P.1 

OAR Box 1669 

Prepped by Charmelle Mathews 

DocumeniNumber: 

103)11-1-11 

Docket Number: 

A-98-13 

Printed 9/23/2008 9:36:49 AM Sheet 103 of 110 
•9r-/3z-±-n 

A^industry'-by -industry overview of the U.S. economy— 

from manufacturing to high-tech to service industries 

P.2 

u. 

Industry 

& Trade 

Outlook 

The McGraw-Hill Companies and 

U.S. Department of Commerce/International Trade Administration 
P.3 

i 

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as*?=^ 
I V 

PA 

CHEMICALS AND ALLIED PRODUCTS 

Economic and Trade Trends 

• 

i 

U.S. International Trade 

($ billions) 

60 

1990 1991 1992 1993 1994 1995 1996 1997 1998 

Source: US. Depenment of Commerce: Bureeu of the Cenuit: Internetkmel Trade Adminiitration. 

Export Dependence and 

Import Penetration 

20 

I Exports/shipments ; • 1ir.poi.fi/c_ ru.•.: 

1990 1991 1992 1993 1994 1995 1996 

Source: U.S. Department of Commerce: Bureau of the Ceneus, Internetionel Trade Admininretion. 

See "Getting the Most Out of Outlook 2000" for definitions of terms. 
P.5 

Chemicals and Allied 

Products 

INDUSTRY DEFINITION This chapter contains sections on the 

chemical industry (SIC 28) and the following subsectors: industrial inorganic 

chemicals (SIC 281), industrial organic chemicals (SIC 286), agricultural 

chemicals (part of SIC 287), miscellaneous chemical products (SIC 289), plastic materials and resins (SIC 2821), and drugs and pharmaceuticals (SIC 283). 

Cellulosic and noncellulosic man-made fibers (SIC 2823 and 2824) are covered in Chapter 9, "Textiles." 

.ERVIEW 

1996 

ipWK 

referred to as the keystone industry because nearly every 

tcctor of the manufacturing economy uses its products, the 

chemical industry ranks among the world's leading induswith U.S. chemical companies accounting for an estimated 

arter of total world chemical production. The industry 

(biles hundreds of companies with over 12,000 plants that 

.•c over 70,000 different chemical products, ranging from 

materials for other industries to a wide variety of finished 

imcr products. Chemical building blocks are used in nearly 

food consumer and industrial products. 

U.S. chemical and allied products industry, with about 

billion in shipments in 1998, is the world's largest sup-

. f chemicals and accounts for about 25 percent of total 

chemical production. Chemicals are one of the nation's 

industries, representing about 11.5 percent of all U.S. 

Icturing on a value-added basis and 1.9 percent of gross 

Ic product (GDP). Chemical companies employ over 

.million persons in the United States, equal to 5.5 percent 

Ihe workers employed in manufacturing. 

U.S. chemical industry is also one of the country's 

exporting industries, generating over 10 percent of the 

i total exports and 13 percent of all world exports of 

lis. According to data provided by the Chemical Manux Association (CMA), chemical industry exports in 

totaled $68 billion, down 2 percent from 1997, while 

rose 8.5 percent to reach $54.6 billion. The industry's 

trade surplus narrowed to $10.1 billion, the lowest surplus since 

1988. Although the Asian economic crisis was the main factor 

in the poor trade balance, that decline also reflected reduced 

demand from the Middle East and central and eastern Europe 

coupled with increased imports from those regions into the 

United States. In 1999, exports were expected to decline 

slightly and imports were expected to rise about 7 percent, and 

the industry's balance of trade was likely to drop to about $8 

billion. Firmer economies in Asia should help lift exports in the 

year 2000, resulting in an improved trade picture. 

In 1998, worldwide chemical shipments of slightly less than 

$1.6 trillion were up about 0.75 percent from the 1997 level, 

according to data provided by the CMA.. This sluggish growth 

contrasted with an average annual gain of 4.2 percent in the 

1994-1997 period. The softening trend largely reflected the effect 

of the widespread financial crisis in Asia. Global dollar shipments 

also were affected by falling prices stemming from oversupply 

conditions in many principal product categories. Unit shipments 

to the Asia-Pacific region dropped 2.25 percent in real terms in 

1998, including a 4.5 percent decline in Japan. By contrast, most 

major markets in western Europe grew at rates in excess of the 

world average, especially in France and Italy. Boosted by new 

capacity, chemical shipments to Mexico increased 4.25 percent 

and shipments to Canada rose 3.75 percent. According to the 

CMA, the Asia-Pacific region accounted for 31 percent of global 

chemical shipments in 1998, western Europe for 29 percent, 

North America for 27 percent, Latin America for 6 percent, and 

other areas for the remaining 7 percent. 

Chemicals and Allied Products 11-1 
P.6 

World exports of chemicals totaled $510 billion in 1998, 

according to CMA data. With chemicals now manufactured 

throughout the world, prices are determined by global supply 

and demand conditions and the discounting tactics used by 

leading producers to gain market share. According to Chemical 

Market Associates, Inc. (CMAI), worldwide capacity in base 

chemicals (light olefins, aromatics, chlor-alkali, and methanol) 

will expand from about 250 million tons in 1990 to close to 

400 million tons in the year 2000. World chemical consumption of 300 million tons in 1998 was divided as follows, 

according to CMAI: light olefins (ethylene and propylene), 43 

percent; chlor-alkali (chlorine and caustic soda), 30 percent; 

aromatics (benzene and mixed xylenes), 18 percent; and 

methanol, 9 percent. 

The industry is also capital-intensive, a large user of energy 

resources, and heavily regulated, factors that provide high 

entry barriers to new competition. U.S. chemical companies 

consume about 7 percent of total annual U.S. energy output. 

Most of the industry's energy consumption involves natural 

gas and oil, with the balance consisting largely of electricity 

and coal. 

Most of the industry's production consists of commodity 

chemicals, with demand largely a function of general economic 

activity in the U.S. market and overseas markets. Industry profitability is determined largely by raw material costs, export 

demand, pricing trends in world chemical markets, and capacity utilization. Trends in interest rates, inflation, and manufacturing as well as marketing costs also can have a significant 

impact on profits. 

Chemicals are produced from raw materials such as oil, natural gas, metals, minerals, and air, which are further processed 

into chemical intermediates and industrial and consumer goods. 

The automobile and housing sectors are key markets, although 

chemicals find their way into nearly all manufactured products. 

Key trends affecting leading U.S.-based chemical companies include specialization, globalization, and consolidation. 

With an eye toward increasing profits and the return to shareholders, chemical firms are divesting low-margin commodity 

businesses to concentrate on higher-margin specialty chemical 

businesses. Other firms are attempting to achieve greater profitability through mergers and acquisitions. The value of all 

merger and acquisition activity in the worldwide chemical 

industry was expected to exceed $45 billion in 1999, including 

the planned $11.3 billion merger of Dow Chemical and Union 

Carbide. The value of all merger and acquisition activity in 

1998 totaled $37.3 billion, according to Young & Partners. 

INDUSTRIAL INORGANIC CHEMICALS 

This subsector covers developments in the industrial inorganic 

chemicals industry (SIC 281), which includes four main 

product groups: alkalies and chlorine (SIC 2812); industrial 

gases such as nitrogen, oxygen, and carbon dioxide (SIC 

2813); inorganic pigments such as titanium dioxide and iron 

oxide (SIC 2816); and miscellaneous inorganics, including 

acids, aluminum compounds, potassium and sodium coiq 

pounds, and catalysts, among many others (SIC 2819 

Accounting for the bulk of chemical industry productio 

inorganic chemicals are derived from earth materials 

as minerals and the atmosphere. 

Global Industry Trends 

With U.S. markets for commodity inorganic chemicals such I 

the automobile and housing industries considered relative 

mature, most future growth for these products is expected I 

come from developing nations in Asia and Latin AmciHl 

Exports account for close to 30 percent of total inorganic chr^ 

ical production, with domestic markets accounting for 

remaining 70 percent. Key U.S. export markets include Can* 

and Mexico, which accounted for 28 percent of inorpi 

chemical exports in 1998, followed by western Europe al | 

percent, Japan and China at 22 percent, Latin America at I 

percent, the rest of Asia at 11 percent, and other areas al d ra 

cent (see Table 11-1). With depressed economic comliil.j 

particularly in Asia, continuing to affect this market, expo 

inorganic chemicals were expected to decline almost 5 |x-tv 

in 1999, after a drop of over 8 percent in 1998 (see Tabic IH 

Despite the recent downturn in export volumes, longbusiness prospects remain favorable. Some improvemci^ 

export volume is anticipated in the year 2000, generated] 

firming economic trends in Japan and other Asian counn i< 

addition, key export markets in North America have coniifl 

to be resilient. The North American Free Trade Agreed 

(NAFTA) partners Canada and Mexico, along with Latin Al 

ica, account for about 38 percent of total U.S. inorganic ch| 

cal exports, and growth in those regions is expected to raj 

respectable. 

U.S. Industry Outlook 

Key factors affecting domestic demand for inorganic chcii 

include the health of end-use markets, environmental i 

tions, and trends in foreign trade. Inorganic chemicals MI 

primarily by the construction, paper, packaging, pain! 

coatings, and fertilizer industries. Those markets are inllti 

by the overall health of the U.S. economy and by cwifl 

spending trends. 

After declining 5.6 percent in 1998, industrial produci 

inorganic chemicals was sluggish through much of 

Demand from export markets remained weak, ami 

domestic markets slumped. However, this situation is c 

to improve somewhat in the year 2000, with growth ll 

2003 projected to be in the range of 2 percent per year. Ii 

by cyclical improvement in U.S. industrial production 

The sectors expected to exhibit the best growth are in 

gases and titanium dioxide. Chlorine shipments also 

begin to improve over the next few years, helped l»; 

demand from the pulp and paper industry and greatci 

polyvinyl chloride (PVC) plastic products. Inorganic eli 

include a large number of items, with the most impoitm 

alkalies and chlorine, industrial gases, and inorganic | 

such as titanium dioxide. 

'* 

11-2 U.S. Industry & Trade Outlook 2000 

s 
P.7 

odium i 

(SIC 

produc 

iteriall • 

icals su 

id retail, 

expectl 

in Ar 

rganic cr 

ting for| 

lude Cl 

of inof] 

Europe 

merica 

reas at 6] 

; condith 

et, exp 

ost5 

•-Table |J 

js, longH 

>rover 

generate 

countric 

ive conti_ 

e Agreed 

1 Latin ( 

rganic ch 

ted to i 

11-1: U.S. Trade Patterns in Industrial Inorganic Chemicals1 in 1998 

Bns of dollars; percent) 

1 

(America 

jtm Europe 

JNChinese Economic Area 

#Aila 

M world 

U M Countries 

W 

ifkorea 

__ 

Exports 

Value3 

1,822 

680 

1,512 

1,408 

726 

389 

6,538 

Value 

1,181 

1,057 

641 

370 

331 

Share, % 

28 

•10 

23 

22 

11 

6 

100 

Share, % 

18 

16 

10 

6 

5 

Imports 

Region' 

NAFTA 

Latin America 

Western Europe 

Japan/Chinese Economic Area 

Other Asia 

Rest of world 

World 

Top Five Countries 

Canada 

Germany 

Australia 

Russia 

Japan 

Value3 

1,629 

459 

1,685 

747 

120 

1,375 

6,014 

Value 

1,364 

611 

611 

459 

421 

Share, % 

27 

8 

28 

12 

2 

23 

100 

Share, % 

23 

10 

10 

8 

7 

IP'. 

flnitions of regional groupings, see "Getting the Most Out of Outlook 2000." 

I may not sum to total due to rounding. 

ii U.S. Department of Commerce, Bureau of the Census. 

llies and Chlorine 

iprincipal products manufactured by the chlor-alkali indus-

|IC 2812) include chlorine, caustic soda, soda ash, sodium 

unate, and potassium hydroxide. Chlorine and caustic 

|lominate the industry, accounting for more over 80 perjujf total demand, and soda ash accounts for about 15 per-

|Chlorine production totaled 12.8 billion tons in 1998, 

Ijfrom $13.0 billion tons in 1997. Industry shipments were 

lied at about $2.8 billion in 1998. 

Chlorine and caustic soda (sodium hydroxide) are manufactured by a chemical process called electrolysis. This technique 

is accomplished by passing electricity through brine (a salt and 

water solution), triggering a chemical reaction that results in the 

recombination of salt (sodium chloride) and water (hydrogen 

and oxygen) to form chlorine and sodium hydroxide. The 

process yields 1.1 parts of caustic soda to 1 part of chlorine. 

Because chlorine is difficult to store, production is geared to 

meet immediate demand. Thus, the availability of caustic soda 

nic che 

lental 

icals art| 

g, painty 

ire influ 

by con 

produc 

uch off 

k, and?; 

an is ext 

rowth 

: year,, 

ction. 

