Intermediates Businesses in Several Global Chemical Companies

In a previous blog, I showed the reporting segment names used by 38 global chemical companies.  (Click here to see that blog.)   Eight of the 38 companies have intermediates in one of their reporting segment or division names (Arkema, BASF, Celanese, Dow, Eastman, Evonik, Lanxess, and Lyondellbasell).   

In this blog, I provide brief descriptions in the table below on those eight companies’ (Arkema, BASF, Celanese, Dow, Eastman, Evonik, Lanxess, and Lyondellbasell) intermediates-related businesses.  I also reviewed the annual reports of the other 30 companies as to what intermediate-related businesses they have, even though they have no reporting business segments or divisions with intermediates in the name.  The other companies that indicate intermediate-related businesses are also presented in the table below, along with brief descriptions of their intermediate-related businesses based on my review of the companies’ annual reports.  Altogether, 15 of the 38 companies indicate energy-related businesses, and 23 of the 38 companies report no intermediate-related businesses and are not listed in the table below.

  

company	intermediates businesses
albemarle	lithium compounds as intermediates in pharmaceutical manufacturing
arkema	has intermediates reporting segment	amino acids
basf	one of 11 divisions named intermediates	poly THF used in making textile fibers	butanediol; amines; neopentyl glycol; formic and propionic acid	vinyl monomers; acid chlorides; chlor formates; adipic acid	for use in manufacturing coatings; plastics; fibers; pharmaceuticals; and crop protection chemicals
celanese	has a division named intermediates	acetyl products; acetic acid; vinyl acetate monomers; acetic anhydride	acetyl aldehyde; ethyl acetate; formaldehyde; butyl acetate	for use in manufacturing paints; coatings; adhesives; lubricants; pharmaceuticals; films ; textiles; inks
chemours	intermediates are a principal product	glycolic acid; free radical initiators; substituted nitrile compounds
dow	one of divisions named industrial intermediates	ethylene oxide and propylene oxide derivatives	glycols; amines; silicone materials
eastman	has intermediates reporting segment	acetyls; oxo alcohols; alkylamines; olefin-based intermediates
evonik	has intermediates reporting segment	alkoxides; amino acids; isononaol	intermediates for plastics, rubber, superabsorbent industries
fmc	makes intermediates for internal use
lanxess	has intermediates reporting segment	for automobile, agricultural, construction, aroma/flavors, rubber, and electronics industries
lyondellbasell	has intermediates reporting segment	styrene monomer, acetyls, ethylene oxide, and ethylene glycol
mitsubishi	pharmaceutical intermediates
olin	chlorinated carbon intermediates	silicones, cellulosic, epoxy intermediates, allyls
shin-etsu	silicon monomers
solvay	soda ash, peroxides

  

I believe the following are some interesting conclusions based on the information above and found in the company annual reports: 

• The intermediate businesses are not considered to be high-margin businesses. 
• The intermediate businesses are considered to be mature, steady, cash-flow businesses. 
• The intermediate businesses are often based on long-term customers and arrangements with those customers. 
• A difference in strategy exists in pursuing these businesses.  For example, some companies, such as Chemours, consider their intermediates business to be a principal business, while other companies, such as Arkema, are trying to exit intermediates.  One chemical company, not on the table above, Huntsman, has recently sold its intermediates business. 
• Some companies, such as BASF and FMC, depend on their intermediate businesses to produce intermediates used internally to make higher-margin products.