Chemical Industry Trends Impact on CMS CMS Forum – San Francisco, CA November 12, 2008
Robert Davenport Director, Safe & Sustainable Chemical Series SRI Consulting
Introduction SRI Consulting • 55+ years of chemical business research
• Once known as Stanford Research Institute • Now division of Access Intelligence Safe & Sustainable Chemical Series
• New series of reports on important opportunities and threats to industry
• Bioproducts, safe materials, new energy
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Items to Cover • Sustainability ─ Just what does this mean? • What is the status of the global chemical industry?
• What are some recent trends? • What can we expect to see coming? • Threats or opportunities to CMS?
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What Constitutes Sustainability? • Difficult question • Different parties value different attributes • Everyone wants it • Stake holders demand it • Three major areas of concern
4
Elements of Sustainability
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Economic Sustainability • It has to be • No value, no survival • Laws may help
• Bottom line value • Supplier → end-users • Entire value chain in total
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Environmental Sustainability • Products and services renewable over time • Safety along value chain • Minimize toxicity • Minimize GHG footprint
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Sustainable in Society • Complex issue
• • • • • • •
Employment vs. economy Self sufficiency Integration into economy Alternate use of capital Educational issues Infrastructure changes N.I.M.B.Y.
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So When Is a System Sustainable?
Economy
Society
Environment
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The Chemical Industry Today
Hydrocarbons
Polymers End User
Intermediates Minerals
Others
Commodity Specialty Fine Chemicals
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End Uses Fine Chemicals Plastics/Resins Specialty – Functional Specialty – Market Focus Fertilizers Fibers Coatings Solvents Elastomers Other
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$2 Trillion Globally (or more)
Some Trends • Energy uncertainty • Biotechnology thrusts • Regulations galore • Nanotechnology • Changing order
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Historical Oil Prices Dollars per Barrel
136
160
140
High Low 90.5
120
2002
48.2
35.2
27.6
2001
24.6
31.8
29
26.6
17.1
1999
16.2
1998
23.2
32.3 9.76
24.7 9.41
15.2
15.9
20
23.2
40
44.3
60
53.3
60.8
80
63
71.4
100
0 1997
2000
2003
2004
2005
2006
2007
Note: Based on weighted average, weekly, all-country, fob, exported value. Source: EIA. 13
2008
Biotechnology
• Red ─ Pharma • White ─ Industrial • Green ─ Agriculture
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Biotechnology Focus • Early focus – agriculture and pharma • Size of market • Profit potential
• New interest in industrial • “Green” focus • Energy situation
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Nanotechnology • Big interest several years ago • Industry that is hard to define • Materials • Processes
• Many types of products • • • •
Nanotubes Nanofibers Fullerenes Organoclays
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Nanotech Applications and Growth Billion $ Sales 40 35
Other 30%
Materials & Production Process 31%
35 30 25 20
Consumer Products 7% Pharma/ Medical 21%
4.5
10 5
1.1
Electronics 11%
15
0 2007
Source: Freedonia.
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2012
2020
M&A Activity Some Major Transactions 2008
• • • • • • •
Dow buys Rohm & Haas Ashland buys Hercules Vestar buys Unilever N.A. Detergent business BASF buys CIBA Tata buys General Chemical Industrial Products Incitec Pivot buys Dyno Nobel Jordan Company buys Haas TCM
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What’s Coming? • Less regulation (ha ha) • Green & sustainable • New energy sources • Biomass conversion • Recycling
• Petroleums of the future • Water • Various elements
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Regulations • The big ones • Registration, authorization and evaluation of chemicals • REACH
• Restriction of hazardous substances – electrical/electronic equipment • RoHS
• Waste electrical and electronic equipment • WEEE
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New Energy Sources • Solar • Wind • Biofuels • Rejuvenation • Nuclear
21
World Energy Demand – Long-Term Energy Sources
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The Future
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Chemicals from Biomass • Forestry • Natural Products • Fermentation • Food/Agriculture Products • By-Product of Biofuels • Thermochemical Products
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Recycling • Plastics • Solvents • MSW • Reuse vs recycle • Electronics • Other
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CMS Impact • Green initiatives • New materials in market • New service opportunities • Global changes • Information value increasing
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Dow Corning Study on Green Percent
Most Important Second Most Important Third Most Important
30
29
30
32
35
20
20 14
15
17
18 16
15
20
18
19
21
25
15
9
10
5 0
Reducing Waste
Source: Dow Corning.
Increasing Developing Energy Green (environmentally Efficiency friendly) Products 27
Reducing CO2/ Using Greenhouse Renewable/ Gas Emissions Cleaner Energy Sources
Where is Impetus? 37
Percent 40
Most Important Second Most Important Third Most Important
35
25
30
16
18
11
12 6
8
8
9
9
10
9
9
11
15
12
15
17
20
18
20
21
25
0
3
5
Share- EnvironThe Your The Your Local mental Media Customers Govern- Suppliers Commun- holders Campaign ment ities Organizations and the General Public
Source: Dow Corning.
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New Opportunities in Energy
• Solar • Non-photo voltaic • Heat transfer media
• Wind • Lubricants/functional fluids
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Biomass → Chemicals • • • • • • • •
Renewable/sustainable/locally produced CO2 reduction Cost advantage Alleviate waste or by-products Less toxic Might be biodegradable Market/political advantages CMS providers can bring solutions to many issues
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The Plastic Car
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Serve the Entire Lifecycle • Synthesis and production • Minimize waste • Use renewable/recyclable • Less GHG • Less toxic • Optimize transport and packaging • Less material and energy • Less hazards • Efficiency in use • Renewable/recyclable • Minimize • Reuse/recycle/dispose • Value from waste 32
Changing Global Markets Petrochemical Investment
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Information Value Increases • Regulations • Green opportunities • GHG status • New materials • Future trends
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SRI Consulting Programs • Process Economics Program • Process economic analysis of 100’s of processes • Examples: Chemicals from Agricultural Waste, Methanol to Olefins
• Chemical Economics Handbook • Market analysis of hundreds of chemicals • Examples: Acrylic Surface Coatings, Zeolites
• Specialty Chemical Update Program • Strategic analysis of specialty product groups • Examples: Electronic Chemicals: Semiconductors, Silicon and IC Process Chemicals, Plastic Additives
• Safe & Sustainable Chemicals • Analysis of evolving chemical development – “oven” • Examples: Global Solvents Report: The Green Impact, Chemicals from Biomass
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Thank You Robert Davenport Director, Safe & Sustainable Chemical Services +1 650 384 4350
[email protected] www.sriconsulting.com