I are in. 

is also jl 

iped byj 

greater^ 

anic che 

nportantif 

;anic pig 

11-2: Industrial Inorganic Chemicals (SIC 281) Trends and Forecasts 

nt of dollars except as noted) 

i.: 

1,,: 

HrycUta 

M Shipments' 

K Shipments (1992$) 

Bhployment (thousands) 

Hon workers (thousands) 

• hourly earnings ($) 

IWpenditures 

milata 

f|f Shipments' 

I t Shipments (1992$) 

|jtt a 

MJmports 

UMxports 

1992 

27,332 

27,332 

103 

54.9 

16.59 

1,553 

22,090 

22.090 

4,183 

5,324 

1993 

26,339 

26,092 

93.7 

49.7 

16.93 

1,179 

21.845 

21,670 

3,998 

4,926 

1994 

25,018 

24,358 

86.5 

46.7 

17.87 

1,304 

21,286 

20,729 

4,389 

5,309 

1995 

26,667 

24,744 

81.8 

45.4 

19.00 

1,708 

23,992 

22,064 

5,189 

6,145 

1996 

27,741 

25,052 

80.2 

45.2 

20.74 

2,002 

24,920 

22,333 

5,882 

6,254 

1997' 

28,950 

26,100 

26,020 

23,450 

5,953 

7,121 

1998' 

29,600 

25,500 

26,600 

22,900 

6,014 

6,538 

19992 

30,300 

25.800 

27,240 

23,170 

6,100 

6,250 

20003 

31,100 

26,200 

27,950 

23,540 

6,190 

6,380 

97-98 

2.2 

-2.3 

2.2 

-2.3 

1.0 

-8.2 

Percent Change 

98-99 

2.4 

1.2 

2.4 

1.2 

1.4 

-4.4 

99-00 

2.6 

1.6 

2.6 

1.6 

1.5 

2.1 

96-004 

2.9 

1.1 

2.9 

1.3 

1.3 

0.5 

I except imports and exports. 

und annual rate. 

flnition of industry versus product values, see 'Getting the Most Out of Outlook 2000." 

[U.S. Department of Commerce: Bureau of the Census; International Trade Administration. 

Chemicals and Allied Products 11-3 

<_? 
P.8 

is dictated by the level of chlorine production, creating cyclical 

problems in matching chlorine and caustic supplies with 

demand. Chlorine is used in the production of both organic and 

inorganic chemicals, including chlorinated solvents, titanium 

dioxide, and propylene oxide; as a feedstock in the manufacture 

of PVC; as a pulp and paper bleach; and as a sanitizing agent in 

water treatment. Caustic soda is used in soaps and detergents, 

water treatment, oil drilling, and textiles and fibers. 

The chlor-alkali industry experienced a cyclical downturn 

during 1998 and through the first half of 1999 as prices deteriorated under pressure from increased industry overcapacity coupled with weakness in demand from the pulp and paper 

industry. On an electrochemical unit (ECU) (a combined price 

of chlorine and caustic soda) basis, prices of chlor-alkali products during the first half of 1999 were at their lowest level in 

over 20 years. However, the market showed signs of improvement during the second half of that year, and prices started to 

firm. The better pricing environment reflected tighter supply 

and demand conditions as well as improved demand from the 

pulp and paper and oil refining industries. Prices also benefited 

from short supplies caused by unplanned outages at several producers, including the effects of a plant explosion at a key producer. Demand from U.S. markets should continue to be 

healthy over the next few years. 

Demand for PVC, which accounts for close to a third of chlorine production, will be a key driver of chlorine demand over the 

coming years. The second largest volume plastic, PVC, is used 

primarily by the housing and construction industries. The PVC 

market has risen in importance for the chlorine industry in recent 

years as environmental regulations have affected chlor-alkali use 

in solvents, pesticides, and chlorofluorocarbons (CFCs). 

Improving economies in Asia also should bolster this business in the year 2000. Over 40 percent of U.S. vinyl chloride 

(the raw material for PVC) production is shipped to Asian markets. Boosted by better foreign markets, worldwide chlorine 

demand is expected to expand 2.5 percent per year through 

2002. By comparison, domestic demand is expected to grow 

only 1.5 percent in that period. 

As caustic soda production is linked to chlorine, the 

1998-1999 slump in the chlorine market was reflected in caustic soda. Caustic soda prices declined in 1999, largely as a result 

of reduced demand from the pulp and paper industry, which 

accounts for about 18 percent of caustic soda production. Pricing also has been under pressure from capacity additions in the 

United States and abroad. New facilities were expected to boost 

total U.S. chlor-alkali capacity about 5 percent in 1999. Largely 

as a result of the new plants, domestic producers were operating 

atvabout 91 percent of capacity in 1991, down from 98 percent 

in 1997. Although operating rates in 2000 are not likely to 

improve much, increased demand, particularly from emerging 

markets, should help prices stay firm. Worldwide demand 

growth over the next 4 years should create a balance between 

worldwide production and consumption and facilitate an 

improved pricing environment. 

Soda ash (sodium carbonate) is a naturally occurring mineral 

whose primary use is in glass production, which accounts for 

nearly half of total demand. It also is used as a sodium soui 

chemical production, as a detergent builder, in pulp and paj 

and in environmental and water treatment products. U.S 

ash production dropped 9.8 percent to 10.7 million tons in 14 

as the business was affected by the Asian economic slowdi 

Exports constitute a vital market for U.S. soda ash produi 

accounting for about 35 percent of total domestic product! 

With exports to Asia accounting for nearly half of all Al 

ican soda ash exports, the Asian slump continued to affect 

market negatively in 1999, with total production levels 

expected to vary appreciably from 1998 levels. A better 

mance is seen for the year 2000, boosted by economic reo 

in Asia and improved demand from the domestic glass m 

Although the overall market for soda ash in the United 

is mature, demand from the glass industry has picked U| 

recent years, with a resurgence of glass usage in many con 

markets. Accounting for about half of U.S. soda ash consi 

tion, the glass industry has regained market share in o 

glass container markets. Although competition from pl 

packaging and aluminum beverage cans will limit its gro 

soft drink markets, glass remains the preferred bottle mal 

in the wine and beer industries, which are experie 

respectable growth. Demand for soda ash also has inc 

from the chemical industry, where soda ash has benefited 

the increased price of caustic soda, opening up opportuni 

swing markets that can use either one as a raw material 

Industrial Gases 

Demand for industrial gases in the United States is ex 

increase about 5 percent annually through 2004, driven 

ily by growth in large-volume gases such as nitrogen, oxj 

and hydrogen. Other important gas products include '< 

dioxide, argon, acetylene, and helium. Niche markets exi| 

krypton, neon, and xenon. Oxygen is used extensively 

kilns in the steel and building products industries, and! 

oxygen and liquid hydrogen are used in rocket fuel. Nil 

used in the brewing industry, rubber tire industry, and] 

industries, and argon is used in the manufacture of sti 

steel and in fluorescent.light bulbs. 

Production of nitrogen increased 4.2 percent in 1998, 

volumes of hydrogen dropped 9.1 percent and oxygen,| 

tion fell 5.1 percent. Demand for industrial gases will 

to be heavily reliant on the chemical, oil refining, and 

metals industries. However, the strongest gains will oco 

electronics industry and in smaller niche markets suc^ 

recovery and water treatment applications. Hydrogen hi 

one of the fastest-growing sectors in this market in recei 

boosted by rising demand from the oil refining industry] 

uses hydrogen to process crude oil and oil residues. 

An important technological development in the indusl 

industry involves the continuing diffusion of noncryogj 

separation technology, particularly membrane systemst>| 

swing adsorption (PSA), and vacuum PSA. Although 

ditional cryogenic air separation technology will retain tl 

volume and high-purity segments of the industrial gun 

noncryogenic methods offer a highly cost-effective ulli 

11-4 U.S. Industry & Trade Outlook 2000 

7 
P.9 

cm 

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(hi 

. IM 

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kir smaller customers for the major atmospheric gases: nitrogen 

md oxygen. These developments have prompted gas customers 

*> reevaluate their purity requirements and methods of delivery, 

«KI most major gas companies now offer customers on-site nonuyogenic options in areas where those methods can result in 

wbstantial cost savings. 

Although the chemical and primary metal industries are 

«alure markets, gas demand from those markets exceeds secular 

l»«iwth in end-market chemicals and metals, reflecting greater 

wage of industrial gases compared with competing materials. 

ftw example, the use of nitrogen for inerting applications in the 

chemicals industry is growing as a result of the greater availability of less costly noncryogenic materials. Meanwhile, hydrogen 

i* finding greater use in petroleum refineries because of Clean Air 

*il mandates that necessitate the hydrosulfurization of petroIwm products to produce cleaner-burning fuels. 

()xygen is by far the largest-volume gas used in the production 

if primary metals, where it fuels the basic oxygen furnaces that 

ttmvert pig iron into steel as well as blast furnaces and open 

!»*rtl) furnaces. Using oxygen instead of air in furnaces enhances 

jwiilnistion, reduces energy consumption, and reduces emis-

#n*, particularly of nitrous oxides. These advantages are proitM ing the use of oxygen in combustion processes in many other 

Wusiries, such as glass manufacturing. Oxygen and acetylene 

4*i provide combustible heat sources in welding operations, 

*hlc carbon dioxide, argon, and helium are used as shielding 

$«*>> io protect the welding surface. 

1 lie electronics industry will remain a leading outlet for highjjMity gases, particularly nitrogen, which is used to create an 

.«!Ijcn-lree atmosphere that is conducive to the production of 

•JUaitive components such as semiconductors and printed circuit 

.WSHU. Nitrogen also is being used in new packaging materials 

|*i provide longer shelf lives for perishable foods and beverW However, oil recovery will remain the market's most 

_Kr*Hy expanding sector, boosted by the cost-effectiveness of 

#*jt gases such as nitrogen and carbon dioxide to improve 

ftkU. 

Imports in most industrial gases are not significant because 

|}j*i«ihibitively high shipping costs. However, foreign trade is 

IfrfMituni in niche gases such as helium. With its large natural 

|j|k»iis. the United States holds a dominant world position in 

§ ! supply of helium. 

* * • 

H|m«nts and Other Inorganic Chemicals 

•»i (if their major markets are relatively mature, growth in 

«MI for inorganic pigments and other inorganic chemicals 

I expected to exceed growth in GDP in the foreseeable 

t lite U.S. market for other inorganic chemicals includes 

Iwxliiy products such as sodium and potassium chemicals, 

jintim compounds, and inorganic pigments. Hundreds of 

k'Hl compounds can be formed by utilizing sodium and 

rtium chemicals because of their high reactivity, which 

k. litem to combine with numerous other chemicals. Key 

JiMikets include the water treatment, pulp and paper, fertiljiWwp and detergent, food and beverage, metals, textile, and 

processing industries. 

Consumption of aluminum compounds such as aluminum 

oxide, aluminum hydroxide, and aluminum sulfate is expected 

to roughly track growth in GDP. Aluminum oxide (alumina) 

should benefit from growing demand for aluminum metal in the 

packaging, transportation, construction, and electrical equipment and electronics markets. Aluminum hydroxide is increasing its share of the flame retardant products market because of 

its environmental advantages over competing products, particularly halogenated flame retardants. Demand for aluminum sulfate (alum) will benefit from growing concern about the 

presence of organic carbon in water supplies. Municipal and 

industrial water treatment facilities are expected to increase their 

use of alum to enhance organic carbon removal via coagulation. 

Since the United States has virtually no commercially significant deposits of bauxite, the ore from which aluminum 

metal and chemicals are made, basic bauxite demand will continue to be satisfied by foreign sources, primarily Jamaica and 

Suriname. However, the United States is largely self-sufficient 

in downstream aluminum compounds, including alumina, aluminum sulfate, and aluminum hydroxide. 

Demand for titanium dioxide, the largest-volume inorganic 

pigment, is expected to be somewhat stronger than that for most 

other pigments, stimulated by its unique qualities and increased 

demand from the pulp and paper industry. Used as the primary 

white pigment in paper and paperboard, plastics, synthetic rubber, and coatings, titanium dioxide has an extremely high ability to reflect light and add brightness to products. After showing 

annual compound growth of 3 to 4 percent through 1997, production of titanium dioxide slipped 0.1 percent in 1998, primarily as a result of reduced shipments to Asia, which accounts for 

about 25 percent of world demand. After another indicated 

modest decline in 1999, demand should grow in the range of 2 

to 3 percent through 2003. 

The global titanium dioxide industry has exhibited increased 

merger and acquisition activity in recent years as companies 

sought to join forces to compete more effectively during the 

downturn experienced in 1998 and 1999. Consolidation activity 

also has been a response to a weaker pricing environment 

resulting from substantial overcapacity, which has left producers with eroding margins despite robust growth in demand. 

INDUSTRIAL ORGANIC CHEMICALS 

This subsector covers developments in the industrial organic 

chemicals industry (SIC 286), which includes organic dyes 

and pigments, aromatics such as benzene and toluene, gum 

and wood chemicals, pesticides, alcohols, and various cyclic 

intermediates, such as cumene, cyclohexane, and styrene, 

along with many other organic chemicals. All organic chemicals contain carbon and come in liquid and solid forms. 

Global Industry Trends 

Consisting primarily of petrochemicals, dyes, and pigments, the 

global organic chemical market is becoming increasingly competitive as new suppliers emerge from developing nations. 

Chemicals and Allied Products 11-5 

s 
P.10 

Although traditionally dominated by die United States, Germany, and Japan, this sector has had considerable capacity 

added in recent years from companies in Asia, the Middle East, 

and Latin America. That trend should continue despite the 

recent financial crisis in Asia. 

The global petrochemical industry had a tough year in 1998 

as it was beset by worldwide overcapacity, declining prices, and 

reduced shipments to Asian markets. Although lingering financial difficulties in Asia continued to affect this business in the 

first half of 1999, substantial price hikes implemented during 

that year should help top line comparisons in the year 2000. In 

1999, international price increases in major petrochemical 

products were triggered by increases in raw material (naphtha) 

prices and increasing demand from some markets. The chemical industry is sensitive to changes in oil and gas prices, as both 

of those materials represent basic chemical feedstocks and key 

energy sources that fuel manufacturing processes. 

