Credit: Dow | Dow's complex in Freeport, Texas
Like companies everywhere, US chemical makers were buffeted last year by COVID-19. Lockdowns due to the pandemic slowed economic activity to a crawl, and firms scrambled to respond by cutting capital spending and other costs.
The pandemic's effects are reflected in C&EN's latest survey of the top 50 US chemical producers, which is based on data from 2020. The 50 firms combined for $250.9 billion in chemical sales, 10.1% lower than what they had posted a year earlier.
Profits declined even more sharply. The 46 firms that report chemical operating income combined for $24.8 billion, down 15.6%.
The results were worse in the depths of the pandemic, in April and May of last year. Many chemical companies saw chemical sales fall more than 20% in the second quarter last year. For example, Dow reported a sales drop of 24.2% in the period, compared with a 10.3% decline for the full year.
But business started to pick up in the second half of 2020, particularly the fourth quarter. The industry also benefited from demand for some key products. For instance, Dow's sales of polyethylene, used in packaging, actually rose for the year.
Worried about having enough cash to make it through the pandemic, chemical companies cut costs wherever they could. Capital spending was a frequent target. In many cases, project construction had to stop because of the pandemic. The 43 companies that disclose capital spending numbers reported a decline of 17.8%, to a combined $15.7 billion.
R&D spending held up better, slipping only 2.9%, to $3.5 billion, for the group of 31 companies that report such outlays.
The current survey reflects a few other changes from the one C&EN published a year ago. Three firms have fallen off the ranking. Versum Materials was acquired by Merck KGaA. Emerald Performance Materials sold a major business to Huntsman last year, and Lanxess is buying the rest of the company. And Innophos was purchased by the private equity firm One Rock Capital.
Three new firms joined the group: ChampionX, which was Ecolab's former oil-field chemical business; the choline chloride maker Balchem; and the agricultural chemical firm American Vanguard, which has grown recently.
Of course, C&EN's survey isn't comprehensive, as it includes only companies that report chemical sales figures publicly. Many private companies that don't have to report these figures publicly—like TPC Group, SI Group, and Koch Industries—certainly have the sales to make the ranking, as do public companies like Procter & Gamble and PPG Industries, which don't break out the sales of their chemical divisions.
Dow is once again the largest US chemical maker. In 2020, its first full year after splitting from DowDuPont, the company initiated a round of cost cutting, partly because of financial pressures resulting from the COVID-19 pandemic. In July, Dow said it was reducing its workforce by 6%—about 2,200 jobs—in an effort to save more than $300 million annually by the end of 2021. As part of the plan, Dow is shutting some amine and solvent plants in the US and Europe and closing small polyurethane plants and coatings reactors. Dow also divested terminal and rail assets in 2020.
In recent years, LyondellBasell Industries has cultivated a reputation for expanding capacity with little risk by not building large projects itself. Keeping with this strategy, the company twice purchased stakes in petrochemical projects that another firm took the trouble to construct. For $2 billion, LyondellBasell bought a 50% interest in an ethylene cracker and two polyethylene plants in Lake Charles, Louisiana, that Sasol built as part of a $12.5 billion project that went severely over budget. LyondellBasell also bought a 50% stake in a petrochemical project in Panjin, China.
After a long time on the sidelines of the plastic-waste debate, ExxonMobil recently got into the game of chemical recycling plastic waste. With the recycling firm Agilyx, ExxonMobil formed a joint venture, Cyclyx, that will scale up systems for gathering postconsumer plastic waste for recycling. The oil giant has also conducted trials of a new chemical recycling process at its Baytown, Texas, plant and signed an agreement with Plastic Energy to build a plastic pyrolysis plant at its petrochemical complex in France.
DuPont appears to have finished restructuring and settled on a permanent portfolio. The company sold its Nutrition & Biosciences division to International Flavors & Fragrances in February, generating $7.3 billion in proceeds earmarked for investment and paying down debt. DuPont decided to hold on to its electronic materials business, which it had considered divesting. Augmenting this business, it recently announced the purchase of Laird Performance Materials, a specialist in electronic shielding, for $2.3 billion.
