TABLE OF CONTENTS Introduction... vii ACC Economics and Statistics Department Staff... vii 1. CHEMISTRY AND THE ECONOMY...1 Chemistry in Our Lives...2 Economic Contributions of the Business of Chemistry...4 2. WHAT IS THE BUSINESS OF CHEMISTRY?...9 Cost Structure... 11 Production Indices... 12 Price Indices... 13 Shipment Value... 14 3. CHEMISTRY 101... 15 Basic Chemicals... 15 Inorganic Chemicals... 16 Bulk Petrochemicals and Organic Intermediates... 16 Petrochemical Derivatives and Other Industrial Chemicals... 17 Specialty Chemicals... 21 Adhesives and Sealants... 23 Catalysts... 24 Coatings... 24 Cosmetic Additives... 24 Electronic Chemicals... 24 Fine Chemicals... 24 Flavors and Fragrances... 25 Food Additives... 25 Functional Fuel and Lubricant Additives... 25 Institutional and Industrial Cleaners... 25 Oilfield Chemicals... 25 Paper Additives... 26 Plastics Additives... 26 Plastics Compounding... 26 Rubber Processing Chemicals... 26 Water Management Chemicals... 27 Other Specialties... 27 Agricultural Chemicals... 27 Fertilizers... 27 Crop Protection... 27 Pharmaceuticals... 28 Consumer Products... 29 4. FINANCIAL PERFORMANCE... 31 5. GLOBAL BUSINESS OF CHEMISTRY... 33 Global CPRI... 40 i
6. U.S. TRADE IN THE BUSINESS OF CHEMISTRY... 43 ii Exports... 43 Imports... 47 Trade Balance... 50 7. INVESTMENT IN THE FUTURE: KNOWLEDGE... 55 Research and Development Activities... 55 Innovation and Learning... 57 Service Innovation... 57 8. INVESTMENT IN THE FUTURE: CAPITAL... 59 Capital Investment... 60 Profits and Other Determinants of Investment... 61 Capacity Utilization... 61 Motivation for Capital Investment... 62 Foreign Direct Investment... 63 Maintenance and Repair Spending... 63 Information Technology... 64 9. EMPLOYMENT... 65 Total Employment Impact of the Business of Chemistry... 65 Knowledge Workers... 66 Wages, Benefits and Other Labor Indicators... 67 10. ENVIRONMENT, HEALTH, SAFETY AND SECURITY... 69 Environment... 69 Health... 69 Safety... 69 Sustainability... 69 Environmental Performance... 70 Environmental, Health and Safety Spending... 70 Worker Health and Safety... 74 Spending on Security... 75 ACC s Commitment to EHS&S... 76 11. ENERGY... 79 Fuel and Power... 79 Feedstocks... 79 Natural Gas & Petroleum Products... 81 Energy Consumption... 82 Energy Costs... 84 Chemical Industry Energy Efficiency... 84 Energy Efficiency from the Products of Chemistry... 85 Greenhouse Gas Emissions... 86 12. DISTRIBUTION... 89 Transportation by Mode... 90 Truck... 90 Rail... 90 Waterborne... 90 Other Modes... 91
Transportation and Logistics Costs... 91 Wholesale Trade in Chemicals... 91 13. THE BUSINESS OF CHEMISTRY IN THE STATES AND REGIONS... 93 Employment Impact of the Business of Chemistry... 95 U.S. Chemical Production Regional Index... 98 Appendix A: Chemical Chains... 99 A.1 - Chlor-Alkali... 99 A.2 - Methanol... 100 A.3 - Ammonia... 101 A.4 - Ethylene... 102 A.5 - Propyylene... 103 A.6 - C4 Hydrocrarbons... 104 A.7 - Benzene... 105 A.8 - Toluene... 106 A.9 - Xylene... 107 iii
LIST OF TABLES Table 1.1 - U.S. Business of Chemistry Industry Snapshot, 2017...5 Table 1.2 - Industries Dependent upon the U.S. Business of Chemistry, 2016...6 Table 2.1 - Business of Chemistry Summary, 2008-2017...9 Table 2.2 - Characteristics of the Business of Chemistry... 10 Table 2.3 - Business of Chemistry Industrial Production Indices (2012=100)... 12 Table 2.4 - Business of Chemistry Producer Price Indices (2012=100)... 13 Table 2.5 - Business of Chemistry Shipments by Segment ($billion), 2017... 14 Table 3.1 - Basic Chemicals Shipments ($million)... 16 Table 3.2- Chemicals and Plastic Resins Production (thousands of metric tons)... 18 Table 3.3 - Plastic Resins Summary, 2008-2017... 