With important derivatives uses in plastics and fibers, ethyleneis the largest-selling organic chemical. Reflecting higher oil 

feedstock costs and better supply and demand conditions, ethylene prices rose materially in 1999. According to estimates by 

SRI Consulting, ethylene feedstocks should be adequate to 

meet world demand through 2005 despite projected growth in 

demand of 4 percent per year and growth of 2 percent in the rate 

Of global production. 

U.S. Industry Outlook 

Key factors, affecting, the U.S. organic chemical industry 

include the prospects for key end-use markets and competition 

from foreign producers. As a result of the commodity nature of 

many of these chemicals, currency fluctuations also play an 

important role in global shipment patterns. Industrial organic 

chemicals are used primarily in the production of fuels, pla 

fibers, elastomers, fertilizers, and a broad range of other ch 

ical products. Organic chemicals encompass a broad rangej 

products* the majority of which are intermediates in ther| 

duction of other chemicals. 

After rising for many years, production of industrial ot] 

chemicals dropped 5.7 percent in 1998, largely reflecting! 

downturn in petrochemical production and the reduced 

opportunities caused by recession in key Asian econon 

Exports of organic chemicals, a good deal of which are shipp 

the Far East, dropped almost 9 percent in 1998 (see Table, 1-fl 

Organic chemical production continued to slide in Jj 

although the rate of decline subsided somewhat. With recove 

Asian economies, total domestic industrial organic chen 

production was expected to decline modestly in 1999. 

However, some improvement is projected for the yeatM 

with growth increasing almost 3 percent annually through^" 

That gain should reflect a cyclical upturn in the petrochenj 

industry and improvement in the overall global economy^ 

United States is expected to remain a net exporter of orj 

chemicals but will have a significantly smaller surplus thanj 

which it averaged over the last decade because Of strong cord( 

tion from export-oriented producers in Asia and the MiddleJ 

The trade balance in industrial organic chemicals has < 

in recent years, with the value of exports exceeding! 

imports by only 5 percent in 1998. Important export marke| 

western Europe, 33 percent; Canada and Mexico, 26 p 

east Asia, 14 percent; Latin America, 13 percent; andj 

regions, 14 percent (see Table 11-4). About 45 per 

imports came from western Europe, 17 percent from Japa 

China, 12 percent from Canada and Mexico, 7 percenffl 

Latin America, and 14 percent from the rest of the world| 

TABLE 11-3: Industrial Organ 

(millions of dollars except as 

'. .;-.•« . 

Industry data 

Value of shipments' 

Value of shipments (1992$) 

Total employment (thousands) 

Production workers (thousands) 

Average hourly earnings' ($) 

Capital expenditures 

Product data 

Value of shipments* 

Value of shipments (1992$) 

Trade data 

Value of imports 

Value of exports 

noted) 

.' 1992 

64,397 

64,397 

125 

-723 •-

18.55 

4,791 

59,451 

59,451 

8,179 

11,536 

ic Chemicals (SIC 286) Trends and Forecasts 

1993 

: 

64,280 

61,826 

123 

•"- 72.9. 

18.68 

4,061 

59,912 

57,724 

8,327 

11,839 

1994 

70,096 

65,700 

116 

68.5 

19.98 

3,554 

65,889 

61,955 

, 

9,807 

13,953 

1995 

76,729 

66,020 

118 

'69.7 

20.31 

4,923 

73,247 

63,234 

12,276 

17,560 

1996 

75,672 

63,902 

126 

74.7 

21.30 

6,269 

71,478 

60,931 

13,823 

16,158 

1997' 

77,100 

66,250 

72,850 

62,600 

15,774 

17,775 

1998' 

76,500 

65,500 

72,300 

61,900 

15,364 

16,238 

1999* 

78,600 

66,550 

74,300 

62,900 

16,000 

16,800 

2000s 

80,900 

67,750 

' 76,450 

64,700 

16,300 

17,400 

97-98 

-4.8 

-1.1 

-0.8 

-1.1 

-2.6 

-8.6 

'•^i'^S^^H 

Percent Change^JJ 

98-99 

2.7 

1.6 

2.8 

1.6 

4.1 

3.5 

99-00 ^§ § 

*tJ|^H 

2.9 *4H 

1.8 JOT 

'^_____! 

"'___i 

2.9 >-m 

2.9 7_TM 4 

1-9 ,M 

3.6 J I 

1

 Estimate except imports and exports. 

2

 Estimate. ..••••.• • 

'Forecast. 

4

 Compound annual rate. 

* Fori definition of industry versus product values, see "Getting the Most Out of Outlook2000." 

Source: U.S. Department of Commerce: Bureau of the Census; International Trade Administration. 

11-6 U:S. Industry & Trade Outlook 2000 
P.11 

;11-4:5 U.S. Trade Patterns in Industrial Organic Chemicals1 in 1998 

lis of dollars; percent) 

Hja-t>n^;; 

|,>0:<:. : .•- . (• • »• • 

B£ • 

pierica 

| Europe 

Chinese Economic Area 

Mia 

ptrtd. 

Il"*'-' 

(^Countries : 

_R~ s' 

_•__-•• 

Exports 

.•••! . Value? 

4,233 

2,148 

5,284 

2,299 

1,435 

839 . 

16,238" 

Valub2,510 

1,723 

1,246 

1,137 

1,088 

Share, % . 

26 

.13.. 

33 

14 

9 

-5. . 

100 

• r ' Share, % 

15 

11 

8 

7 

7 

Region2: 

NAFTA 

Latin America.,.., 

' Western Europe 

Japan/Chinese Economic Area 

Other Asia 

Rest of world 

World 

- Top Five Countries: 

Japan 

.Germany 

Canada 

• United Kingdom 

France -•"• 

Import* 

• • • 

- •• 

Value3 

1,810 

1,042 

6,884 

2,626 

794 

2,209 

15,364 

Value 

2,073 

1,491 . 

1,325 

.956 • 

908 srv' ' 

Share, % 

.12. 

...,-. ,..-.,. 

45 

17 

5 

-': 14 

"' 100 

: Share, % 

. 13 ;-

10 

9 

i s - - , 6 

•. ,-..+ -6 

ttons of regional groupings, see 'Getting the Most Out of Outlook 2000." 

I not sum to total due to rounding. 

. Department of Commerce, Bureau of the Census. 

id Organic Pigments 

emand for dyes and organic pigments in the United 

ejected to;rise about 2 percent annually.over the next 

gbplstered by growth in key end markets such as packdlprinting inks. Growth in demand for organic dyes 

en stimulated by ongoing shifts from inorganic to 

igments. However; other important markets, such as 

i'paints and coatings, are expected to continue to be 

jjjjgfestringent environmental regulations that have fossiof other products.. Demand from textile markets 

i muted in recent years. • ••v•>•'••- • •': wv» 

||organic pigments business also has beten hampered 

"Vimpbrt competition from low-cost overseas proilorants. Competition-from developing 'countries; 

ffndi v . China,. and. other Asia-Pacific - nations, has 

^prevalent in the-textiles sector, die'largest end 

_t_>

 ;because of *inta^ed"organic=fpigment "proicountries to support thekgrowing textile marialso have expanded their operations in the 

jjgegknrto takeadvantage of-lower labor, enyiron-

»'««. 

.«•£ 

•iOS 

ms 

IJMcel; and ouier costs* >J ••<s%i:. s,s; 

is significaritlii the "organic colorants industry, 

[sector being affected more significantly than the 

itssector. TheUnited States is expected to mainpasa net importer of dyes and organic pigments, 

•are expected to increase much more.i^iai^1p,( 

.0 Western Europe should remain a dominant 

nited States, althoughless expensive organic 

5,1© 'apply downward pressure* on ohost dyeistuff 

^profit mai^ms for1U.S.:

,

:manufacturers; West* 

_...... 'andMexico?fShd<the'Asia»Pacifiejregion 

" i,remain the "most:significant markets for U.S. 

fe# and organic pigments. h> ••'•.•;,. 

AGRICULTURAL CHEMICALS 

Fertilizers'-' -

 :''n

;-',;^(T.x.:''ri:''': 

World consumption of fertilizers totded.l'3i54^mi^6nV.tons.-in 

'• the 1997-1998 growing season, up 1.3 percent from.the comparable 1996^-1997 season, according to ;data>;proyidedrby ;the 

International Fertilizer. Industry Association ^A).;'.Nitrogefi 

fertMzers accbuntedifbr 59 peircent of world feftiliiier bbtisumptionj-phosphate fertilizers for;24percent, iand;,pptash fertilizers 

for 17percent; . . • .'i-nvr..- •..,,,v;;;|t.„. 

The fertilizer; industry is a?relatively mature-<business: in the 

United?Stated 'reflecting stagnancy or modest jgrowtB^ih-the 

underlying American Mm.economy. The oyerpi'fertiiiieir biisi^ 

onessis.highly seasonal; with the most sales occajning-before:the 

spring and fall plantings. Domestic demand is ;largely.a function 

of ther amount of acreage planted, withfannersVplantingrdeci^ 

:

 siorisimpoi^tly iiMuenced^by grain.pn^/'fe^er^'sUp^jit 

^programs, and weather conditions.vGth^-^^^qr^Jiii'§ctprs 

affecting; this business include carryover .inventories .fronythe 

; previous year,- production costs; environmental concerns, ;and 

*'SoU*moisture.i!Afbump6r crofpkin the previous year*typically 

'iraultsih lower'prices and feducied plantings in thetstrrentyear. 

However, when favorable weatKeir4cMs(Js'ihcn&ised grainiaiid 

bean yields,' additional fertilizer application is neededin. thecurrent year-to compensate for soil nutrient^depletiori. * «if

' -' 

'^Fdre!*! ^ 

of U.S. industry! shipments (see Tables 11-5 and 11-6). Thus, 

changes in economic conditions abroad and fluctuations in currency eJcchahgerrates Scan >materiaU#saffect"ih& fertilizer btisiT 

ness; GMna.accountS!forclose:to33:percent!ofhU.S2/fertilizer 

exports; other •AsiaTPacifiq markets, 37 .percent;lLatin America, 

25;percent;andallotherinarkets,'^percent, vr:' ..U; ;il>'•.••>•>. 

After 4 years pf increased volume, world fertilizer consumption was expectedto decline fractionally in 1999 and remain flat 

Chemicals and Allied Products 11-7 

/O 
P.12 

TABLE 11-5: Agricultural Chemicals Except Fertilizer Mixing (SIC 2873,2874 , 2879) Trends and For 

(millions of dollars except as noted) '..>. • . >-U.!)i 

- ; _ ••' ' '.:. . . . ' .., '

 : 

'••sfe;.^ ' •• • •-•.ii:-. ••• 

Industry data 

Value of shipments6 "''''. ' 

2873 Nitrogenous fertilizers' 

2874 Phosphatic fertilizer^ ", ',, 

2879 Agricultural chemicals. .. 

not^elsewriere classified'[". "\. 

Value of.shipments (1992$) 

2873 Nitrogenous fertilizer / 

2874 Phosphaticfertilizers ;; '•"' 

2879'Agricultural chemicals Y . 

not elsewhere classified 

.*•"' itY! --i/J.-.i:-.'•••'•iT;.''.!..V-:'51,l.-.> 

Total employment (thousands); 

2873 Nitrogenous fertilizers

 r 

2ffl74,Rh^>hiBtfcIfirtilizers,,..vi'J 

2879 Agricultural chemicals . • •. 

..not elsewhere classified;. . :, 

Production workers (thousands) 

2873 Nitrogenous fertilizers :, 

2874 Phosphatic fertilizers '' i 

2879 Agricultural chemicals • 

not elsewhere classified^ j «?: 

AveFag£ hourl y earnings ($) '. 

2873 Nitrogenous fertilizers 

2874 Phosphatic fertilizers , 

2879 Agricultural chemicals

 !: 

not elsewhere classified :~"-\-'£ 

C^|>rtare>^nditures: -'•-«fi 0; : •; j,' 

M73iNitr^en.ou8;'!tartilizi^;f>.sf.1 

-^^J^q^^j^^^liatrftv,-.-',/^ ' 

2879 Agricurtu rai chemicals' " 

i hot dsei^er o ctafesified>^« 

•At&ttiifytt. .ft ;-'(•••. ' -J: 

Product data 

A/aiiSiotsWfimentstiii^i.i ';';' 

2873 Nitrgogenqus fertilizers , . 

2 ^ 4 f^osphatic fertilizers . ... j 

r

3l^$'>^rJeul-tn£l cKerriitMfif1"^ 

: ^ eteevrtVereclassified sisx 

V^li^^fii^iSi^^lMK^) m ^ 

2873 Nitrogenous fertilizers "-'* 

2874 Pljospha^c fertilisers 

-2879 Agricultural chemicals 

' ftbffelsewhere'Sassified1 

vT^'i&r^ " ' 

ValUe imports ' •' -'

 r 

Value, of^ exports j , 

r ,".;«.•« ' 

1992 

16,637 

3,177 

4,318 

9,142 

16,637 

' 3,177 

•-~; 4318 ' 

• :'> '.'••.-. • , -• : 

"."• .4'T 4 ? . 