The industrial-gas maker is organizing the largest green ammonia project in the world. With local partners, Air Products intends to spend $5 billionon a complex in Saudi Arabia that will generate power from solar and wind, use the electricity to make hydrogen from water, and produce 1.2 million metric tons per year of ammonia from that hydrogen. Air Products plans to spend an additional $2 billion to distribute the ammonia globally to convert back to hydrogen for fuel-cell trucks and buses.
The fertilizer maker is looking for a little help—from microbes—to make its crop nutrients more effective. Late last year, Mosaic signed an agreement with the biotechnology firm BioConsortia on nitrogen-fixing bacteria. Similarly, it is partnering with Sound Agriculture on activators for soil microbiomes. Mosaic is also collaborating with AgBiome on a project intended to minimize fertilizer loss to the environment.
DuPont and Dow are the top spenders on R&D among US chemical firms.
|CHEMICAL CAPITAL SPENDING||CHEMICAL R&D SPENDING|
|2020 ($ MILLIONS)||CHANGE FROM 2019||% OF CHEMICAL SALES||2020 ($ MILLIONS)||CHANGE FROM 2019||% OF CHEMICAL SALES|
|GCP Applied Technologies||26||–42.7||4.9||n/a||n/a||n/a|
|W. R. Grace||156||–19.9||9.0||66||2.2||3.8|
|Orion Engineered Carbons||145||–7.0||12.8||20||1.5||1.8|
Sources: Company documents, C&EN analysis.
Note: Figures are for companies on the top 50 list reporting capital and/or R&D expenditures. n/a means not available.
Eastman Chemical is moving forward with one of the most ambitious chemical recycling projects in the US: a $250 million depolymerization plant in its hometown of Kingsport, Tennessee. The plant will use methanolysis to break down as much as 100,000 metric tons per year of polyethylene terephthalate (PET) into the raw materials dimethyl terephthalate and ethylene glycol. The project follows a pilot program that Eastman has been running for about a year to break down PET using glycolysis. Eastman plans to use the output from the plants to make specialty polyesters.
Chevron Phillips Chemical got new leaders this year. Mark Lashier retired as president and CEO in April, and two executives are taking his place: Bruce Chinn, formerly the head of Chevron Chemicals, replaced him as CEO. And B. J. Hebert, who joined Chevron Phillips in 2020 after 3 years as president of Occidental Chemical, assumed the roles of president and chief operating officer.
Like most US chemical companies, Westlake Chemical had to contend with the economic impact of the COVID-19 pandemic. But the polyolefin and vinyl maker was hit hard by hurricanes too. In late August, Westlake shut down its Lake Charles, Louisiana, complex before it took a direct hit from Hurricane Laura. It reopened the plant in September, only to have to idle it again in October because of Hurricane Delta. It resumed production in November. In all, Westlake suffered $83 million in costs associated with the storms.
Corteva Agriscience faced an insurrection in early 2021 from the investor Starboard Value, which maintained that Corteva had not achieved the cost savings and profitability that it promised when it was spun off from DowDuPont as an agricultural chemical and seed specialist. The hedge fund sought to remove Corteva CEO Jim Collins and install eight new directors. Instead, Corteva agreed to appoint three directors proposed by Starboard.
Last June, Ecolab completed the merger of its oil-field chemical business with the oil-field services firm Apergy. The result: ChampionX, which debuts in C&EN's US top 50 ranking at number 42 with $1.1 billion in chemical sales. Ecolab's chemical business now consists mostly of water treatment chemicals, but those are still sufficient to put the company at number 11 in the survey.
Lubrizol, the specialty chemical arm of the conglomerate Berkshire Hathaway, made a couple of small but key investments over the past year. In November, the firm announced that it would build a chlorinated polyvinyl chloride plant in Gujarat, India, by 2022. The plant will serve the country's water infrastructure market. Lubrizol also bought Avid Product Development, a Colorado-based provider of 3D-printing services.
Flush with cash from the $2 billion sale of its intermediates and surfactant business to Indorama in January 2020, Huntsman went shopping. It bought CVC Thermoset Specialties, part of Emerald Performance Materials, for $300 million. CVC makes specialty epoxy resins, reactive modifiers, polymer tougheners, curing agents, and nitrile latex. And Huntsman purchased Gabriel Performance Products, which makes epoxy additives and curing agents, for $250 million this year.
