SIC 2869 Industrial Organic Chemicals, Not Elsewhere Classified
SIC 2869
This industry includes companies primarily engaged in the production of organic chemicals used by other manufacturing industries. It encompasses the majority of U.S. organic chemical output and represents the single largest segment of the overall chemical industry. Materials created using these chemicals, such as plastic and fiber, are classified in their respective industries.
325110
Petrochemical Manufacturing
325188
All Other Inorganic Chemical Manufacturing
325193
Ethyl Alcohol Manufacturing
325120
Industrial Gas Manufacturing
325199
All Other Basic Organic Chemical Manufacturing
Scientists began producing synthetic organic chemicals in the 1850s. Not until the 1900s, however, did production grow to surpass inorganic output. Rapid expansion during the twentieth century made the overall chemical industry one of the largest businesses in the United States and one of the largest exporting sectors of the American economy. In 2003, the U.S. chemical industry grew by 2 percent, shipping products valued at $463.5 billion.
In 2003, the United States processed approximately 70,000 chemicals, which accounted for 26 percent of the world chemical supply. The health of the industry has followed the fate of the U.S. economy at large. In 2001, the industry suffered with the rest of the economy as terrorism, unrest in the Middle East, and a stagnant domestic economy affected productivity and profitability. Shipments of basic chemicals fell by 3.4 percent in 2000 and by 9.4 percent in 2001, before rebounding 8 percent in 2002. Despite a better year in 2002, the economy was recovering slowly, and the chemicals industry continued to suffer from weak consumer confidence and volatile natural gas and oil prices in 2003.
After a stagnant three years, the chemical industry experienced gradual to moderate growth in most business sectors throughout 2004. During the first half of the year, the growth rate was slow, up only 1.1 percent. However, in August of 2004, there was a 6.6 percent surge of shipments. Towards the end of 2004, there was a slight downturn from higher oil prices once again. Overall, global chemical production climbed 4.4 percent from 3.2 percent in 2003. Shipments of basic chemicals rose 4.9 percent. The recovery resulted in the shipping of products valued at $501 billion in 2004, despite the high cost of raw materials, as well as higher energy costs that still overshadowed the industry.
The chemical industry is divided into organic and inorganic substances. Inorganic chemicals, which are derived from the inanimate material of the earth's crust, include compounds such as sulfuric acid, sulfur, phosphoric acid, and hydrogen peroxide. Organic chemicals are so named because in the industry's early days they were obtained from living organisms. Today they are derived from substances that contain carbon—such as petroleum, coal, and natural gas. Petroleum-based chemicals, or petrochemicals, account for about 80 percent of industry output by weight and 50 percent of production by value.
Organic chemicals, particularly petrochemicals, play an indispensable role in modern society. They are essential ingredients in plastics, synthetic fibers, rubber, fertilizers, and chemical intermediates, which are converted into a plethora of consumer and industrial products. They are the primary building blocks of important materials supporting the health, food, transportation, and communication industries. Organic substances also have made possible many important specialty items, such as protective clothing and materials used for space exploration.
Because organic chemicals are used to make so many products within the overall chemical and related products divisions, the industry eludes clear definition. In fact, most industrial organic chemicals are consumed by chemical-related businesses. For instance, companies that produce cyclic crudes and intermediates, such as aromatics and dyes (see SIC 2865: Cyclic Organic Crudes and Intermediates, and Organic Dyes and Pigments), purchased about 20 percent of industry output in the 1990s. Plastic resin manufacturers (see SIC 2821: Plastics Materials, Synthetic Resins, and Nonvulcanizable Elastomers) consumed 13 percent of production. Synthetic fiber producers (see SIC 2824: Manmade Organic Fibers, Except Cellulosic) accounted for about 6 percent of industry revenues, and elastomer companies (see SIC 2822: Synthetic Rubber—Vulcanized Elastomers) absorbed 3 percent of production. Another 13 percent of organic chemical sales were garnered from exports.
The remaining 45 percent of organic output was used by numerous manufacturing sectors. Steel and aluminum mills, paper mills, semiconductor manufacturers, drug companies, carpet mills, and battery producers were relatively large customers. Other chemical uses included the production of items such as pipe, photographic equipment, electrical insulation, and food containers.
The organic chemical industry serves one primary purpose: to take a relatively few fundamental raw chemicals that contain carbon and combine and transform them into new substances with desirable physical properties. Using carbon as a basic building block, chemists are able to unite other elements—such as nitrogen, hydrogen, oxygen, sulfur, and chlorine—to generate a multitude of different compounds. Furthermore, each resultant compound can be manipulated with heat or additives to produce an infinite variety of characteristics and grades.
The most common category of organic chemicals are aliphatics, or olefins, which are straight-chain hydrocarbons. Olefins can be made using petroleum or natural gas, though most U.S. manufacturers use the latter. To produce Olefins, natural gas is separated into ethane, propane, and butane. From these gases, smaller percentages of marketable ethylene, propylene, and butadiene are extracted. These three substances are the basic building blocks for most organic chemicals and synthetic materials. Major producers of aliphatics include Dow Chemical, Union Carbide, Occidental Petroleum, and Quantum Chemical.
Ethylene is the largest volume organic chemical produced in the United States. Approximately 75 percent of all ethylene is utilized to produce plastics such as polyethylene, polyvinyl chloride, and polystyrene. It also is widely used to make antifreeze, synthetic fibers, rubber, solvents, and detergents. Derivatives of ethylene also represent a significant share of total industry output. The second largest olefin by production volume is propylene. Forty percent of propylene is used to make polypropylene, which in turn is utilized to manufacture film, packaging, foams and coatings, solvents, gasoline, and fibers. In addition, propylene is used to make other popular chemicals, such as acrylonitrile, propylene oxide, isopropanol, and cumene. Butadiene, the third most popular olefin, is employed primarily in the manufacture of synthetic rubber. The remaining one-third of butadiene production is consumed by makers of latex, resins, and nylon fibers.
Aside from olefins and their offspring, synthetic methanol accounts for a large share of industry output. Important derivatives of methanol include formaldehyde, acetic acid, methyl methacrylate, and various solvents. About 50 percent of all methanol is utilized in the production of adhesives, fibers, and plastics. In addition, it is an important ingredient in antifreeze and gasoline additives. Methyl tert-butyl ether (MTBE), a methanol derivative, is used as an oxygenate in automobile gasoline.
Laws and initiatives regarding hazardous emissions generated during organic chemical production and use are important dynamics that shape the industry. The chemical business is by far the largest polluting U.S. industry—generating at least three times more pollution than the second greatest offending industry.
As late as 1991, chemical producers released more than 1.5 billion pounds of toxins—as defined by the Environmental Protection...
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