33.3 

" 7.0 

:U.,i,9.5 :, 

,. 16.8 

••;. -'21.0 

4.7 

; ; 6.7 

Y|ftf'?;6.5 

7«ri£oo~;r 

15.66 

13.84. 

'. . Y?." . . 

qif15;57 ' 

!t'ir>'944 ', 

,>Y'.i^209;.i 

.V,.,.:3Q7; 

"'""'""'' 

.•iK:i'^428fl 

P"*'"- ' ' 

'is .5,743 '. 

,. ,3,589.,; 

~ 3,929' 

viCSSi ;;'»•::: :.' 

1993 

16,669 

3,467 

3,648 

9,554 

16,637 

3340 

4,155 

9,142 

32.7 

7.0 

.J:,9.4 

, " . .. • 

16.3 

20.5 

4.7 

6.6 

".!".'..,?_?••* 

^.5~7 9 

16.11 

14.70 

- • 16.41, 

:

 '•'•'692'-

,"t-J186:': 

,Y ,150« 

". ' " "" 

:

 -356-

f 1537V 

3,737 

^3,397, 

i'-.n'.- •:•:•-

*r-'f.'8,225?iiiv8,737i 

'

J<!ii.iW; 

r 3.589'-

3329 ^ 

" 8\225 

•s- » 

1,521 -> 

, 3,598 

-i5;8307 

- '3.600 

I . W 

8361 

1,801 

3,051 

1994 

18,479 

4,246 

4,597 

9,636 

16,569 

3,617 

4,152' 

8,800 

-31.8:. 

. 8.0 

- , .8.5 ^ 

15.3 

20.4 

5.4 

6.2 

Y i 8.8 

r

 17.41" 

16.69 

16.69 

' • • 

•18.40 ' 

633 '•'"• 

175, 

-.,-.. i5?; 

299 ' 

• -'•'v;;. . 

17,548 ••>' 

.4,428.-

"4,272 ~. 

•

 ; - J ;

 •••;-:-* •• • * • 

« 8348 " 

v r15j7li ' 

3,772 

3359 

8,080 

r* 

2,253 

4,039 

1995 

..-

19,862 

4,446 

:

5!337""'. 

10,079 ° 

16341 

3,267 

4,083 

8,991 

30.7,. 

7 3 v 

. _„8.6 , 

14.8 

20.3 

5.1 

. ' 6.5 

:"•--*J > 

. 17.89' 

16.37,,. 

16.75 

•'• • .-. •;.!' . 

.19.85 . 

•• '68» 

Yi.r17fr.i 

. ;>. 9.. 

• *I.'.!318'I! 

' • f' i '• 

19^68 

,-4;761| : 

'.'4J9IM" 

.:; 9,623 

'15,896 

- 3,498 

3313 

j [ 

8,585 

i 

2,536 

4,734 

-1996 

20,963 

4,376 

5,684 

10,903 

16,825 

3,196 

4,031 

; j, 9,597 

i-O 29.1 

7.5 

. „ - 7.8.. 

13.8 

18.7 

5.1 

5.8 

4, 7.8 

"18.09 

16.95 

17.30 

:' 19.45 

< . 967 

.!•. 305 

200 

-"••-• 463 

20,265 

,4,864 

5,364 

iJ • v. 

:i0,038 

;V'l"e;'l93 

• 3 553 

,3,804 

8,837 

2,594 

4 635 

1997' 

20,740 

3,960 

5,860 

., 

10320 

16,725 

2,890 

4,220 

• '' 

9,615 

• i, " . • • 

, • •• , 

i 

..; • •-., . 

• •- : :•.• : 

: " : .'".- ' • : 

20,000 

• 4,405 . 

5,535 

.'

 { ' ", : ' -V 

10360'. 

;

i6,000 

h.3,220:: 

,.3330,. 

i!J5.85(.i 

i&-!.;:.4< 

"'f2',556'*' 

4,874 

1998' 

21,110 

4,040 

6,030 

11,040 

16,970 

2,950 

4,300 

9,720 

r. ..; . 

• > 

20,370 

4,500 

5,700 

10,170 

!

-16;240 

;•: 3,290 

ijAOlO; 

.' "_"•' .".' 

•' -8,946 

;:;•;•?•:! * 

=2,632 

5,222 

1999s 

21,450 

4,100 

6,120 

11,230 

-17,250 

3,000 

4360 

9,890 

,.. .. .•. 

... . .» 

• • ..•: •« . 

.... . w 

20,700 

4,570; 

5,790 

10,340.. 

16,500 

,3,340 . 

.s,4,070 

•gjO-O1 

'11,.!. ' '• 

«*2,703' 

5,551 

• .,•, . 

, 20003 

21,750 

4,140 

6,180 

11,430 

17,500 

3,030 

4,400 ' 

10,070 

... t - - .. 

..-., 

' . •,.• . 

,• 

. i * 

:• • Y 

. ' ''" 

• . '••; , •'••. • 

.-• ' ••' " •,-. 

20,990 

. .4,620.. 

5350 ' 

,10,520 1 

16,730 

.;i!3,370; 

jaf.4.!l0. 

r,'; ! 9,250 ! j 

;bV..'.;_ .•.'.• 

V;.2;784 ' 

5,928 

97-98 

1.8 

2.0 

2.9 

1.1 

1.5 

2.1 

1.9 

1.1 

-.,,. 

i! • 

t .' «. '• 

• • . 

:-:• " 

. ,., 

•l/l'--. 

1.9" 

,!,.«. • 

3,0 

. . -rjivi 

'"'i.5;' 

• i 2.2 • 

2.0 

•:, ;,. SI 

• 1.6' 

9 - ^ • 

3 3 

1-..7.1 

Percent Che,n(j 

98-99 99-0Cf 

.' .Ill 

1.5 ::m 

1.5 ;':,'i'tf§: 

• «l_ 

1.7 1.83 1

 •*. .Atf 

1.6 1.4 J 1.7 ,..,.','"ljtfl 

1.4.'"" 03 3 

1,7 ' •'. 1 - ^ 

«.• .•'.•. .JJiSam 

• \ y\M 

.;>,i '-I'-'Jisa 

•• • v' T'-^al 

'''•'"'• ^ 

wn 

••"'•'y'^fll 

• 1 i.'i'.HiircwM 

••''•'cM^fflB ' __*$_ 

• "•;•. !''!?ATM [ 

•' > •'•iitiJitftimM 

.'•,.'. frJIffl^H 

• ' ''••'!ftife« | 

b'i.i'r:!.'|luS^j 

1 i._«tffl__l 

• •.-'.'""iSSSffl 

.'•'u'»V.li<'-^_fflH 

••• 1.61;-it M3 0 

• VS;ww!ji| 

. 1.61 tjm 

<1.7:vir.^^j 

,, I'M '» -.1.-*i.l'W__| 

"'''•* : 6 «

r 4J^ | 

iv'iff^JH^W 

ii'^^osaH 

;:. ex^itiSmSm 

'•,^2.7.'5¥!'MyH 

:)t.; ?-i3'"l*f^M 

' Estimate except imports andexports , ',...,.. . 

iEsttmate52 w- -' ' ' ' V ii>:' ' ^ ' 

•''FbrecBStt-'

 f -.'M.wi •;: ,•<.•; . 

4

 Compound annual rate > , _, j, 1 -> , 'i .'.•'vi.';-.'.."i' .S':: 

* For a definition of industry versus product values, see 'Getting the Most Out of Outlook 2000" ^ 

Source U S Department of Corhmerce Bureau of the Census, International Trade Administration. 

r

- » i

 ! ^ j ) /-> n }:•:.,.:•. ni:- :, ;;: 

Jf J 'j i J J i v ' ' ^ 

up the year 2000. The fertilizer business has been hurt by sluggish demadd in the Umted States, economic problems in Asia, 

andiexcess global capacity for key products such as ammonia 

. M dammonium phosphate (DAP).Reflecting reduced acreage 

for com and certain other crops, DAP consumption dropped an 

estimated 3 percent in thetl998*1999;growing season: - -

! 

W >'.f 1Zil£0 

'.' •> rri-i'-'M, 

. :•-.:•• <:.?s.'i 

<.'V '..T. '4 

.i.'ivV i»s| 

;

;

..: iiirUtUsaij 

•>,iE!pmesticHdollar- fertilizer shipments .arefiex 

another decline in the year 2000 as continued higj^ 

tones' and depressed grain1 prices are expdcted^td| 

izer; demand'in the 1999--2000> growing seasons! 

and wheat acreage dropped about 2.6percent>in thra 

season, and a drop of 3.7 percent, isexpected'.forwl 

11^ 8 'U^S;iIndustry & TradeOiitlodlc 2000 
11-6: U.S. Trade Patterns in Agricultural Chemicals1

 in 1998 

I o( dollars; percent) 

'<•• 

'

p

, 

. " • 

[urope 

IfMte Economic Area 

( 

_ * • Countries 

t^i = 

» ; s 

G_-**i. 

It;. 

Exports 

* 

Value3 

1,181 

982 

444 

1,391 

817 

407 

5,222 

Value 

1,093 

923 

415 

318 

309 

Share, % 

23 

19 

8 

27 

16 

8 

100 

Share, % 

21 

18 

8 

6 

6 

Region2 

NAFTA 

Latin America 

Western Europe 

Japan/Chinese Economic Area 

Other Asia 

Rest of world 

World 

Top Five Countries 

Canada 

Trinidad and Tobago 

Germany 

Russia 

Mexico 

Imports 

Value2 

1,456 

300 

473 

62 

14 

327 

2,632 

Value 

1,368 

245 

200 

112 

88 

Share, % 

55 

11 

18 

2 

1 

12 

100 

Share, % 

52 

9 

8 

4 

3 

fH74,2879. 

oni of regional groupings, see "Getting the Most Out of Outlook 2000." 

I not sum to total due to rounding. 

.Department of Commerce, Bureau of the Census. 

&£-• 

WCrcage for com rose fractionally to 80.2 million acres 

jwV' growing season, while plantings for soybeans 

|2.9 percent to 72.0 million acres. Farmers have opted 

|BK>re soybeans in recent years because of attractive 

|*new findings of soil benefits from the annual rotation 

•with corn. 

is the most commonly used fertilizer, with anhyitjtonia being the principal ingredient in most nitrogen 

^Anhydrous ammonia is produced by combining 

; nitrogen with methane. Another related nitrogen feru, a combination of anhydrous ammonia and carbon 

cuuse nitrogen-based compounds evaporate from the 

i fertilizers must be applied each year, resulting in a 

tile market for this commodity. Phosphate fertilizers 

|ifrom phosphate rock. Phosphate rock is combined 

*acid to yield phosphatic acid, which is further 

jphto DAP, the most widely used phosphatic fertilizer. 

pined primarily from deposits of potassium salts in 

nany, Russia, the United States,-and Israel, 

jiosphate production rose about 3 percent in 1998, 

fio^IMC Global estimates, with U.S. producers 

for 41 percent of world concentrated phosphate proundustry's current phosphoric acid capacity utiles about 77 percent, with utilization expected to 

[HJwi area over the next few years, according to IMC 

pver, by 2005, utilization should reach 85 percent 

1 demand conditions are more closely matched. 

I'States exports about 55 percent of its phosphate 

duction, with about 30 percent of that volume 

||na. About one-fifth of U.S. nitrogen fertilizer proIported. Despite its leading position, the United 

jjpccted to relinquish its dominant position in phosBilkers to Morocco eventually. With its phosphate 

Winuited at over 50 percent of world rock phosphate 

reserves, Morocco is currently the largest phosphate rock 

exporter, with most of its production going to Europe. China, 

the former Soviet Union, and India are also large phosphate fertilizer producing countries. 

World potash production increased about 2 percent in 1998. 

North America is the leading producer and exporter of potash 

products. Over 95 percent of world potash output in 1998 consisted of potassium chloride or muriate of potash, with the rest 

consisting mostly of potassium-based sulfate products. According to IMC Global, world potash consumption is expected to grow 

12 percent while capacity is expected to rise only 6 percent, resulting in higher operating rates and firmer prices. Overall potash 

consumption should track growth rates in the world economy. 

Despite prospects for stagnant or declining levels of fertilizer 

consumption in the United States and western Europe, developing nations in Asia and Latin America represent important growth 

markets for fertilizers. According to the IFA, Asian countries 

accounted for 48 percent of fertilizer consumption, North America for 16 percent, western Europe for 16 percent, Latin America 

for 8 percent, and other areas for 12 percent in 1998-1999. 

Strong demographic growth, rising income levels, and 

efforts to improve diets and general standards of living in developing areas in Asia, Latin America, and Africa should foster 

greater production of grains and other produce. This should 

result in increased use of fertilizers to lift production. The total 

world population is projected to grow from 6 billion in 1999 to 

over 7 billion in 2010, with most of the growth occurring in 

emerging or third world countries. Asia currently accounts for 

about half of world fertilizer consumption. 

Pesticides 

After several years of declining sales, the $31 billion worldwide 

pesticide market was expected to increase slightly (less than 1 

percent) in 1999, according to data provided by Wood Mackenzie 

ft!-

Chemicals and Allied Products 11-9 

/2-
P.14 

Consultants, a research firm in Edinburgh, Scotland. Although 

demand has remained sluggish in the United States and western 

Europe, shipments have benefited from improved demand conditions in developing countries in Latin America and east Asia. 

Demand from Asian markets was depressed in 1998 by economic 

problems and unfavorable weather conditions. 