In October, Celanese closed the sale of its stake in the Polyplastics Engineering Plastics joint venture to its partner, Daicel, for nearly $1.6 billion. Celanese quickly deployed the cash on expansion. Most notably, Celanese's Clear Lake, Texas, methanol joint venture with Mitsui is building a unit to convert waste carbon dioxide to methanol. Using a next-generation catalyst, Celanese will expand vinyl acetate capacity in Nanjing, China. And in Europe, the firm aims to build an ultra-high-molecular-weight polyethylene plant.
In January of this year, Chemours eliminated a problem that had dogged it since 2015, when it was spun off from DuPont: liabilities related to sites contaminated for decades with per- and polyfluoroalkyl substances stemming from when DuPont ran the business. In 2019, Chemours sued its former parent, alleging that DuPont management had misled Chemours's leadership about the scope of the environmental costs. After arbitration, the two companies—along with Corteva Agriscience, which includes old DuPont businesses—agreed to split up to $4 billion in liabilities.
Honeywell International's UOP technology arm got a feather in its cap recently when Chevron finished building an ionic liquid–based alkylation unit at Chevron's refinery in Salt Lake City. The technology—developed by Chevron and licensed by UOP—circumvents many of the problems involved in handling hydrofluoric and sulfuric acid, which are traditionally used in the octane-producing process. UOP is already working on three licenses for the technology.
Olin's chemical business—primarily a maker of chlorine, caustic soda, and derivatives—has been going through some tough times. Chemical sales dropped over 11% in 2020, while chemical earnings plummeted almost 90%. As a result, the company announced the permanent closure of a diaphragm-electrolysis-based chlor-alkali facility in McIntosh, Alabama. Olin's nonchemical business, the Winchester ammunition unit, has been booming.
FMC has made the strategic decision to specialize in crop protection chemicals. It acquired a chunk of DuPont's crop protection business in exchange for its own health and nutrition business in 2017, and in 2019 it spun off its lithium chemical business, forming Livent. Last year, FMC formed a venture capital arm to invest in emerging crop protection technologies.
The maker of nitrogen fertilizer is jumping with both feet into selling ammonia as a clean fuel. In Donaldsonville, Louisiana, CF Industries is building the largest green ammonia project in the US. It will spend $100 million to install water electrolyzers that produce the hydrogen needed to make carbon-free ammonia. CF also plans to convert a chunk of its current ammonia production to blue ammonia, so called because its by-product, carbon dioxide, is captured.
Occidental Petroleum has gone bananas! Its green investing arm, Oxy Low Carbon Ventures, is working with the start-up Cemvita on a microorganism that converts carbon dioxide and water into ethylene. The bug is engineered with a gene that bananas use to make ethylene in the ripening process. The firms are building a pilot plant set to open next year and hope to establish a CO2-based process to make ethylene for Occidental's polyvinyl chloride business.
Albemarle inked an agreement this February to sell its fine chemical unit to W. R. Grace for $570 million. The business has about $160 million in annual sales, mostly of custom synthesized intermediates and active pharmaceutical ingredients. Albemarle has been trying to unload the unit since 2015. The divestment will allow the company to focus on its high-growth lithium business and bromine and refining catalyst units. Furthering these goals, Albemarle unveiled plans in January to double its US lithium production.
In a diversification move, the styrenic polymer maker purchased Arkema's polymethyl methacrylate business for about $1.4 billion earlier this month. The Arkema business has acrylic resin sales of more than $600 million annually. Trinseo says the move follows a portfolio review that recommended acrylic resins as an attractive "adjacent chemistry" to its core business in styrenics such as acrylonitrile-butadiene-styrene resin. As part of the review, Trinseo plans to divest its synthetic rubber business.
H.B. Fuller made a transformational deal in 2017 with its $1.6 billion acquisition of Royal Adhesives. Then, in 2019, it sold its surfactant, thickener, and dispersant business in Dalton, Georgia, to Tiarco for $71 million. In another move in adhesives, Fuller partnered last October with Gorilla Glue to launch 19 professional-grade products sold under the Gorilla brand.
