Chemical Sector Players
- 02:35
An overview of the types of company in the chemicals sector.
Glossary
ChemicalsTranscript
At a very high level. Chemical companies work a lot like industrial companies, but are closer to the raw materials. If you've worked with industrial companies, this industry has a lot in common with them. Chemical companies tend to do well at high volumes as they have high fixed costs and high dependence on bulk inputs such as oil and gas. Buying power through scale can be very helpful. Here, the chemical sector is split into two main types of player, the diversified, as they're called, like Bass F, which has many activities spanning many inputs and outputs, and the more specialized companies like Air Liquid, which concentrate on fewer or one type of product. There's also a transatlantic split, which we'll explore later. Some companies arguably don't fit into either of those brackets. Shell, for example, explores and extracts oil and gas. It also uses that oil and gas to create chemicals used in plastics, and so it straddles several sectors.
As we mentioned earlier, there are many types of inputs and output for this sector. You can see Dow, a large American chemical company takes raw chemicals that would be produced by crackers. These are chemical plants that split oil into more useful hydrocarbons. It uses those to assemble plastics, resins, coatings, and other products that are useful in a wide variety of end consumer app applications. If you're a DIY or professional builder, if you're putting cars together or handling food packaging, chances are you've held a product created by DAO at some point.
Axo Noble, a smaller European chemical company, takes a slightly different approach. It uses some of the same inputs as Dao, but relies more heavily on titanium, which is commonly used to create paint. If you painted a wall in Europe, it's very likely you've used Axo Noble products.
Air liquid, as we saw before, is on the other side of the chemical spectrum. It takes gases and builds them into useful products. Hospitals in Europe often use Airli liquid products as Airli liquid as the dominant player in this niche, because the inputs in outputs of chemical companies can be very broad. There's a lot of variability within the companies. This leads to the need for detailed segmental analysis.