Pesticides are chemical agents that are used to destroy or 

repel plant or animal pests, with herbicides, insecticides, and 

fungicides representing the principal product categories. The 

United States is the leading global manufacturer of chemical 

pesticides, with Germany and Japan also being important producers. North America is the largest geographic market for 

pesticides, accounting for 32 percent of 1998 global sales, 

according to Wood Mackenzie. Other important markets are 

western Europe (26 percent of 1998 sales), the Far East (18 percent), Latin America (16 percent), and other areas (8 percent). 

Leading global pesticide producing corporations include 

Novartis,, Monsanto, Astra-Zeneca Corp., Dupont, AgrEvo, 

Bayer, Rhone-Poulenc, Dow Chemical, BASF, the Cyanamid 

division of American Homes Products, and FMC Corp. 

Global sales of insecticides and herbicides were relatively 

unchanged in 1998, but demand for fungicides improved as fungus outbreaks increased as a result of wet weather conditions in 

Europe and Japan. By contrast, weather conditions reduced insect 

infestation in North America, Europe, and Japan, resulting in a 

reduced need for insecticides and herbicides in those markets. 

Greater use of insect-resistant cotton and herbicide-resistant 

food crops also has affected the overall pesticide business. 

Genetically engineered, or transgenic, plants have been developed that have resistance to insects, herbicides, and plant diseases, reducing the need for conventional pesticides. Led by 

Monsanto, many companies have developed transgenic seeds 

for corn, cotton, and soybeans. About one-half of all soybean 

and corn acreage planted in the United States today is used to 

grow genetically modified seeds. Approximately one-third of 

that output is exported, primarily to markets in Europe and 

Japan. Although U.S. producers argue that transgenic seeds 

provide important quality and cost advantages, there is growing 

opposition to those products, especially in Europe, because of 

consumer apprehensions and environmental concerns. 

Total domestic sales of U.S.-made and imported pesticides 

grew 1.1 percent to $8.95 billion in 1998, according to the 

American Crop Protection Association (ACPA). Exports of 

U.S.-made pesticides totaling $2.86 billion were essentially 

unchanged from the level in 1997. With this business affected by 

price erosion caused by weak markets and increasing use of 

genetically modified seeds, many companies are exploring ways 

to divest or merge their agrochemical businesses. Increased consolidation is anticipated in this market in the years ahead. 

Corn represents the largest single market for crop protection 

products, accounting for 26 percent of domestic pesticide sales 

in 1998. Other important crop markets in that year included soybeans (17 percent), cotton (8 percent), small grains (5 percent), 

and vegetables (4 percent). The balance (40 percent) was composed largely of fruits, rice, sorghum, peanuts, and potatoes. 

Revenues from pesticides designed for use in the home, garden, 

turf, and other noncrop categories totaled $1.64 billion in Hi 

representing 14 percent of total domestic pesticide sales. 

The pesticide market is a mature business in the United Stan 

with over 90 percent of corn, soybean, and cotton acreage j 

major producing states being treated each year with pesticit! 

Changes in yearly sales are largely a function of starting imi 

tory levels, changes in planted acreage, weather, and farm pi 

Representing the largest pesticide category, herbicide 

totaled $6 billion in 1998. Herbicides, which are used to conil 

weeds, brush, and other unwanted vegetation, accounted for i 

percent of total U.S. crop protection sales in 1998, accordirnj 

the ACPA. About 88 percent of U.S. herbicide sales in 1998 ^ 

for crop use, of which com and soybeans accounted for about H 

thirds of total volume. Herbicide sales rose 0.6 percent in 19* 

Used to guard growing or stored crops from insect, inl'c 

tion, insecticides are the industry's second largest produci i 

ment and totaled $1.8 billion in sales in 1998, accounting I 

percent of industry sales. Cotton and corn were the leading i 

markets for insecticides in 1998, with each one accounting! 

about 19 percent of total insecticide sales. Corn insectid 

sales rebounded 27 percent in 1998, after a comparable droj 

1997. The gain was due entirely to a sharp increase in sale 

corn soil insecticides. Total U.S. insecticide sales increased! 

percent in 1998, with the gain restricted by the widening nil 

acceptance of insect-resistant plants. Fungicides accounii 

8 percent of total pesticide sales in 1998. While agricull^ 

uses represent the largest end market, fungicides also arc i 

extensively in the lumber, paint, plastics, and pharmaccu 

industries. Fungicide sales rose 13 percent in 1998. 

MISCELLANEOUS CHEMICAL PRODUCT 

This subsector covers developments in the miscellan 

chemical products industry (SIC 289), which includo«( 

main product groups: adhesives and sealants (SIC 

explosives (SIC 2892), printing ink (SIC 2893), carbon I 

(SIC 2895), and various miscellaneous chemicals, inclu 

fatty acids and gelatin. 

U.S. Industry Outlook 

Shipments of miscellaneous chemicals in current dollar* j 

expected to increase just over 2 percent in 1999, with 

accelerating to 3 percent annually through 2003, essentln 

line with expected growth in overall GDP (see Table 11-7), 

projection, however, masks many diverse trends that arc i 

ring in individual product markets. The leading importers utl 

products from the United States are Canada and Japan (sc<}!J 

11-8). Included in this category are products ranging fn 

cialty chemicals such as adhesives and sealants and printin 

to commodity chemicals such as carbon black and fatty i 

Adhesives and Sealants 

Domestic demand for adhesives and sealants is projo 

grow in the range of 2 to 3 percent annually through 2(H). 

higher prices expected to raise the annual growth in II* 

'At 

Hill: 

•hi* 

«lll. 

* « • 

Win 

to* 

11-10 U.S. Industry & Trade Outlook 2000 

/ j 
P.15 

LE 11-7: Miscellaneous Chemical Products (SIC 289) Trends and Forecasts 

Ons of dollars except as noted) 

R 

•MKry data 

I H M ihipments5 

|||« 4 ihipments (1992$) 

Hflfnployment (thousands) 

HuHlon workers (thousands) 

H b t hourly earnings ($) 

^•(expenditures 

•pi t data 

WJK¥ Ihipments5 

BB|( ihipments (1992$) 

___!*"* UmM, Imports 

•ft l •"ports 

1992 

20,512 

20,512 

83.7 

48.2 

13.63 

751 

19,440 

19,440 

1,511 

2,881 

1993 

21,851 

21,481 

81.8 

47.0 

13.76 

790 

20,764 

20,406 

1,702 

3,143 

1994 

22,502 

21,426 

79.8 

46.7 

14.27 

731 

20,950 

19,954 

1,883 

3,356 

1995 

23,830 

21,662 

81.6 

47.7 

14.42 

807 

22,215 

20,191 

2,316 

3,863 

1996 

24,508 

22,194 

75.9 

45.0 

14.72 

1,006 

22,918 

20,734 

2,625 

4,177 

1997' 

26,000 

23,100 

24,300 

21,570 

2,868 

4,733 

1998' 

26,550 

23,150 

24,800 

21,600 

2,661 

4,533 

19992 

27,050 

23,200 

25,950 

22,040 

20003 

27,600 

23,270 

26,470 

22,480 

97-98 

2.1 

0.2 

2.1 

0.1 

-7.2 

-4.2 

Percent Change 

98-99 

1.9 

0.2 

4.6 

2.0 

99-00 

2.0 

0.3 

2.0 

2.0 

96-00* 

3.0 

1.2 

3.7 

2.0 

H« oxcept imports and exports. 

und annual rate, 

nition of industry versus product values, see "Getting the Most Out of Outlook 2000." 

6. Department of Commerce: Bureau of the Census; International Trade Administration. 

is to close to 4 percent in that period. The average price 

thtl for formulated adhesives and sealants will increase 

Of continuing shifts in the product mix that favor highly 

itcd synthetic adhesives. 

||obal adhesive and sealant market was estimated to be 

*22 billion in 1998. Adhesives accounted for about 82 

i)f the total global market, with sealants representing 18 

North America accounted for 33 percent of the global 

and sealant market, followed by Europe with a 30 perThe Far East accounted for 19 percent of the world 

Iwilh the rest of the world representing 18 percent. 

Adhesives are chemicals that are used to attach or bond 

together materials such as paper, wood, and metal. Also bonding agents, sealants are substances that are used to fill gaps 

between two materials and prevent the passage of liquids and 

gases between them. Sealants have the flexibility to adjust to 

changing conditions, such as the expansion and contraction that 

occur with heat and cold, without being damaged. Adhesives 

and sealants are produced from blends of petroleum-derived 

resins, synthetic rubber elastomers, and related materials. 

The largest market for adhesives in 1998 by volume was 

converting and packaging, with a 34 percent share, according to 

It 1-8: U.S. Trade Patterns in Miscellaneous Chemical Products1

 in 1998 

f dollars; percent) 

[*»* 

i»#po 

NX). Economic Area 

pfeltilos 

Exports 

Value' 

1,284 

612 

.' 1,034 

755 

493 

355 

4,533 

Value 

888 

493 

396 

234 

212 

Share, % 

28 

13 

23 

17 

11 

8 

100 

Share, % 

20 

11 

9 

5 

5 

Imports 

Region2 

NAFTA 

Latin America 

Western Europe 

Japan/Chinese Economic Area 

Other Asia 

Rest of world 

World 

Top Five Countries 

Japan 

Canada 

Germany 

France 

China 

Value3 

566 

140 

816 

819 

274 

46 

2,661 

Value 

648 

433 

289 

174 

149 

Share, % 

21 

5 

31 

31 

10 

2 

100 

. Share, % 

24 

16 

11 

7 

6 

IM of regional groupings, see "Getting the Most Out of Outlook 2000." 

pool aum to total due to rounding. 

MXtjmrtment of Commerce, Bureau of the Census. 

Chemicals and Allied Products 11-11 

H 
DPNA International. Other important markets were construction, 17 percent; pressure-sensitive (self-adhesive) materials, 14 

percent; woodworking, 9 percent; assembly, 7 percent; and 

transportation, 2 percent. The balance of shipments (17 percent) 

went for a wide variety of other uses, including laminates, flexible packaging, disposable products, and consumer do-ityourself markets. Major applications for adhesives include 

paperboard, labels and tapes, containers, plywood, laminates, 

furniture, graphic arts, carpeting, and motor vehicles. 

Advances in technology have increased adhesive use in the 

automotive industry as new adhesives have been developed to 

allow for lighter and more fuel-efficient cars. Other technological improvements have resulted in the development of adhesives that are less flammable and products with lower solvent 

content and reduced emissions of volatile organic compounds. 

The major beneficiaries of these trends include environmentally 

compatible systems with higher solids contents, such as waterbased and hot melt (100 percent solid) adhesives. Because of 

environmental concerns about their toxic content, the use of 

solvent adhesives is declining about 2 percent a year. 

According to some industry observers, adhesives have the 

potential to partially replace traditional methods of fastening 

such as rivets, welding, bolting, and screw joining of materials. 

However, it is unlikely that adhesives will become the dominant 

means of fastening materials because of concern about the 

long-term reliability of adhesive bonds. 

Foreign trade does not play a significant role in the adhesive 

and sealant industry, principally because of prohibitive shipping costs and the fact that most of these'products are based on 

readily available technology. Nonetheless, U.S. producers hold 

a leadership position in the global market, particularly in 

higher-margin products such as structural adhesives and 

sealants used in more advanced applications. Most trade in 

adhesives and sealants traditionally has been with Canada, 

although the enactment of NAFTA has increased trade with 

Mexico in recent years. Asia is another important market, with 

exports to that region expected to show good growth over the 

2000-2004 period, buoyed by alleviation of the financial and 

economic problems experienced there in 1998 and 1999. 

The U.S. adhesive industry is fragmented, with over 500 

companies manufacturing adhesive products. By contrast, the 

sealants industry is highly concentrated, with a small number of 

firms accounting for the bulk of industry sales. Leading companies in the adhesives and sealants industry include Dow Corning 

(a joint venture between Dow Chemical and Coming), National 

Starch & Chemical, Imperial Chemical Industries (United Kingdom), Henkel (Germany), General Electric, Bostick, Solutia, 

Tremco (a division of RPM Inc.), Dow Chemical, Rohm & 

Haas, Reichhold Chemical, and Elf Atochem (France). 

Consolidation activity in this industry has increased in 

recent years as companies have joined together to broaden 

product lines and achieve operating synergies in order to compete more effectively in an increasingly competitive marketplace. The need to reduce costs through mergers and 

restructuring also has resulted from spiraling costs for regulatory compliance in the United States and abroad. The most 

recent large merger in this industry was Rohm & Haas's 

billion purchase of Morton Salt in early 1999. Rohm's maiml 

ment said that the merger should enable the company J 

increase its top line growth from its present range of 4 to 51 

cent range to between 6 and 8 percent beginning in 2001 

allow for a reduction of $300 million in annual operating on 

Explosives 

The explosives market is driven by underlying demand comliiH 

in principal global energy, base metal, and construction mail 

The coal and metal mining industries account for roughly i 

thirds of the total market. While demand from the coal anil in 

mining industries depends on global economic trends, con»U| 

tion activity varies significantly by geographic region. 

Overall demand for explosives, including pyrotechnic* 

explosive accessories and assemblies, is expected to incrcufj 

a rate of slightly over 2 percent annually through 2004. 

growth will trail the higher rates experienced during the 

and middle 1990s because of a decline in mining activity (nj 

caused by lower prices for many metals) and decelerating 

struction expenditures. These markets account for nearly I 

thirds of worldwide explosives consumption. 

