MH5 PDF

Industry
Surveys
Chemicals
March 2019
Christopher Muir Xiong Jun Goon
Equity Analyst Industry Analyst
CONTENTS Contacts
Sales Inquires & Client
Support
4 Industry Snapshot 800.220.0502
cservices@cfraresearch.com
5 Financial Metrics
Media Inquiries
7 Key Industry Drivers press@cfraresearch.com
CFRA
10 Industry Trends
One New York Plaza
New York, NY 10004
23 How the Industry Operates
34 How to Analyze a Company in this Industry

Contributors
42 Glossary Beth Piskora
Vice President, Editorial
43 Industry References
Marc Bastow
45 Comparative Company Analysis Senior Editor
Raymond Jarvis
Associate Editor
Copyright © 2019 CFRA, One

New York Plaza, New York,
NY 10004. All rights reserved.
EXECUTIVE SUMMARY
Our fundamental outlook for the diversified chemicals sub-industry for the next 12 months is
positive. The business environment for the chemicals industry will likely remain healthy and
manufacturing volumes will likely continue to expand this year, in our view. Importantly, we see
continued feedstock and energy advantages for U.S. petrochemical companies relative to overseas
peers, improving fundamentals for fertilizer and agricultural chemical companies, and a growing
economy supporting industrial gases and specialty chemical companies.
Chemical Companies’ Results Driven by a Handful of Companies
Of the 42 companies in the S&P Composite 1500 (S&P 1500) Chemicals Sub-industry Index, the
eight highest market cap companies in the index account for 75.4% of the total. DowDuPont alone
makes up 22.9% of the index and Linde PLC 15.7%. The rest of the companies in the index are each
less than 10% of the total market cap.
Commodity Chemicals Benefit from Strong Competitive Position in the U.S.
The strong U.S. competitive position for commodity chemical companies (8.3% of the S&P 1500
Chemicals Index) stems from U.S. natural gas prices that are significantly cheaper than oil prices.
Currently, WTI oil prices are 20.5 times Henry Hub natural gas spot prices and North Sea Brent oil
prices are an even higher multiple. However, we see challenges due to lower volumes and higher
costs in 2019 hurting EPS.
Merger Savings and Higher Volumes Should Drive Diversified Chemicals Growth
Diversified chemical companies (26.2%) should benefit from merger savings driven by the
DowDuPont merger. DowDuPont, which makes up 87.4% of diversified chemicals market cap,
expects total synergies of $4.3 billion. We also see higher volumes driven by economic growth, but
see higher input costs offsetting these benefits and leading to lower results in 2019.
More Balanced Market Should Boost Fertilizer & Agricultural Chemicals Results
We see slowing urea capacity growth falling below demand growth over the next several years
leading to a more balanced market for fertilizer & agricultural chemical companies (6.6%).
Additionally, we see a balanced market in potash and phosphates. These factors should support
prices, and we see demand growth leading to higher volumes.
Economic Growth and Merger Savings Should Drive Industrial Gases Results
The industrial gases sub-industry (23.1%) became substantially larger following the Linde PLC and
Praxair merger, completed at the end of October 2018. Linde expects to achieve $1.2 billion in
merger synergies. The industrial gases sub-industry results are also driven by economic growth.
Linde’s sales are heavily weighted toward the Americas and Europe, followed by Asia.
Higher Volumes and Prices Should Aid Specialty Chemicals Results
Specialty chemicals companies (35.9%) is another industry facing rising raw materials costs, but its
competitive position allows most companies to recoup the increased costs through increasing product
prices. Volume growth and cost savings efforts are also helping to drive improved results.
3 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