Jeffry N. Quinn, Tronox's CEO since 2017, stepped down in January after it was alleged that in 2016 he had fed insider information to a friend about a potential takeover of Ferro, where Quinn was a director. Tronox, which wasn't implicated in the affair, named longtime executives John D. Romano and Jean-François Turgeon co-CEOs.
The carbon black maker made a high-tech investment last year, buying the world's second-largest carbon nanotube maker, Shenzhen Sanshun Nano New Materials, in a $115 million deal. The Chinese firm has annual sales of $28 million. Cabot sees an opportunity for carbon nanotubes in energy storage and forecasts 20% annual growth. It will combine Sanshun with the carbon black and nanostructured materials it sells to this market. ▪
Earlier this month, Hexion sold a business long earmarked for divestment. For $425 million, its phenolic resin, hexamine, and European forest-product resin business is going to two private equity firms—Black Diamond and Investindustrial. The business, which has annual sales of about $530 million, includes the famous Bakelite brand.
Ashland has been fine-tuning its portfolio over the past year. It sold its business in maleic anhydride—a raw material for unsaturated polyester resins—to composites maker AOC Materials for $100 million in October 2020. And in January of this year, Ashland agreed to buy the personal care business of the disinfectant product maker Schülke & Mayr for $319 million. The business makes cosmetic-grade antimicrobial agents.
This laboratory chemical supplier is a relative newcomer to the top 50. The private equity firm New Mountain Capital founded Avantor in 2010 with its purchase of Mallinckrodt Baker. It later folded in other acquisitions, most notably the $6.2 billion purchase of VWR. Avantor went public in 2019, raising $4.2 billion in its offering.
Some might wonder why a whale would appear in the logo of a fuel additives maker. Back in 1962, Albemarle Paper—through a miracle of financing—bought Ethyl, an oil and chemical company over 15 times its size. News articles compared the transaction to the biblical Jonah swallowing the whale. The chemical piece was spun off as Albemarle in 1994, leaving a fuel additives business eventually named NewMarket.
The normally conservative surfactant maker has been on a shopping spree. In February, Stepan bought Invista's aromatic polyester polyol business, adding $100 million in annual sales to its activities in the polyurethane raw material. Stepan has also purchased an idle fermentation plant in Lake Providence, Louisiana, that it plans to convert to biobased surfactant production.
In April, Grace agreed to be acquired by Standard Industries Holdings in a deal worth $7 billion, including debt. Grace had rejected two offers from Standard's investment arm, 40 North Management, which owned about 15% of the firm. Grace insisted that the offers were too low, but 40 North maintained that the company wasn't realizing its full potential. While Grace was playing hard to get, it agreed to buy Albemarle's fine chemical business.
Titanium dioxide maker Kronos Worldwide is about as steady as a company gets. Over the past decade, it has increased capacity for the white pigment by just 5%, "incurring only moderate capital expenditures," it boasts in its annual report. The company forecasts that it will operate at nearly full capacity this year.
As part of an effort to focus on styrenic block copolymers and pine chemicals, Kraton sold its Cariflex polyisoprene latex business to South Korea's Daelim Industrial for $530 million in March 2020. The elastomers are a substitute for natural latex, which can cause allergic reactions, in products like surgical gloves. Cariflex had sales of $180 million in 2018.
Avient is a new name for an old company, PolyOne. The company made the change last July, when it closed its purchase of Clariant's masterbatch business for $1.4 billion. The purchase explains Avient's 50% increase in chemical sales and its jump to 34 from 45 in C&EN's ranking.
Ingevity CEO D. Michael Wilson resigned in 2020 over "matters relating to his personal conduct," according to a company statement. No further details were given, and Wilson now appears to be focused on philanthropy. On his watch, Ingevity, the former pine chemical business of MeadWestvaco, bought Perstorp's caprolactone business and Georgia-Pacific's pine chemical unit. He was replaced by Chief Financial Officer John C. Fortson.
The fuel additives and specialty chemical company made a $1.3 billion bid for the British specialty chemical maker Elementis in April and was rebuffed. Innospec said a combination would have unlocked "significant anticipated synergies" but walked away rather than sweeten the offer.
