The chemical industry: what it makes and how it is organised

By the end you will be able to

• Describe the size and regional split of world chemical sales, trade, investment, R&D and energy use using Cefic and IEA figures
• Distinguish commodity, pseudo-commodity, fine and specialty chemicals and explain how their volumes, prices, margins and research intensity differ
• Name the main raw materials and the nine building blocks from which most chemicals are made, and sketch the tree that links them
• Explain why feedstock cost and economies of scale decide where commodity plants are built
• Outline how the industry's structure and geography changed from the 1973 oil shock to China's dominance today
• Locate each later module of the course on the path from basic inorganics to bioplastics

Contents

1. Part 1 What the chemical industry is and how big it is

   The chemical industry is easy to overlook because it rarely sells to households. It takes a few raw materials and turns them into inputs that almost every other industry uses. This part defines the industry and then sizes it with the most recent data in the sources: sales, trade, investment, research spending and energy use, region by region.

   • The chemical industry is an upstream supplier to almost every other industry
   • World chemical sales are about 5 trillion euros, and nearly half are made in China
   • About a third of output crosses borders, and investment now follows Asian demand
   • The industry is the largest industrial energy user, and half its energy input is raw material
2. Part 2 The sectors and why their economics differ

   A sulphuric acid plant and a drug plant both belong to the chemical industry, yet they compete in completely different ways. This part sorts products into four business types (commodity, pseudo-commodity, fine and specialty), follows one molecule up the value chain, and then compares the main sectors on volume, value, growth, margins, research intensity and customer relationships.

   • Two questions sort every product: how much is made, and is it bought for what it is or for what it does?
   • Value multiplies at every step from methanol to a packet of tablets
   • The main sectors differ in size, growth and how much value each tonne carries
   • Margins, research intensity and customer ties all rise as products become more specific
3. Part 3 A handful of raw materials and building blocks

   The tens of thousands of chemicals on the market come from a short list of raw materials and an even shorter list of building blocks. Learn these, and most of the industry becomes a family tree. This part names them, shows what each yields, and explains why feedstock cost and plant scale dominate the economics of the trunk of that tree.

   • Nine raw materials supply almost everything the industry makes
   • Nine building blocks carry most of the industry's tonnage
   • Feedstock choice sets a plant's cost, its product mix and its location
   • Bigger plants make cheaper tonnes, which drives a race to scale
4. Part 4 How the industry's structure and geography changed after 1973

   Fifty years ago the industry was dominated by European, American and Japanese groups that made almost everything themselves. Oil shocks, overcapacity, shareholder pressure, cheap gas in the Gulf and later in the United States, and finally Asian demand redrew the map. This part follows that story from Kent's history chapter to the latest Cefic and IEA data.

   • 1973 to the mid-1980s: oil shocks exposed an overbuilt, maturing industry
   • From the 1980s, Western groups chased specialties and then broke themselves up
   • Cheap gas moved the commodity trunk to the Gulf, and shale gas brought part of it back to the United States
   • Asia now holds the centre of gravity, led by China
5. Part 5 A map of the course

   The modules that follow climb from simple to complex. First come the tools: how a process works and how a plant earns money. Then the big-volume chains, from inorganics to plastics. Then the low-volume, high-value chemistry of colour, crop protection, drugs and specialties. The course ends with bio-based chemicals and plastics. Each paragraph below says what a module covers and how it builds on this one.

   • Modules 2 to 7 supply the tools and then follow the trunk of the tree
   • Modules 8 to 12 move into low-volume, high-value chemistry
   • Modules 13 and 14 ask whether biomass can replace part of the tree
6. Wrap-up Key terms, try it in the table, final quiz, sources