, Thai major PTT GlobalChemicals (PTTGC) faced manyinternal and external challengeslast year, which resulted in a 2%drop in sales in 2013.

PTTGC’s 300,000 tonne/yearLDPE plant in Map Ta Phut was shutfor more than three months to ad-dress a technical problem at the

unit. Meanwhile, an outage at thegas separation plant (GSP) No 5 ofPTT, the parent rm of PTTGC, be-

cause of a lightning strike in August,prompted PTTGC to run some of itsplants at reduced capacity.

In addition, 2013 was also therst full year that a new price for-mula for feedstock gas to its olensand derivative business was ap-plied. According to the company,the new formula aims at providing afairer prot sharing between PTTGCand its parent.

Indian rening and petrochemi-cal major Reliance Industriesclimbed to #23 on the global list

thanks to 10.5% growth in salesduring 2013-14. Surging exportsales, a strong performance in re-ning and higher petrochemicalsmargins also drove up prots.

Petrochemicals sales rose 9.5%year over year to $16.1bn, withgrowth led by an 8.6% increase inprices while volumes grew 0.9%.Earnings in the petrochemicalsbusiness was supported by strongmargins in polymers and polyester,which partly offset the weak marginseen in bre intermediates such

as PTA.Most Asian chemical companies

saw an improvement in their busi-ness environment in 2013 and ex-pect this to continue in 2014. Whilesigns of improvement in marginsand protability are evident, therisks cannot be ignored. These in-clude high feedstock costs and anuncertain Chinese economy. ■

ASIA MALINI HARIHARAN MUMBAI

ASIAN TOP 10 CHEMICAL COMPANIES OVERCOME CHALLENGING YEAR

ASIA TOP 10 LEADERS, $M

Sales Operating profit Net profit



1 Sinopec 72,281 6.2 143 189 - -2 Mitsubishi Chemical 33,961 13.3 1,072 958 313 1973 LG Chem 21,920 -0.5 1,651 1,793 1,203 1,4144 Sumitomo Chemical 21,779 14.9 980 478 359 -5425 Toray 17,838 15.4 1,022 886 579 5156 PTT Global Chemical Public Co. Ltd. 16,787 -2.4 1,064 1,172 1,017 1,1117 Reliance Industries 16,074 10.5 1,399 1,319 - -8 Lotte Chemical Corp 15,570 3.4 462 349 271 2979 Mitsui Chemicals 15,200 11.4 242 46 -244 -86

10 Formosa Chemicals & Fibre (Taiwan) 14,331 9.4 635 109 832 252

NOTE: Please refer to main Top 100 listing (published 8 September) for footnotes


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SAUDI ARABIA’S SABIC continuesto be by far the largest chemicalplayer in the Middle East and Africaregion, with sales nearly ve timesthat of nearest challenger, SouthAfrica’s Sasol.

SABIC’s turnover for 2013 ofSaudi riyal (SR) 189bn ($50.4bn)was, however at, showing nochange on the 2012 gure due tothe challenging market conditionsespecially in developed economies.Nevertheless, it retained its overallglobal position of fth place, afterBASF, Sinopec, ExxonMobilChemical and Dow Chemical.

SABIC’s earnings improved slight-ly in 2013, with net income advanc-ing 2% to SR25.3bn. SABICdescribed the year as one of “solidperformance... despite continuedchallenges in the global economy.”It has, it added, “beaten the marketaverage on improved efciency andstrong performance in key sectors.”

Looking forward, vice chairmanand CEO Mohamed Al-Mady notedthat: “The global chemical sectorhas turned the corner, with salesvolumes starting to stabilise andeven pick up. We believe the sec-tor will see better growth, withdemand outpacing capacity forthe next three years or so.”

Fellow Saudi Arabian producerTasnee, in sixth spot with sales of$4.9bn, also struggled to grow rev-enue, with sales up just 1.6% inlocal currency terms.

The big change in the Middle

East and Africa ranking this yearhas been the disappearance ofIran’s state-owned NPC. With salesof $9bn in 2012 this ranked thirdlast year in the regional table and50th in global terms. Privatisationof the oil and chemicals sector inthe country has created three newplayers that rank in the table thisyear: Persian Gulf PetrochemicalIndustry, Parsian Oil & GasDevelopment and TAPPICO, in third,fth and seventh place, pushing outKuwait’s PIC and South Africa’sAECI from the bottom of the table.

Abbas Sha’ri Moghadam, Iran’s

deputy petroleum minister and presi-dent of NPC, said at the recent 11thInternational Iran PetrochemicalForum in Tehran that NPC, whichoperates under Iranian PetroleumMinistry, has undergone a vast trans-formation. As a holding company, itused to have more than 50 produc-tion and service companies, but ithas now privatised most of these.

The only state-run units at NPCare now R&D, the Mahshahr SpecialEconomic Zone and the $4bnDamavand petrochemical project.

NPC will continue to functioningas a company with governance and

development tasks, he added. Therm is to provide the required infra-structure and incentives for invest-ment in petrochemicals.

In Israel, ICL and Makhteshim-Agan, now known as AdamaAgricultural Solutions, had diversefortunes, with ICL seeing salesdown 3.1% in local currency termsto $6.3bn, and Adama enjoying anincrease of 8.5%, to $3.1bn.

Adama reported a year of solidgrowth in sales and earnings de-spite an unfavourable currency envi-ronment especially in its Asia-Pacicregion and Brazil. It achieved growthacross all regions; higher sales vol-umes and an improved product mixthat led to improvement in nancialperformance. The results in LatinAmerica beneted from positivemarket conditions in the region.