Geographically, the largest explosives market is the 

American market, which is dominated by coal and moliiU 

ing, quarrying, and construction. Construction represent 

principal growth area in western Europe as mining activity] 

tinues to decline in that region. Construction also drive* | 

Asian markets, although mining plays a significant role inj 

tralia. Coal and iron ore account for close to one-fifth o.J 

tralia's exports. South America is another growing nw 

boosted by rising open pit coal and metals mining acilvj 

many countries. 

Although the United States is the largest consumer ^^(^ 

sives worldwide, the market is becoming increasingly glut. 

The greatest opportunities for producers of explosives ai. | 

expanding mining and construction industries of southed 

Latin America (e.g., Argentina, Peru, and Bolivia), and Am) 

Many U.S. producers therefore are pursuing growth III 

exports. Explosives exports are expected to outpace ini|K. 

nificantly in the foreseeable future. Besides direct cx|iotJj 

ness, many U.S. explosives firms are entering intern 

markets through direct investment in local industries, jolfl 

ufacturing ventures, and technological licensing agreeim 

Currently representing a relatively small part of ihe j 

market, pyrotechnics, or consumer explosives, repnj 

rapidly growing market. Growth is being driven by ifi 

use of fireworks in holiday celebrations, stage prodm.ii(| 

amusement park displays. Strong demand also is com|(j 

the automotive market, which uses explosive igniiors 

pellants in air bag systems. Leading explosives maim, 

include Austin Powder, Dyno Nobel (Sweden), Exploul] 

nologies International, and LSB Industries. 

Printing Inks 

Valued at about $12 billion, the global printing ink m 

expected to expand at a rate of about 2 percent annually | 

11-12 U.S. Industry & Trade Outlook 2000 
P.17 

I- Modest growth is projected in the key commercial printJ packaging markets, helped by improved demand for 

inks and other higher-priced formulations. Inks used in 

a-ial printing and packaging, such as newspapers, peri-

|f(t. nnd books, represent the largest segment of the printing 

|Mirkct, with miscellaneous applications such as business 

mid greeting cards accounting for the balance. Ink-jet 

K inks are the most rapidly growing ink type, with 

being driven by greater use of personal and commercial 

printing equipment in the desktop printing industry and 

lopment of new substrates and niche markets. Although 

jfoclor to some extent, the switch from solvent-based inks 

minentally attractive alternatives (vegetable oil-based 

A) in applicable markets has been completed for the 

H*rt-

wilting about one-third of the total global market, the 

tilling ink business is expected to show very little growth 

coming years, reflecting the maturity of its basic marever, better gains are projected for emerging overseas 

c.pccially in many Asian and South American counllfcdcinand for commercial printing and packaging rises 

wing standards of living. The United States should 

il* |X)sition as a net exporter of printing inks in the 

'yours, with the trade surplus widening as U.S.-based 

IS cupand their multinational presence, 

iplmliisiry also has witnessed considerable consolidation 

yciirs as key players have sought mergers to better deal 

ant markets and declining ink prices. Two leading 

Dainippon Ink & Chemical and Flint Ink—have 

iHijth acquisitions of smaller ink companies in recent 

•lack 

curbon black in the United States is expected to 

<mi 2.5 percent annually through 2004, essentially 

vih in rubber tire production, its principal end marlires account for more than 90 percent of total 

. carbon black. Carbon black is used as a reinforce-

•Ijt'Unized rubber products, since it has the ability to 

Iffllustomer's tear, abrasion, and flex resistance. A 

||ubstance, carbon black is derived from petroleum 

i|(llstillation of coal tars, and ethylene. 

demand growth is forecast in the tire industry, 

• the increased popularity of performance tires and 

litms of carbon black with properties that reduce 

fformance tires require higher carbon black load-

|^()itipounds compared with all-season radials. Peril filso have shorter service lives, and so tiiey are 

i often. In addition, the popularity of sport utility 

|j\ill-si/.e pickup trucks has increased demand for 

.n both original equipment manufacturers (OEM) 

l\l markets. 

iher tires, carbon black is used widely in indusKtHlucts such as hoses, belts, and mechanical 

im, demand for carbon black in nontire industrial 

iM* will he restricted by the increased use of thermoplastic elastomers, some types of which do not require carbon black while others require much less carbon black than do 

conventional rubber parts. 

Accounting for less than 10 percent of the market, nonrubber 

applications, called special blacks, are also important, particularly from a value standpoint, since these specialized grades 

command significantly higher prices than do commodity rubber 

blacks. In addition to higher margins, a strong position in special blacks offers suppliers greater protection against cyclical 

swings in the rubber and motor vehicle industries. 

The primary nonrubber use for carbon black is as a pigment 

in plastics, paints and coatings, and printing inks. While growth 

in the domestic market is expected to remain relatively modest, 

strong gains are indicated in many foreign regions. The AsiaPacific region will continue to have the biggest growth markets 

for carbon black, mainly because of the ongoing development 

of China's tire industry. Latin America also offers solid opportunities, particularly in Brazil; in eastern Europe, the strongest 

prospects are in the Czech Republic, Hungary, and Poland. 

Herman Saftlas, Standard & Poor's Corporation, (212) 438-

9542, November 1999. 

DRUGS AND PHARMACEUTICALS 

The drugs and pharmaceuticals sector (SIC 283) has four primary components: medicinals and botanicals (SIC 2833), 

pharmaceutical preparations (SIC 2834), diagnostic substances (SIC 2835), and biological products (SIC 2836). Medicinal and botanical establishments (SIC 2833) are engaged 

primarily in manufacturing bulk organic and inorganic medicinal chemicals and their derivatives and in processing bulk 

botanical drugs and herbs. Pharmaceutical preparations 

(SIC 2834) include those produced by establishments 

engaged primarily in manufacturing, fabricating, and processing medicinal substances into finished pharmaceuticals 

for human and veterinary use. Ethical brand-name drugs, 

generic products, and nonprescription or over-the-counter 

medications constitute the pharmaceutical preparations 

subsector. The diagnostic substances subsector (SIC 2835) 

includes products from companies that make chemical, biological, or radioactive substances for testing blood and other 

bodily fluids and tissues. These substances may be used for 

in vitro (test tube) or in vivo (administered in the body) testing. Biologicals establishments (SIC 2836) are engaged primarily in the production of bacterial and viral vaccines, 

toxoids, and analogous products (such as allergic extracts, 

serums, plasmas, and other blood derivatives) for human 

and veterinary use. 

Global Industry Trends 

The global pharmaceutical market continues its pattern of solid 

growth, with consistent increases in sales expected over the 

next 5 years. Growth in the world pharmaceutical market 

increased from 6.6 percent in 1997 to 7 percent in 1998. Combined worldwide sales of prescription and over-the-counter 

medications are estimated at over $300 billion. The market is 

Chemicals and Allied Products 11-13 

/& 
P.18 

for new prescription drugs and medical devices. FDA's user-fee 

program has been extended, and the review process for new 

drugs has been expedited. Under the 1997 law, seriously ill 

patients have easier access to experiential compounds and new 

incentives for the development of pediatric medicines are provided. The FDA has cooperated by liberalizing regulatory 

requirements on DTC ads. The 199.7 legislation is expected to 

continue to aid industry growth over the next 5 years. 

International Competitiveness 

Highly innovative and technologically advanced, the U.S. pharmaceutical industry hlas consistently maintained a competitive 

edge in: international markets. In 1997, North America 

accounted for 34.5 percent of the global pharmaceutical market, 

Europe, 29.0 percent; Japan, 15.9 percent; Latin America, 7.7 

percent; southeast Asia and China, 7.3 percent; arid all other 

regions,. 5.6 percent This geographic .breakdown is not 

expected to change much over the next 5 years. 

The introduction of new products is the primary force in the 

U.S. pharmaceutical industry's overall growth and competitiveness. The United States leads the world in new drug discoveries 

and R&D expenditures. Research-based pharmaceutical companies invested $18 billion in R&D in 1998 and were expected 

to invest1 $24 billion in 1999. Pharmaceutical manufacturers 

invest a higher percentage.of sales revenues in R&D than does 

anyother industry. Innovative pharmaceuticals provide some of 

the most effective and cost-efficient means to treat- patients. 

U.S. R&D-based pharmaceutical companies have an excellent 

reputation throughout the.world; With die world's rising standard of living and die increasing use of innovative drugs as a 

way to slow the rise in health care costs, U.S. pharmaceutical 

exports are expected tocoritinue to do.well. ;». ? * 

..; \In 1998; the pharmaceutical industry in the United States was 

expected to export medicines worth more than $11.9 billion (see 

TABLE; 11.16: 

Table 11-10). Between 1997 and 1998, exports from the 

States increased 15.1 percent. U.S. drug makers on a' 

make close to 35 percent of their sales abroad. Some of the li 

ing pharmaceutical customers for the United States are C 

the Netherlands, Germany, Japan, and United Kingdom. 

Although U.S. exports continue to be strong, pharmaceuj 

imports into the United States are increasing faster thi 

exports. The United States imported more than $17.8 bl 

worth of pharmaceuticals in 1998 (see Table 11-10). This j 

25.7 percent increase over the 1997 level. Some of the Ji 

pharmaceutical suppliers to the United States are Germany] 

land, the United Kingdom, Japan, and Switzerland. Th 

been a rapidly growing deficit in U.S. pharmaceutical^ 

since 1997. Possible reasons for the increase in phafmacei 

imports include die number of companies relocating re 

and manufacturing operations outside the United States,,] 

national mergers, and increased sales by European Union; 

producers in die United States. Two factors also could cn 

appearance of rapid import growth: a recent change! 

methodology used by U.S. firms to set transfer prices fror 

subsidiaries and an increase in the use of foreign trade 

manufacture duty-free finished pharmaceutical products! 

dutiable, imported intermediates and raw materials 

Other concerns threatening the competitiveness of th 

pharmaceutical industry in die international arena are; 

quate protection for patents, trademarks, trade secrets, aril 

price restraints; and barriers to market access: Pha 

intellectual property is threatened in many countries 

of pharmaceutical intellectual property provides an' incei 

continue R&D investment and;is important for diel'cdB 

international competitiveness of die U.S. industry. The 

ceutical industry objects toprice controls, which'it 

denying recovery of R&D costs and a fair profit," thus;i 

ing the innovation and viability of U.S. firms. Noni 

>'zofl 

tpercejj 

U.S. Trade Patterns in Drugs1 in 1998 "MlAl 

(millions.of dollars; percent) „ 

US_*. -to-idiAWr •:, iM:?. -^i^ur r v « jr* ! 

Exports 

-;'i3Wi-3"nt.r;f.'.,TJ'.>!'.; °! '••'••• ?iry.-r?>r-. •' sjfi .-.;;!? -jrh^k-. 

Region'..j,.,.,...,".,.. ,t ' . ..Value 3 ._.'». 

N.AIfrf.i?.i..c,.^.!,,,,.,,,., •.•;..-.. -. ,w-..,1,892 . 

Latin America, . 792. 

Western Europe v- Ii!- •• '-*''• T , '. . 6,835' 

Japan/Chinese Economic Area . . 1,376 

Other Asia -^, r i _ , . _..... . • . 313,. 

Rest of world 735 

World' «-*i<^' •'•' •'••"• ..••-••-•.. t.-. . " n;944' 

_"M V ..-.n'cyr.'/.-•-.lib;.u,:-: •.•" • .••.: • x:.-;.:. ->.;; 

Top Five Countries y .-.j;-;^ •,.?£• ;.-,,,_.. •; .Value . ;• 

Canada'-/.' .•<...•:.;:•• •*.<;;.;••:':••••!' --O:. :-v-v ' ;1,614 '•- •• 

Netherlands„., _ ..- ..,...,.'.,.,., | ;..-r;s ... 1,292 

Germany . . '*.". . 1.121 

liipan ' -_

: J *J•..-',u , .•-,. ,:.:•..!.,•,. " -\lojy: 

United Kingdom •;..;» .825: 

= ;i ' ' - '-.P.- • '• 

= v ' •••- V :: • • » 

. r-<' .I'i. H1". " 

. Share, % 

, -. . , 16 ,.. 

7 

57' 

12 

;•. .• .,- 3 

6 

•100 ' 

-,; ,.;, .Share, % 

; .: V14' H 

•*.•• ••.1.1 " 

9 

" - - • "'"9 ' • 

;: i '•••..• V 7 -.. 

i-j,l< . '••••, ' ' 1 

.•;> . :'', \/'\ ' . ,'• r.:>> 

Region3 

NAFTA .,, -,, . 

Latin America 

Western Europe 

Japan/Chinese Economic Area 

Other Asia 

Rest of world , 

World ' " • 

. • /. • i..\;-. - - •••••<• .-•-. 

Top Five Countries > , Y •, 

Germany ' ' 

Ireland( ,-, «.j. . 

United Kingdom 

Japan' ' 

Switzerland 

' ; 

Imports' 

Value1, 

.811 . 

70 .' 

"•" • -14,407 

1,766 

426." 

368 

17,847 

- .M .,;. Value ;-. 

