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SOURCE: IBISWorld 3
The Petrochemical Manufacturing industry faced significant volatility over the last five years, but the improving economy will pave the way for growth as downstream demand improves. Domestic operators will continue to face obstacles, as increased input costs affect prices and performance. However, heightened demand and continuing dependence on petrochemicals will benefit industry firms. For these reasons, industry research firm IBISWorld has updated a report on the Petrochemical Manufacturing industry in its growing industry report collection.
Los Angeles, CA (PRWEB) November 22, 2012
The Petrochemical Manufacturing industry plays an important role in the US economy. Many of the goods produced by petrochemical manufacturers are the fundamental building blocks used to produce a variety of consumer and industrial products like detergents and pharmaceuticals. While petrochemicals are essential to many kinds of chemical manufacturing, the industry is still susceptible to economic shifts. Over the five years to 2012, revenue is expected to decline at an average annual rate of 1.8% to $80.8 billion. However, this decline has not been constant. Although the recession caused this industry to suffer in 2008 and 2009, revenue has been on the rise since 2010.
During 2008 and 2009, key buying industries reduced their demand for petrochemicals. As downstream industries such as construction and packaging bought fewer plastics and chemicals, the industry lowered production, reducing petrochemical revenue. The industry also endured changing raw-material costs, which affected price structures. Industry firms had to adjust to shifting production intensity and handle excess capacity. However, in 2012, revenue is anticipated to grow as buying industries increase their manufacturing levels and buy more petrochemicals. Revenue is expected to grow 2.2% over 2012 because of higher demand, higher prices and stabilized capacity. From 2012 to 2017, industry revenue is projected to grow; similar to the previous five years, industry revenue will be volatile. “Although demand from key buying industries will remain relatively constant, changing raw-material costs will affect prices and cause revenue to fluctuate,” says IBISWorld industry analyst Radia Amari. If the industry raises prices too significantly, buyers could reduce their purchases, hurting revenue. Some firms are expected to move abroad to mitigate costs; others will find it difficult to wind down capacity, choosing to sell off establishments too costly to continue operating. While revenue is anticipated to increase over the next five years, the industry will likely consolidate. Some firms will leave the industry because of high costs and others will make acquisitions to meet demand levels.
The Petrochemical Manufacturing industry has a low level of concentration, with the top four players accounting for an estimated 10.8% of industry revenue. In addition, over half (55.0%) of establishments employ fewer than 100 workers, although industry concentration has gradually increased. This trend has continued in line with various mergers and acquisitions, with the remaining players seeking to strengthen their position in the increasingly competitive market. According to Amari, industry consolidation among integrated companies such as Exxon Mobil Corporation and Dow Chemical Company has also resulted in the development of larger and stronger petrochemical players. Moreover, the departure of smaller players that cannot adapt to the changing operating environment has further aided this concentration process. Further consolidation is expected as players shut down excess capacity over the five years to 2017. For more information, visit IBISWorld’s Petrochemical Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures petrochemicals, which are chemicals derived from petroleum and natural gas. Key products include ethylene, propylene, butylene, benzene, toluene, styrene, xylene, ethyl benzene and cumene. These products are used in the production of consumer products, automotive components and various durable and non-durable goods. Organic compounds like ethyl alcohol and inorganic chemicals like carbon black are excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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