AdvanSix is the former nylon 6 business of Honeywell, but the polymer accounts for only a quarter of the firm's sales. AdvanSix also sells the nylon 6 raw material caprolactam and coproducts of nylon production. Those include ammonium sulfate, which represents another quarter of sales. In January, AdvanSix announced that it was investing in research on this fertilizer's application on soybeans.
Orion Engineered Carbon has been pushing into specialty carbon black, such as for electrical equipment, and deemphasizing commodity grades of carbon black for tires. To that end, it purchased LyondellBasell Industries' French carbon black arm in 2018. The French firm's highly conductive acetylene black is used in lithium batteries and electrical cables.
Cabot Microelectronics changed its name to CMC Materials in October. Long a specialist in chemical mechanical slurries for semiconductor production, the company diversified in 2018 with its $1.6 billion buy of KMG Chemicals. Last month, CMC purchased another electronic materials firm, International Test Solutions.
Americas Styrenics, the polystyrene joint venture of Trinseo and Chevron Phillips Chemical, is on the leading edge of chemical recycling. The company has a joint venture in Tigard, Oregon, with Agilyx that uses pyrolysis to break down polystyrene into its raw material, styrene. The companies may build another plant at AmSty's styrene facility in Saint James, Louisiana.
PQ has been shedding businesses to focus on sulfuric acid regeneration for refineries and on chemical and refining catalysts. In March 2021, it agreed to sell its sodium silicate, specialty silica, and silicate derivatives business to Cerberus Capital Management and Koch Industries for $1.1 billion. The unit had sales last year of $685 million. In December, PQ completed the sale of its glass bead business to the Jordan Company for $650 million.
The COVID-19 pandemic crushed oil exploration in the first half of the year. Despite that, Ecolab was able to complete the merger of its oil-field chemical business with the oil services firm Apergy to form ChampionX. ChampionX's chemical sales—of products for drilling, well completion, and production—come from Ecolab's former Nalco Champion business.
Chemours and DuPont aren't the only companies in hot water about emissions of per- and polyfluoroalkyl substances. 3M has been in trouble over illegal discharges of fluorochemicals into the Tennessee River from its Decatur, Alabama, plant. The company entered into a consent order with the state of Alabama to mitigate release of the chemicals and to conduct toxicology testing on them.
In December 2019, the pigment maker signed an agreement to sell its tile coatings business to Pigments Spain for $460 million. The transaction finally closed this February. Ferro management said the sale allows the firm to focus on higher-growth businesses.
Pentachlorophenol, a utility-pole preservative that the US National Toxicology Program calls a "reasonably anticipated" human carcinogen, faces a ban in the US. Smelling an opportunity, Koppers, which is both a wood preservative producer and one of the largest utility-pole makers in the US, has said it may start offering copper naphthenate, a potentially safer alternative.
Genesis Energy is an oil and gas logistics company, so its 2017 purchase of Tronox's soda ash business for $1.3 billion was odd. The company justified the acquisition as a diversification move. Tronox owned the business, which had been part of FMC, for only about 2 years. Genesis is investing in the business, spending $300 million to expand its Green River, Wyoming, mining operations.
New to C&EN's ranking, Balchem is a specialist in choline chloride, which is used in animal feed—where it helps promote growth—and in human nutrition. The firm launched PuraChol, a branded line of choline chloride products, last year.
GCP Applied Technologies spun off from W. R. Grace in 2016. Like Grace, it found itself the target of 40 North Management, which aimed to put directors on GCP's board. While Grace recently agreed to be acquired by 40 North's parent, Standard Industries Holdings, GCP fought off 40 North's initiative. But another activist investor, Starboard Value, did beat GCP in a proxy battle last year, electing eight of its directors to GCP's board.
New York City–based Materials Technologies attempted to acquire the British company Elementis last year but gave up after its three bids were rejected. Both companies make chemicals from mined minerals and sell oil-drilling chemicals. Elementis claimed that the offers undervalued it—something it also said when it rejected a more recent offer from Innospec.
The agricultural chemical firm is making C&EN's survey for the first time. One of the transactions that helped American Vanguard grow was its 2017 purchase of businesses in the herbicide paraquat, the insecticide abamectin, and the fungicide chlorothalonil from the Israeli generic-pesticide firm Adama. The move helped clear the way for Adama's parent, ChemChina, to buy Syngenta.