Scope of the Chemical Industry

The chemical industry comprises the companies that produce industrial chemicals. It is central to the modern world economy, as it converts raw materials into more than 70,000 different products. The chemical industry is more diverse than virtually any other industry in the world. Its products are omnipresent. Chemicals are the building blocks for products that meet our most fundamental needs for food, shelter and health, as well as products vital to the high technology world of computing, telecommunications and biotechnology. They are used to make a wide variety of consumer goods, and are also inputs in agriculture, manufacturing, construction and services industries. In particular, chemicals are a keystone of world manufacturing, as they are an integral component of all manufacturing sub-sectors, including pharmaceuticals, automobiles, textiles, furniture, paint, paper, electronics, construction and appliances. It is difficult to fully enumerate the uses of chemical products and processes, but the following nomenclature gives some indication of the level of diversity: Polymers and plastics--especially polyethylene, polypropylene, polyvinyl chloride, polyethylene terephthalate, polystyrene and polycarbonate--comprise about 80% of the chemical industrys output worldwide. The chemical industry itself consumes 26% of its own output. Major industrial products include rubber and plastics, textiles, apparel, polymers, pulp and paper, and primary metals. Chemicals are nearly a US$3 trillion global enterprise, with chemical companies in the EU, US and Japan being the worlds largest producers.

Category Breakdown of the Chemical Industry

The marketing of the chemical business can be divided into a few broad categories, including basic chemicals (about 35-37% of US dollar output), life sciences (30%), specialty chemicals (20-25%) and consumer products (about 10%).

BASIC CHEMICALS Also known as commodity chemicals are a broad chemical category, which include polymers, bulk petrochemicals and intermediates, other derivatives and basic industrials, inorganic chemicals and fertilizers. Polymers--the largest revenue segment, at about 33% of the basic chemicals US dollar value--include all categories of plastics and man-made fibers. The major markets for plastics are packaging, followed by home construction, containers, appliances, pipe, transportation, toys and games. The largest volume polymer product, polyethylene (PE), is used mainly in packaging films and other products, such as milk bottles, containers and pipes. Polyvinyl chloride (PVC), another large volume product, is principally used to make pipes for construction markets, as well as siding and, to a much smaller extent, transport and packaging materials. Polypropylene (PP), which is similar in volume to PVC, is used in markets ranging from packaging, appliances and containers, to clothing and carpeting. Polystyrene (PS), another large-volume plastic, is used principally for appliances and packaging, as well as toys and recreation. The leading man-made fibers include polyester, nylon, polypropylene and acrylics, with applications including apparel, home furnishings, and other industrial and consumer use. The principal raw materials for polymers are bulk petrochemicals. Chemicals in the bulk petrochemicals and intermediates category are primarily made from liquefied petroleum gas (LPG), natural gas and naphtha. Their sales volume is close to 30% of total basic chemicals. Typical large-volume products include ethylene, propylene, benzene, toluene, xylenes, methanol, vinyl chloride monomer (VCM), styrene, butadiene and ethylene oxide. These chemicals are the starting materials for most polymers and other organic chemicals, as well as much of the specialty chemicals category. Other derivatives and basic industrials include synthetic rubber, surfactants, dyes and pigments, resins, carbon black, explosives and rubber products. They contribute about 20% to basic chemicals external sales. Inorganic chemicals (about 12% of revenue output) are the oldest of the chemical categories. Products include salt, chlorine, caustic soda, soda ash, acids (such as nitric, phosphoric and sulfuric), titanium dioxide and hydrogen peroxide. Fertilizers are the smallest category (about 6%) and include phosphates, ammonia, urea and potash chemicals. LIFE SCIENCES (about 30% of the dollar output of the chemical business), include differentiated chemical and biological substances, pharmaceuticals, diagnostics, animal health products, vitamins and crop protection chemicals. While much smaller in volume than other chemical sectors, their products tend to have very high prices--over US$10 per pound--with research and development (R&D) spending at 15-25% of sales. Life science products are usually produced to very high specifications and are closely scrutinized by government agencies such as the US Food and Drug Administration (FDA). Crop protection chemicals, about 10% of this category, include herbicides, insecticides and fungicides.

SPECIALTY CHEMICALS are a category of relatively high value-added, rapidly growing, chemicals with diverse end-product markets. They are generally characterized by their innovative aspects--products are sold for what they can do rather than for what chemicals they contain. Products include electronic chemicals, industrial gases, adhesives and sealants, as well as coatings, industrial and institutional cleaning chemicals, and catalysts. Coatings comprise about 15% of specialty chemicals sales, with other products ranging from 10-13%. Specialty Chemicals are sometimes referred to as fine chemicals.

CONSUMER PRODUCTS Include direct product sales of chemicals such as soaps, detergents, and cosmetics.

Classification of the Chemical Industry Development of Pakistan This industry is divided into primary sector industries and secondary sector industries. Primary Sector Industries The Primary sector industry generally involves the conversion of natural resources into primary products. These are large, highly sophisticated, technology-based, capital intensive projects consisting of: (i) Petroleum refining and petrochemical industries for the production of petrochemical intermediates, olefins (ethylene, propylene, butylenes) and BTX (benzene, toluene, xylene), all of which form the basis for the development of monomers, polymers and plastic industries. (ii) Natural gas based projects for the production of ammonia, methanol, fertilizers and associated products. (iii) Mineral based industries consisting of cement, limestone, gypsum, sand and salt. (iv) Smelting and refining of ferrous and non-ferrous metals. They also produce raw materials for Secondary industries. Secondary Sector Industries The principal objective of Secondary sector industries is to provide the connective link between products and materials produced by Primary industries, which are of practical use to the national economy. This implies that the Secondary industries rely on the Primary industries for feedstocks and raw materials for use in manufacturing, processing, blending, fabricating plants for petrochemical intermediates, polymers,

plastics, steel, non-ferrous metals, minerals, agricultural and miscellaneous products. These industries use medium- to high-sophisticated technology, and range from light to medium categories.