'" • '-i 3,548 

, 3,227 

3,015 

1,445 ' 

1,223 

• ••I, ^ 

" ^HJjfflj 

' '*'*•« 

1 <i .'^ w n 

>"< '•'.' v H 

. liMl 

• Y ll iM 

''' '•"•''^m 

><,r4at§ 

/;'f*W(BI 

•.MiiUsH 

•,^J| 

• *'•'•< WK^BI 

.SIC283;, n , • )t :...,Ay.- ,,,>,, ,. l , » u ,,•...-,.•;,.(.;•!. _..,- , „ . r> . .. ; ,. : ; . 

2

 For definitions of regional groupings, see "Getting the Most Out of Outlook 2000." 

3

 Values may not sum to tbtafdue to rounding. 

Source: U.S. Department of Commerce, Bureau of the Census. 

M 

I. 

••m 

11-16 U.S. Industry & Trade Outlook 2000 

16?. 
P.19 

Hiding to industry estimates, have cost U.S. pharmaceupanies as much as $9 billion.-. • 

F > ' • " . .>••• • r'.' . •••': ' . • •'" .,;. " 

§!# U.S. Department of Commerce, Chemicals; Pharma-

*\? and Biotechnology Division, (202) 482-5125, 

lr;1999. ; -.r •.'• • 

£10 MATERIALS AND RESINS 

jttic materials and.resins industry (SIC 2821) includes 

Ijshments engaged primarily in.manufacturing synB^resins,,plastics materials, and nonvulcanizable elasire.,',' '"'_ _''.''_ '\'' ' 

and Domestic Subsector Outlook 

idustry Trends;. rThe plastics, industry has moved 

EWorld as. it has pursued business opportunities in 

gphigh-grbwth markets and as suppliers have, followed 

|those companies < have expanded production. The 

sties industry is dominated by large multinational 

[^companies that are vertically integrated. Although the 

5.expanding'.globallyi it has undergone, considerable 

ion* arid restructuring-in.;recent years as a result of 

sitions, the formation of joint ventures, and the 

^obsolete.facilities; That trend is likely to continue 

^die level of competition among producers and the 

Dst-cutting 5 measures.Despite this trend toward 

tion,-i total plastics production remains fragmented 

y^the number ofresins produced and the diversity of 

iif served. Production of larger-volume commodity 

s:polyethylene and polypropylene tends.to be less 

.tiian that of smaller, specialty-type products. In 

||tpp:four resin sectors—polyediylene, polypropyll polystyrene—fewer than five players have sig-

.positions.;; . H 

ithe plastics industry is globalrthe base of produc-

/'commodityresins has shifted to countries such as 

(•China,, and South Korea./ Producers.? in ;highly 

^SrkeiS.'suchTasdie Umt^'States^westem Eiurope, 

Ijave responded to .these shifts, in production by 

[*;the .manufacture of

 :sp^iity jjnd-,lMgher-yaiue-

•and-by rationalizing their/production capacity 

jfitebility. Such actions not only capitalize oh; the 

|advantage ?pf developed >, countries -in highly 

friction technologies and research but also lessen 

j?prbfitability(!Of swings in levels of resin producgPMemandv'^'

 !-u-,"/,^- 'K ' ••:• "•> .3.-

st8r the global plastics industry include the Chile Ai&a, Japan, North America, South America, 

• r and'westerh Europe. Because of their size and 

Miiic development, it is no surprise that Japan, 

Hf-'and western Europe are the largest regional 

Aplastic resin, accounting for some 90 percent of 

• consumption. Although there is certainly opporlipansion in those regions, as epitomized by Canada 

and Mexico, those markets are in large part established, with a 

more limited opportunity for growth. Despite the economic difficulties in.Asia and South America recently, those regions 

remain the primary areas: of significant growth opportunity in 

both the short term and the long term. 

Research in the plastics industry has focused on the development of new production processes instead of entirely new plastic materials..For example, the development,of metallocene 

catalyst technology was expected to play a key role in die olefin 

sector through the end of the century. The production of metallocene-catalyzed thermoplastics has been growing rapidly botii 

in the United States and worldwide, yet it accounts for only a 

minor proportion of total resin production. As technical difficulties are resolved and prices fall, this technology is expected 

to gain greater importance in the global marketplace. Other 

research efforts are aimed at expanding applications for plastics 

and improving;die.performance properties of existing resins 

through alloying and blending.. -

Domestic Industry Trends. Factors affecting growth in the 

U.S. plastics industry include trends in key end-use markets 

such as packaging, building and construction, consumer, and 

institutional products, and transportation. Those markets in turn 

are affected by trends in consumer spending, GDP, and population growth, Other: issues that influence the industry's outlook 

include die cost and availability of raw materials, foreign.competition,. technological advancements, and intermaterial and 

alternative material competition;. , M. 

Noteworthy trends specific to the U.S. plastics,industry 

include eonsOlidation,and restructuring of die industry, competition, among; alternative .plastic materials, and the emergence 

of electronic::,commerce,^(ETCommerce) as a ,business tool. 

Depressed oil and resin prices and overcapacity in resin supply 

have prompted a number of mergers, acquisitions, and joint 

ventures, with the,most notable in 1999 :being. the merger 

announced by the Dow Chemical Company and the Union Car-

. bide Corporation,:The same pressures, along with consolidation 

among OEMs, have played a role in the increased level of intermatenajrcpmpetitio^fiaced by. plastics. Such competition is 

ocevrrringacross die spectrum of'end-use markets as commodity materials that are enhanced through alloying and blending: 

vie wltii;specialt£ resins for mafket share. Last but certainlyn<6t 

least' is the advent of E-cpmmetce in the business operations of 

the U.S. plastics industry. Most U.S. resin producers rhave a~ 

Web site, with some; tympanies offering more comprehensive 

services such as on-line sales, shipping and inventory information,, and technical assistance. The Internet providesIthese coihpaniesjjyith a lpwncost time-sensitive means of communicating 

product information to current and potential customers.. In turn, 

>the ready avadabilityfofdnfonnation on-line has helped reduce 

die time frame for customer decision making. -

Industry and Trade Projections for the 

Next 1 and 5 Years 

Shipment Projections. Constant dollar shipments of plastic 

materials and resins are < forecast to increase only 3 percent in 

Chemicals and Allied Products 11-17 

lO 
P.20 

expected to experience annual compound growth of 8 to 10 percent in the next 5 years. Strong growth in North American markets and the recovery in Japan helped drive the global 

pharmaceutical market upward in 1998. The United States 

remains the largest pharmaceutical market in the world, followed by Europe and Japan. Global growth in the consumption 

of pharmaceutical products is likely to be sustained by strong 

demographic gains widi record-setting life expectancies, a rising standard of living in developing countries, and a steady 

stream of new products and line extensions, including die new 

frontier of quality-of-life pharmacology. 

Demographics are expected to provide a strong market and 

high demand for pharmaceuticals for the foreseeable future. 

The World Health Organization (WHO) reports that the global 

over-65 population is forecast to rise from 380 million in 1997 

to more than 690 million by 2025. The elderly are the single 

largest group of users of prescription drugs. The over-65 population consumes three times as many pharmaceutical medicines 

as younger patients do. As governments around the world consider various ways to tackle the problems of rising health care 

costs for the elderly, pharmaceuticals are emerging as an efficient and cost-effective way to address this problem. Pharmaceuticals provide health care savings by shortening hospital 

stays, reducing nursing home admissions, lessening doctors' 

visits, and in some cases eliminating die need for surgery. In the 

last decade, pharmaceutical companies have brought to market 

more than 150 new medicines for disease of aging. Pharmaceutical company researchers are working on more than 600 new 

medicines to tackle the major causes of disability among 

seniors. 

Rising standards of living throughout the world are 

expected to bolster the demand for better health care and 

increase sales of medical products. Health in developing countries is improving as a result of a rising global economy and the 

new interaction between science, public healtii, and business. 

As issues of trade and health continue to intersect, it is 

inevitable that die pharmaceutical industry and the WHO are 

increasing their interaction. The WHO and the pharmaceutical 

industry continue to search for ways to reduce barriers to the 

global availability of medicine. Pharmaceuticals are the first 

line of medical therapy worldwide. The global pharmaceutical 

industry has the ability to develop products to fight infectious 

diseases wherever they occur. The challenges are availability, 

affordability, and effectiveness. 

The introduction of new products is expected to accelerate 

the growth of the global pharmaceutical industry in die years 

ahead. The leading research-based pharmaceutical companies 

indicate that there are at least 29 compounds in die global 

pipeline witii "blockbuster" potential. Innovative products have 

replaced price as the leading factor driving the industry. Higher 

sales are being achieved dirough simultaneous multicountry 

launches Of new products, improved sales force productivity, 

and direct-to-consumer advertising. Advances in biomedical 

science have given rise to new processes that are expected to 

assist scientists in developing and discovering new pharmaceutical compounds at even faster rates. Over the next few years, it 

is expected that pharmaceutical companies will introdmo 

whole range of new compounds that not only will cure discu 

but also will slow the ravages of age. Even with advance* i 

research and development (R&D) and the continued inirntln 

tion of new pharmaceuticals, there is an urgent need for i* 

and better medicines. According to WHO, there is still no .4 

quate therapy for three-quarters of the 2,500 currently iv. <j 

nized medical conditions. 

The global pharmaceutical industry shows no siynv I 

slowing its worldwide consolidation activity. Companies |*( 

resources to compete more effectively and finance the CMMII 

ing cost of expanded R&D. Mergers are especially pr.v.i 

in companies whose principal drugs have lost or are about 

lose patent protection. Other likely candidates for merga> 

firms whose R&D pipelines are sparse or whose product • 

sist largely of drugs that can be produced by other comp.-m 

Foreign drug manufacturers continue to eye U.S. firm 

potential candidates for acquisition. In the early 1990s, in 

ers were driven primarily by a desire to cut costs. In iln1990s, R&D opportunities appeared to be the driving l<••• 

The press is filled with reports of a battle between three Ir. 

ing U.S. research-based pharmaceutical companies in 

which two will merge to become the world's largest plum 

ceutical company. 

U.S. Industry Growth Projections for the NoifJ 

1 and 5 Years 

The U.S. pharmaceutical industry is divided into thiv. 

ments: the research-based branded pharmaceutical indusiiv 

generic pharmaceutical industry, and the nonpFescripiimij 

over-the-counter industry. Research-based pharmaci-m* 

companies invent prescription drugs that can be sold onl> » 

a doctor's prescription. Generic forms of prescription drnp 

made available once the innovator's patent expires, (i.m^ 

drugs, like prescription drugs, can be obtained only with .i < 

tor's prescription. Over-the-counter pharmaceuticals an- • 

products that consumers can obtain and use on their own m 

tive. All three segments are predicted to have a positive p> 

rate for the next year, and the momentum is expected t< > 

tinue over the next 5 years. New drug discoveries, iiu-u-«|| 

interest in health, demographic trends, managed healih 

and a more industry-friendly regulatory environment haw < 

bined to support the sustained growth of the industry. Tin- mij| 

inal value of industry shipments for the U.S. drug sector I<-I« 

$107.7 billion in 1998, a 13.1 percent increase over 19'// 

ments (see Table 11-9). 

The U.S. industry appears to be on die verge of a mai*« 

cycle, with a number of potential blockbuster product. •» 

pipeline tiiat should ensure continued industry growth i. 

least the next 5 years. To satisfy the increased demand lm 

products, especially among die elderly, U.S. companies M 

intensified their efforts to create unique, "breakthrough" UM 

peutic compounds. Examples of new products are moiv *-<t 

tive cancer drugs, protease inhibitors to treat AIDS |':n»i 

oral diabetes therapy, cholesterol reducers, new treatim-mi 

arthritis, and impotence treatments. Increased demand I. 

11-14 U.S. Industry & Trade Outlook 2000 

n 
P.21 

L.E 11-9: Drugs (SIC 283) Trends and Forecasts 

gins of dollars except as noted) - . 

Bf} •. • 

•try data "' 

Kt shipments' 

fof shipments (1992$) 

amployment (thousands) 

•Httbh workers (thousands).. 

Bghourly earnings ($)' 

Kfxpenditures . 

Npat a • •-'•' 

Epghipments5-

nKShipments (1992$) 

Eiports ... 

ntfkports' 

___•§¥;_ _ ._;.,. . , - i 

1992 

67,792 

67,792 

:194 

92.7 

14.78 

3,887 

60,793 

60,793 

5,980 

6,765 

1993 

70,985 

68,179 

200 

94.6 

15.80 

4,047 

63,970 

61,428 

6,063 

7,214 

1994 

75,804 

71,142 

205 

102 

16.34 

: 4,034 

67,751 

63,588 

6,905 

7,561 

1995 

80,907 

73,820 

216 

113 

15.99 

4,503 

71,528 

65,285 

8,504 

7,992 

1996 

86,532 

76,824 

213 

106 

16.63 

4,301 

76,293 

67,754 

11,090 

8,884 

1997' 

95,219 

82,952 

83,952 

73,159 

1.4,110 

10,368 

1998' 

107,692 

85,251 

94,949 

75,186 

17,847 

11,944 

19992 

112,815 

86,673 

99,466 

76,440 

23,308 

13,616 

20003 

121,947 

. 91,488 

107,517 

80,687 

27,969 

14,705 

97-98 

13.1 

2.8 

13.1 

2.8 

26.5 

15.2 

Percent Change 

98-99 

4.8 

. 1.7 

4.8 

1.7 

30.6 

14.0 

99-00 

8.1 

5.6 

8.1 

5.6 

20.0 

8.0 

96-004 

9.0 

4.5 

9.0 

4.5 

26.0 

13.4 

fexcept imports and exports. 

nd annual rate. 

fjnltion of industry versus product values, see "Getting the Most Out of Outlook 2000." 

