Chemicals, Industrial Inorganic
SIC 2810
NAICS 325
The industrial inorganic chemical industry extracts and processes from inanimate material of the earth's crust a variety of chemicals and gases, often known as basic chemicals. Examples of industry products include alkalies, carbon dioxide, chlorine, nitrogen, numerous pigments, and a wide array of other chemicals for industrial use. For more information about the organic chemical industry, see also Chemicals, Industrial Organic.
Inorganic chemicals account for approximately one-quarter of total global chemical sales (not including allied products, such as plastic), which were hovering around US$1.94 trillion per year in 2003. The industrial inorganic chemical industry consists of four segments: alkalies and chlorine (or chloralkalies); industrial gases; pigments; and miscellaneous inorganic chemicals, which make up the bulk of industry output. Organic chemicals, which are derived from materials that contain carbon, make up most of the remainder of the industry. Because most leading companies and countries in the industry produce both organic and inorganic chemicals, both categories are closely intertwined statistically. Most inorganic (or basic) chemicals are building-block materials used to manufacture other compounds and products. Therefore, industry performance is closely tied to the health of the global economy.
A global economic slowdown in the early 2000s forced many chemical firms to restructure operations. Turbulent economies also brought on a wave of merger and acquisition activity. In 2001 the U.S. chemicals industry as a whole experienced its worst year since the early 1980s. The American Chemistry Council attributed the downswing to the faltering U.S. economy, rising energy costs, a strong U.S. dollar, overcapacity, weakening demand related to the consolidating manufacturing industry, and falling prices.
By the mid-2000s, competition was rising from emerging economies, particularly China. The American Chemistry Council predicted that by 2006 global chemical sales would reach US$382 billion.
Examples of alkalies and chlorine are chlorine, sodium hydroxide (caustic soda), sodium bicarbonate, sodium chlorate, and various potassium compounds. Chlorine and caustic soda are major chloralkalies. They both are created through the electrolysis of salt brine. Chlorine is used in the manufacture of numerous products: to make paper (a controversial application because of its environmental impact); for water and sewage treatment; as a fuel additive; and in a multiplicity of other applications. Other major chemicals in the chloralkalies group include soda ash and sodium chlorate. Soda ash is primarily consumed in the production of glass, other chemicals, and detergents and soaps. Sodium chlorate can be used as a cleaner substitute for chlorine in many applications, particularly paper manufacturing. The United States is the largest global producer of chloralkalies, partly because of its dominance of the natural soda ash market. The U.S. annual capacity of soda ash is 13.1 million metric tons.
Industrial gases include the major gases nitrogen, oxygen, hydrogen, carbon dioxide, and argon. They also encompass more than 100 specialty gases (such as krypton and xenon) which are used in medicine, electronics, aerospace, and other industries. Nitrogen, the largest gas product by volume, is used in the production of other chemicals because of its inert "blanketing" qualities. It is also utilized in applications ranging from metal manufacturing to food processing. Oxygen is also employed in a variety of applications, particularly chemical and glass manufacturing and medical care. Carbon dioxide is commonly used for refrigeration and freezing, and to carbonate beverages. Hydrogen is used in oil refining and ammonia production, among other applications. Gases are often sold in compressed liquid or solid form and then stored in cylinders or transported via pipelines.
The industrial gas sector differs from most other chemical segments in that it is dominated by four companies: Praxair Inc. (U.S.), Air Products and Chemicals, Inc. (U.S.), L'Air Liquide (France), and BOC Group PLC (United Kingdom). Each of those manufacturers controls a major portion of the global market for industrial gas. Both L'Air Liquide and Praxair controlled 18 percent of the worldwide industrial gas market, which was estimated at US$34.5 billion in 2001 by J.R. Campbell & Associates. BOC had a 14 percent market share, while Air Products secured an 11 percent share.
Inorganic pigments are used primarily to make paints and coatings. This category includes metallic oxides, metal powder suspensions, earth colors, and lead chromates. The largest selling pigment is titanium dioxide, which is consumed mostly by producers of paints and dyes, paper coatings and fillers, plastics, and rubber. According to the U.S. Geological Survey, worldwide titanium dioxide capacity was 4.3 million metric tons per year. During 2000, complex inorganic pigments that could provide diverse characteristics such as lightfastness and chemical resistance were growing in popularity. However, growth in heavy metal inorganic pigments was faltering due to environmental concerns. Major producers of pigments are Du Pont (U.S.) and Imperial Chemical Industries PLC (United Kingdom).
Miscellaneous inorganic chemicals, which constitute the bulk of industry sales, include basic building-block chemicals used to make a plethora of other chemicals, compounds, and products. The most common industrial inorganic chemical by far is sulfuric acid, with the United States producing almost 40 billion kg each year. Most sulfuric acid is used to produce fertilizer, but it is also used in numerous other applications ranging from oil refining to paper production. The U.S. Geological Survey estimated that nearly 75 percent of sulfuric acid used in 1999 was for phosphate fertilizer. Sulfuric acid is commonly consumed on the site at which it is produced. An oil company, for example, may produce the chemical for use on site to refine oil.
Another major inorganic is sulfur, most of which is used to make sulfuric acid. Major sulfur-producing countries include Poland, the United States, the former Soviet Union, and Canada. The United States is the world's largest consumer and producer of sulfur. Phosphoric acid is another important industrial inorganic. Most of it is used to make fertilizer, but it is also utilized in the manufacture of animal feed, food processing, and for other industrial uses. Other important inorganics include ammonia (and ammonia nitrate and sulfate), nitric acid, and hydrochloric acid.
The industrial inorganic chemicals industry differs from the organic chemical industry in that it is more mature. Most inorganic chemicals have existed commercially for several decades, and basic production techniques have changed little. Thus, market growth closely parallels expansion of the major industrial sectors that consume the base inorganics: the paper, construction, packaging, transportation, healthcare, paint and inks, and fertilizer industries. Overall, industry growth generally mimics overall economic health with the exception of a few segments including specialty gases. This industry looks for growth in the developing Asian and Latin American countries, where industrialization fuels demand for inorganics.
Because the industry is mature, particularly in industrial countries, most of its products are produced on a very high-volume, commodity basis. As a result, the industry is exceptionally consolidated with just a few producers in each geographic region dominating specific segments. Furthermore, it is characterized by low profit margins and emphasis on containing production costs. The most successful producers are those that can minimize labor and energy costs, obtain access to relatively low-cost raw materials, and minimize distribution costs (by locating near their primary customers, for example).
Because low production costs are crucial, a major industry issue since the 1970s, and particularly in the 1990s and beyond, has been environmental regulation. The inorganic chemical industry is one of the most polluting of all manufacturing businesses. To reduce detrimental impacts, all of the industrialized nations have implemented strict environmental controls that limit output and disposal of pollutants and by-products. Adherence to these regulations costs the industry billions of dollars annually and forced many companies out of business by the mid-1990s. Indeed, a corollary of increased production costs associated with environmental laws has been reduced competitiveness of companies in industrialized nations in relation to those in developing nations with less burdensome restrictions.
Inorganic chemistry has its roots in the metallurgical and medical arts of ancient societies. The early Chinese and Egyptians were aware of simple alloys such as metallic salts and mineral products, as well as chemical processes related to glassmaking, enameling, dyeing, and painting. It was not until the eighteenth century, though, that rapid advances in the inorganic...
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