21 Table 3.4 - Specialty Chemical Market Volume Indices (2012=100)... 22 Table 3.5 - Specialty Chemicals Shipments ($million)... 26 Table 4.1 - Measures of Profitability, Cash Flow and Other Measures... 31 Table 4.2 - Solvency, Liquidity, Debt Management & Asset Management Measures... 32 Table 5.1 - Global Chemical Shipments by Country/Region ($billion)... 34 Table 5.2 - Global Chemical Exports by Country/Region ($billion)... 35 Table 5.3 - Global Chemical Imports by Country/Region ($billion)... 36 Table 5.4 - Global Chemical Trade Balance by Country/Region ($billion)... 37 Table 5.5 - Global Chemical Apparent Consumption/Domestic Sales by Country/Region ($billion)... 38 Table 5.6 - Global Chemical Shipments by Segment ($billion)... 39 Table 5.7 - Chemical Output by Segment (indices where 2012=100)... 40 Table 5.8 - Chemical Output by Nation/Region (Global CPRI) (indices where 2012=100)... 41 Table 6.1 - Exports by Segment ($million)... 44 Table 6.2 - Chemical Exports by Country/Region ($million)... 45 Table 6.3 Exports by Trade Group ($million)... 46 Table 6.4 - Imports by Segment ($million)... 47 Table 6.2 - Chemical Imports by Country/Region ($million)... 48 Table 6.3 Imports by Trade Group ($million)... 49 Table 6.4 - Trade Balance by Segment ($million)... 51 Table 6.5 - Trade Balance by Country/Region ($million)... 52 Table 6.6 Trade Balance by Trade Group ($million)... 53 Table 7.1 - Basic and Specialty Chemical Companies R&D Spending by Type (as % of total)... 56 Table 7.2 - R&D Spending in the Business of Chemistry... 57 Table 8.1 - Capital Investment by Segment ($million)... 59 iv
LIST OF FIGURES Figure 1.1 - U.S. Business of Chemistry Flow Chart, 2017 ($billion)...4 Figure 2.1 - Typical Cost Structure in the Business of Chemistry by Segment... 11 Figure 3.3 - Business of Chemistry Chemical Chain... 30 Figure 5.1 - Global Chemical Shipments by Segment (as a % of total shipments), 2017... 39 Figure 5.2 - Global Chemical Production Regional Index (Global CPRI)... 42 Figure 6.1 - U.S. Trade in the Business of Chemistry ($billion), 2017... 43 Figure 6.2 - Share of Exports by Sector, 2017... 44 Figure 6.3 - Share of Imports by Sector, 2017... 47 Figure 6.4 - Chemicals Trade Balance by Segment ($billion)... 50 Figure 7.1 - Percent of Basic and Specialty Chemical Revenues from New Products... 58 Figure 8.1 - Chemical Industry After-Tax Profits ($million)... 61 Figure 10.1 - EH&S Spending by Basic and Specialty Chemical Producers... 70 Figure 10.2 - EH&S Spending by Type of Spending... 70 Figure 10.3 - Environmental Progress and Economic and Population Growth in the U.S... 72 Figure 10.4 - Environmental Progress and Production in the Business of Chemistry... 72 Figure 10.5 - TRI Releases by Media: Business of Chemistry (millions of pounds)... 73 Figure 10.6 - Trends in Occupational Injury and Illness Incidence Rates... 74 Figure 10.7 - Security Spending by ACC Member Companies ($million)... 75 Figure 11.1 - Derivation of Petrochemical Feedstocks... 80 Figure 11.2 - U.S. Based Petrochemical Competitiveness: Ratio of the Price of Oil to Natural Gas... 81 Figure 11.3 - Composition of Energy Requirements (trillion BTUs), 2017... 82 Figure 11.5 - Share of Total Energy Consumption by Source... 83 Figure 11.4 - Share of Total Energy Consumption by Segment... 83 Figure 11.6 - Value of Energy Consumed by the Business of Chemistry ($billion)... 84 Figure 11.7 - Business of Chemistry: Fuel and Power Energy Consumed (1974=100)... 85 Figure 12.1 - Business of Chemistry: Transportation by Mode, 2017... 89 Figure 13.1- Share of Business of Chemistry Shipments by State, 2016... 93 Figure 13.2 - Number of Business of Chemistry Establishments by State... 98 v