S. Department of Commerce: Bureau of the Census; International Trade Administration. 

fhas replaced price as the primary force in the U.S. 

lltical industry's.overall growth. 

S|United States, consumer interest in health matters 

flt^an alL-time high.i People say they follow health-

•ies in the -media 'more than they follow any other 

.industry is capitalizing on this interest by increas-

|torConsumer. (DTG) advertising. Once considered 

JCiadvertising is becoming a major marketing force in 

aceutical industry and is likely to be a key driver 

stry's future growth. In 1998, the industry spent 

I on DTC advertising, a 38 percent increase over die 

ispentin 1997. Increased DTC advertising is leadtaf consumer recognition of the benefits of pharmaTOpie^andwinCTeasing consumers' confidence in 

Idi matters witii tiieir doctors and asking for speions:"- "---'^ ;. • 

-is-lifting pharmaceutical sales in the tJnited 

singifhe use of pharmaceuticals as a viable 

Ipither treatment forms, and diis trend should confnext 5kyears. Health maintenance organizations 

iferred provider organizations, and other managed 

Kefgrown rapidly in recent years. In the 1980s, 

jj|?share of the retail pharmaceutical market was 

gentry the year 2000, that share is (expected to 

|Hbwever,.the experiment widi HMOs has shown 

rilpebple do not like the idea of rationing health 

lhayejincreased that HMOs put financial! conl:of patients' needs. In 1999, the U.S. House of 

Kfapproved-a bill tomake HMOs subject to lawitjr. Regardless of whedier die HMO liability bill 

fthere is a definite trend toward more people havpty in the drugs they are prescribed. 

In different ways and degrees, each of the three segments of 

the U.S. pharmaceutical industry benefits from the.growth of 

managed care. Partly because of the continued trend toward 

self-care, which increasingly is driven by the managed care 

industry, retail sales of nonprescription drugs, are expected to 

increase steadily over the next 5 years. Managed care has contributed to die; expansion of the markets for generics as well. 

Generic drugs are forecast to account for inearly two-thirds of 

all prescriptions written by the end i of the decade, a large 

increase from 42 percent of the market in 1996 and 22 percent 

in 1985. The generics market is expected to reach $15 billion by 

die year 2000, up from an estimated $9 billion in 1996. Growth 

of the generics market als6 is aided by the fact didt over the next 

5 years drugs that generated more than $16 billion in 1996 sales 

are scheduled to lose patent protection. Sales of research-based 

pharmaceuticals also have been helped by managed care. Managed care providers realize that newly developed branded pharmaceuticals often prbVide the most effective and cost-efficient 

means to treat patients; Increasingly, leading-edge branded 

pharmaceuticals are'bteing used by managed care providers 

as the preferred fortn of treatment. To compete with well--

established and cheaper, generic products and to increase their 

share of the managed cafe market, the branded companies have 

to ensure a'full^pipeline of newand innovative pharmaceuticals 

that offer improved effectiveness or unique solutions. To maintain approximately 10'percent annual growth, research-based 

pharmaceutical companies believe that tiiey must bring two or 

three new, products to market each year. 

*• The U:Srpharrnaceutical industry is experiencing a more 

industry-friendly regulatory environment. Pharmaceutical sales 

continue to benefit from 1997 legislation that streamlined the 

U.S. Food and Drug Administration's (FDA)> approval process 

Chemicals and Allied Products 11-15 

/£ 
P.22 

die year 2000 after an unexpectedly strong performance of 7 

percent growth in 1999 (see Table 11-11). A variety of factors 

contributed to the unusual increase in shipments in 1999: the 

ability of the industry to push through resin price increases, the 

buildup of inventory after a drawdown in 1998, the anticipation 

of Y2K problems in sourcing resin, and the strength of sales in 

virtually all end-use markets. Performance in the year 2000 will 

be weaker because of expected price and shipment erosion during the first quarter after the inventory buildup of 1999, additional capacity coming on-line without sufficient growth in the 

domestic economy and die export market to support-it, 

increased competition from imported materials, and a weaker 

performance in key end-use markets such as building and construction and transportation. 

For die near term, 2000-2004, die outlook for plastics will 

continue to be favorable, with constant dollar shipments growing 

between 3 and 4 percent A weaker domestic economy will lead 

to weakened demand in key end-use maikets. However, that trend 

will be offset somewhat by increased exports as economies in 

Asia and South America recover and have higher rates of growth. 

Export Trade Patterns and Projections. Historically, 

exports as a percentage of plkstic resin shipments have grown at 

an increasing rate. Large regional export markets in the NAFTA 

countries and Western Europe and double-digit growth in Asia 

haveJplayed a significant role in this trend (see Table 11-12). 

The economic crisis in Asia and the economic difficulties experienced in Latin America in 1998 saw a reversal of this trend. 

During most of 1999, U.S. exports of plastics to virtually every 

region in the wbrld were negative. However, there was sufficient recovery—led by Asia-1

-such that plastic resin exports did 

end die year with a positive performance, albeit a small one. For 

the first time since NAFTA's implementation, exports to I 

ico fell. U.S. exports to that country were hurt by low oil priij 

cuts in spending by die Mexican government, and increme 

growth in the domestic economy. Continuing poor econb 

performance was the largest negative element for exportil 

Latin America. U.S. exports to western Europe suffered:* 

result of competition from Asian exports. Bright spots inclu 

China, South Korea, Vietnam, Thailand, and Malaysia agjjj 

United States expanded trading opportunities in Vietnam] 

the Asian economies began to show clear signs of recoveryif 

In the year 2000, U.S. plastics exports are expected t<J'|| 

4.1 percent as die Mexican economy improves its perfdrrri 

and oil prices recover. Exports to Latin America are expector 

continue to fall, although not as much as in 1999. Incren 

growth is expected in western Europe as competition for i 

share from Asian resins is not anticipated to be as fiercejjj 

will resume its position as die primary growth market for| 

plastics exports—altiiough growth will have1 a slower 

widi Vietnam possibly benefiting from a bilateral agre 

with the United States. The same factors will contrib 

export growth of 4 to 5 percent in the period 2000-2004. JI 

Import Trade Patterns and Projections. Although'^ 

was strong demand in the U.S. market, plastic resin, iif 

were negative for most of 1999. Contributing to thissce 

were poor domestic economies in Mexico and most oftl 

America that prompted those countries to supply resin I 

domestic markets as opposed to exporting or importing!!! 

rial. However, U.S. plastic resin imports did ultimately^ 

positive performance, rising 5.4 percent for the year;'-

mary reason for the shift in fortunes was a reversal, ih^ 

dian imports—from negative to positive—given that the 

TABLE 11-11: Plastics Materials and Resins (SIC 2821) Trends and Forecasts 

(millions of dollars except as noted)1' 

: --.-,., t.,.-,. . ,._ . , -..-. , .,,-; 

: •'•'••' •: • • " '••• 1g9 £ -

Industry data - ••'••~.i • 

Value of shipments8 31,601 

Value of shipments (1992$) 31,601 

Total employment (thousands). 61.2 

Production workers (thousands) 36.5 

Average' hourly earnings ($) • 18.61 

. Capital expenditures 1,712 

Product data 

' Value of shipments' 33,299 

Value of shipments (1992$) 33,299 

Trade data 

Value of imports . .2,147 

Value of exports ,7,091 

1993; 

. , ;, 

31,546 

31,172 

62.2 

36.6 

18.75 

1,926 

33,589 

33;191 

2,606 / 

7,280 

1994 

37,305 

35,327 

68.9 

. 40.4 

19.39 

2,536 

38,043 

36,025 

. .; 

>;'3,380 

8,529 

1995 

. v-;. 

43,453 

35,156 

:

 70.0 

41.6 

20.04 

2,324 

44,017 ' 

35,612 

' • 

4,200 

10,461 

1996 

40,097 

34,567 

58.6 

36.3 

20.50 

2,784 

42,751 

36,854 

V -

4,311 

. 10,705 

. 1997 

44,575 

37,678 

61:0 

37.5 

21.70 

2,921 

45,670 

38,623 

4,788 

11,884 

. , . 

1998'' 

47,160 

39,486 

, 60.8 

36.7 

22.62 

2,727 

47,862 

40,091 

4,913 

11,282 

19992 

50,980 

42,250 

60.5 

. 36.4 

23.53 

3,324 

51,739 

42,897 

5,178 

11,305 

20003 

52,866 

43,517' 

59.3 

35.8 

24.00 

3,091 

53,653 

44,184 

5,515 

11,769 

97-98 

5.8 

4.8 

-0.3 

-2.1 

4.2 

-6.6 

4.8 

3.8 

2.6 

-5.1 

', f«|J 

•

:

 -"'# j 

Percent ChangtJ 

98-99 ' 

i 

8.1 

7.0 

-0.5 

-0.8 

4.0 

21.9 ' 

' 

8.1' 

,7.0 

., . 

5.4' 

.2 

j 

99^00j| 

'.;..:.( DM 

37

 J 3.6 i j 

-2.0oj9 

^1.6 J 

2'.0 1 

-7.0'J 

" '"''l 

3:7'4 

,. 3.0;J 

•".. <tiM 

-,6.6jJ 

\S..hYM 

' Estimate except imports and exports. ... ~ ; . i . t. i. • -.•>;,'' -

2

 Estimate. ^ • 

'Forecast.

 : "' 

4

 Compound annual rate. 

'For a definition of industry versus product values, see "Getting the Most Out of Outlook 2000." 

Source: U.S. Department of Commerce: Bureau of the Census; International Trade Administration. 

• >•?.' . 

11-1 8 U.S. Industry & Trade Outlook 2000 

&\ 
P.23 

11-12: U.S. Trade Patterns in Plastics1 in 1998 

^dollars; percent) 

wrlca 

Jtyrope 

Mn«8 Ecor 

Countries 

omic Area 

Export* 

Value3 

4,720 

1,400 

2,137 

1,645 

813 

568 

11,282 

Value 

2,816 

1,904 

758 

590 

450 

Share, % 

42 

12 

19 

15 

7 

5 

100 

Share, % 

25 

17 

7 

5 

4 

Imports 

Region2 

NAFTA 

Latin America 

Western Europe 

Japan/Chinese Economic Area 

Other Asia 

Rest of world 

World 

Top Five Countries 

Canada 

Japan 

Germany 

Mexico 

France 

Value3 

2,344 

85 

1,450 

782 

175 

78 

4,913 

Value 

2,150 

670 

488 

194 

165 

Share, % 

48 

2 

30 

16 

4 

2 

100 

Share, % 

44 

14 

10 

4 

3 

}na of regional groupings, see "Getting the Most Out of Outlook 2000.' 

foot sum to total due to rounding. 

I. Department of Commerce, Bureau of the Census. 

t-share of U.S. imports of plastic resin. Although a 

rtion of the market, double-digit imports from 

omies—predominantly Hong Kong, South Korea, 

isociation of Southeast Asian Nations (ASEAN) 

lidified import growth, 

year 2000, imports are expected to continue a positive 

growth, rising 6.5 percent. Imports from Asia will 

Io grow at double-digit levels as the Asian economies 

to recover, but gains will not be as strong, as Asian 

Hot be as inexpensive as it was in 1999. This shift in 

II encourage closer sourcing of material, with the 

(JOuntries and western Europe having the most to gain, 

rs will contribute to import growth of 4 to 6 period 2000-2004. 

[0. Copperthiie, Office of Metals, Materials, and 

itemational Trade Administration, (202) 482-5124, 

lite@ita.doc.gov, November 1999. 

Generic Pharmaceutical Industry Association, 16201 Street, NW, Suite 

800, Washington, DC 20006. 

Nonprescription Drug Manufacturers Association, 1150 Connecticut 

Avenue, NW, Washington, DC 20036. 

Pharmaceutical Research and Manufacturers of America, 1100 Fifteenth Street, NW, Washington, DC 20005. 

Plastic Materials and Resins 

American Plastics Council, 1801 K Street, NW, Washington, DC 

20006. (202) 974-5400, plastics.org. 

Facts and Figures of the U.S. Plastics Industry, 1998 edition. Society 

of the Plastics Industry, Inc., 1801 K Street, NW, Washington, DC 

20006. (202) 974-5200 

Modern Plastics, McGraw-Hill, Two Penn Plaza, New York, NY 

10121-2298. (212) 904-6245, modplas.com. 

Plastics Nws, Crain Communications Inc., 740 North Rush Street, 

Chicago, IL 60611-2590. plasticsnews.com. 

Society of the Plastics Industry, Inc., 1801 K Street, NW, Washington, 

DC 20006. (202) 974-5200, socplas.org. 

WT E R E N C E S 

Ikitlritting Reporter, Schnell Publishing Company, 80 Broad 

pork, NY 10004. (212) 248-4177. 

i McGraw-Hill Publications. 888 Seventh Avenue, New 

['10106. (212) 621-4900. 

[Htfrmaceuticals • 

Hal Reports, Manufacturers Shipments, Inventories and 

Ithly), U.S. Department of Commerce, Bureau of the 

[Wellington, DC 20233. 

• RELATE D CHAPTER S 

8: Building Products and Materials 

9: Textiles 

12: Synthetic Rubber 

20: Environmental Technologies and Services 

25: Printing and Publishing 

35: Processed Food and Beverages 

45: Medical and Dental Instruments 

Chemicals and Allied Products 11-1 9 

?2-