At ICL, lower selling prices werenoted as primarily being behind thesales slide. The company is lookingto save several hundred milliondollars by 2016. The initiative iscritical, it says, “under the currentclimate of weak markets, increasedcompetition in the markets and anunstable business environment”.

In South Africa, Sasol saw salesrise 11% in 2013, but earnings weredown substantially due in large part toissues in the polymers business. Thecompany has now withdrawn fully fromits joint venture operations in Iran,Arya Sasol Polymer, which resulted inan impairment charge against operat-ing prot of rand 3.6bn ($340m). ■

SPECIAL REPORT ICIS TOP 100 CHEMICAL COMPANIES

MIDDLE EAST AND AFRICA JOHN BAKER LONDON

THREE IRAN COMPANIES MAKE TOP 10 LISTING DEBUT

MIDDLE EAST AND AFRICA TOP 10 LEADERS, $M

Sales Operating profit and EBIT Net profit



1 SABIC 50,403 0.0 11,355 10,938 6,740 6,6062 Sasol * 10,658 11 194 795 - -3 Persian Gulf Petrochemical Industry 8,117 - 1,442 735 722 2254 ICL 6,272 -3.1 1,101 1,554 820 1,3025 Parsian Oil & Gas Development 5,098 - 1,812 1,844 1,737 1,5866 Tasnee 4,853 1.6 823 1,098 314 4707 TAPPICO 3,796 - 1,703 1,180 1,668 1,0188 Makhteshim-Agan Industries 3,076 8.5 309 282 127 1239 Industries Qatar 3,066 6.7 - - - -

10 Petro Rabigh 2,062 -18 - - - -

* Financial year ended 30 June 2013. NOTE: Please refer to main Top 100 listing (published 8 September) for footnotes


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LATIN AMERICA JOSEPH CHANG NEW YORK

LATIN AMERICA CHEMICAL LEADERS POISED FOR CHANGES

LATIN AMERICA TOP 5 LEADERS, $M

Sales Operating prot Net prot

Rank Company 2013% Change


1 Braskem 17,345 13.3 1,160 777 215 -3602 Alpek 6,875 -6.3 223 577 69 3383 Mexichem 5,177 8.6 562 642 83 9624 Pemex 3,081 14.0 -1,164 -806 -1,140 -8695 SQM 2,203 -9.3 652 901 475 657

NOTE: Please refer to main Top 100 listing (published 8 September) for footnotes

SPECIAL REPORT ICIS TOP 100 ANALYSIS

THERE WAS no change among theLatin America-based chemical lead-ers in 2013, as the top ve compa-

nies maintained their positions.However, climbing fast in the rank-ings is polyvinyl chloride (PVC) pro-ducer Mexichem, which continuesto build its empire through mergersand acquisitions (M&A).

The #3 player, Mexichem, whichreports its nancials in US dollars,saw 2013 sales gain 8.6% to$5.2bn. The top line benetedfrom its May 2013 acquisition ofUS-based PolyOne’s vinyl assetsfor $250m, adding $147m in an-nual sales, along with its June

2012 buyout of Netherlands-based polymer pipe manufacturerWavin for €531m.

Mexichem is poised to advancefurther with two major dealssigned in August. The company isbuying US-based polyethylene (PE)pipe and conduit producer Dura-Line for $630m, adding around$650m in annual sales in a dealexpected to close in the third quar-ter of 2014.

Mexichem also plans to acquireGermany-based specialty PVC pro-ducer Vestolit in a €219m deal.That deal, which would add sales ofaround €477m, is expected to

close in the fourth quarter of 2014.

If the two deals go through,Mexichem could boost annualsales by over $1.2bn in 2015.

Brazil’s Braskem, the leadingLatin America player, saw sales inlocal currency rise 13.3%. Yet in US

dollar terms, sales actually fell

1.7% to $17.3bn on the severedecline in the Brazilian real.

In the years ahead, Braskem’ssales should increase on the con-struction of its Ethylene XXI projectin Mexico being built by Braskem

Idesa – a 75:25 joint venture be-

tween Braskem and Mexico’sGrupo Idesa.

The Ethylene XXI project, slated

to start up by July 2015, will consistof an ethane cracker with 1.05mtonnes/year of ethylene capacity,along with derivative PE plants withequivalent capacity.

Mexichem is also working on twomajor projects. The rst involvesupgrading the vinyl chloride mono-mer (VCM) plant at its majorityowned joint venture with Pemex instages ending in 2015.

The other is a 50:50 joint ven-ture cracker in Ingleside, Texas, USwith partner Occidental Chemical.That project, scheduled to be com-pleted in the rst quarter of 2017,

will add 544,000 tonnes/year ofethylene capacity, which will ulti-mately be used to produce VCM atan existing facility on site. The VCMwould be shipped to Mexichem’sPVC plants in Mexico.

Mexico’s energy reform signedinto law in August 2014 allowing forprivate and foreign investment inthe energy, rening and petrochemi-cal sectors also bodes well forgrowth. State-owned energy com-pany Pemex could see its petro-chemical sales rise signicantly in

the years ahead. ■

In the years ahead,Braskem’s salesshould increase onthe construction of its Ethylene XXIproject in Mexico

Mexico’s energyreform allows forprivate and foreigninvestment in theenergy, rening andpetrochemicalsectors

Thel Top Ten Chemical Companies 2014

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