We didn’t understand it at that time, but 2019 goes lower-for that chemical industry and beyond-as are blissfully untarnished through the novel coronavirus. Once the economy begins to grow again after shutdowns are lifted, we’ll use 2019 as a yardstick to gauge whether or not this has retrieved fully.
Based on C&EN’s latest survey from the top 50 US chemical companies, companies were already showing indications of slowing prior to the pandemic. The 50 companies combined chemical sales for 2019-the entire year that forms the foundation for the survey-declined 9.8% from 2018 to $280.2 billion. This can be a sharp contrast towards the 17.9% sales increase the largest 50 firms with each other published in 2018.
Based on the American Chemistry Council (ACC), a trade group, chemical industry growth was weak in 2019. US chemical production elevated by only .6% in the past year. Global growth only agreed to be slightly better at 1.2%.
Prices could explain the decline. Dow Jones, which heads C&EN’s ranking and saw a 13.4% loss of chemical sales this past year, reported that prices because of its products declined by 11.%.
Meanwhile, oil prices elevated all year round, beginning at approximately $45 per barrel and finishing just over $60. Oil and gas are major cost inputs for that chemical industry. Growing energy prices plus declining chemical prices will likely equal shrinking profits.
And based on C&EN’s data, profits did indeed decline. The 44 chemical companies one of the top 50 that openly report profits published combined operating earnings of $28.6 billion for that year, a loss of 26.3%. Last year’s survey found a 19.5% rise in profits.