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Industry Snapshot
CHEMICALS
Outlook: Positive
KEY TAKEAWAYS: 2019/2020 PREVIEW (S&P 1500 Chemicals Capital IQ Consensus)
While we expect this industry to Revenue Growth Forecast: 3.0% in 2019 and 5.0% in 2020
continue to benefit from the strength of EBITDA Margin Growth +14 bps in 2019 and +80 bps in 2020
the U.S. economy, we also see some Materials Select Sector SPDR (XLB), Vanguard
risks related to weaker economic Industry-Focused Exchange Traded Materials (VAW), iShares U.S. Basic Materials
growth in China and Europe as well as Funds (ETFs): (IYM), Fidelity MSCI Materials (FMAT), Invesco
the ability of companies to recover S&P 500 Equal Weight Materials (RTM)
rising input costs. Overall, we see good 2018 REVIEW
EPS growth driven by higher volumes Chemical Industry Index Performance -14.5%
and prices, partly offset by higher input S&P Composite 1500 Index -6.8%
costs.
MARKET CAP BREAKDOWN NEAR-TERM THEMES
RANK COMPANY MARKET
NO. NAME CAP (%)  Rising volumes and prices.  Margins pressured.
1 Dow DuPont 21.9 We expect chemical companies’ Higher oil prices in 2018 have led to higher
2 Linde 17.1 volumes to benefit from new input and logistics costs. Some companies
3 Ecolab 8.6 projects entering service and are unable to or are less able to pass on
Sherwin- improving economic conditions, the higher costs to customers, which could
4 while many companies continue
Williams 7.4 pressure EBIT margins in the industry.
5 Air Products 6.9 raising prices to combat higher input
Others* 38.1 costs.  Slower economic growth overseas.
Source: CFRA, S&P Global Market Intelligence.
*Others with at least 1% market cap include:  Cost savings boost earnings. Economic growth in China and Europe
LyondellBasell, PPG Industries, International has slowed which will pressure demand
Flavors & Fragrances Inc., Celanese, The Mosaic We see merger savings, generated growth and possibly lead to lower prices
Co., Eastman Chemical, FMC, Albemarle, RPM by several large corporate tie-ups, as inventories rise.
International, and The Chemours Co. and other cost saving efforts helping
to drive EPS growth that is higher
than the S&P 1500 Chemicals
Capital IQ consensus.
INDUSTRY SURVEYS CHEMICALS / MARCH 2019 4

FINANCIAL METRICS
Revenue
 We project revenue to increase by 3.0% in 2019
and 5.0% in 2020 for constituents in the S&P
Composite 1500 (S&P 1500) Chemicals index.
 We see revenues rising most in Fertilizer and
Agricultural Chemicals, helped by higher prices
and volumes) and Industrial Gases (aided by
higher volumes, new projects and bolt-on
acquisitions) in 2019.
 In 2020, we expect Commodity Chemicals and
Industrial Gases to lead revenue growth.
Earnings per Share

 We project earnings per share to increase by 3.1%
in 2019, hurt by slower growth in Diversified
Chemicals, and 15.3% in 2020 for constituents in
the S&P 1500 Chemicals index.
 We strong growth in Fertilizer and Agricultural
Chemicals and Industrial Gases and good growth in
Specialty Chemicals in 2019.
 In 2020, we see strong growth in all the
subindustries with Commodity Chemicals and
Diversified Chemicals rising the most.
Dividends and Payout Ratio

 We expect dividends to rise by 5.6% in 2019 and
6.3% in 2020 after rising 4.6% in 2018. Over the
past 10 years, dividends have experienced a 7.1%
compound annual growth rate.
 Following a strong increase from 2011 through
2016, dividend payout ratios have fallen over the
past two years. We expect payout ratios to decline
further over the next two years.
 Looking further into the future, we expect payout
ratios to continue to drop slowly as companies
invest in growth projects.

Capital Expenditure
 Capital spending levels remain very strong despite
a 5.9% decline in 2018 and a 23% drop in 2016.
 Over the past decade, Commodity Chemical and
Diversified Chemical companies have invested in
new production facilities, significantly expanding
their capacity.
 We expect capital spending levels to continue at
relatively high levels for the next few years, but see
the potential for slight declines from current levels.
LT Debt to Total Capital

 Long-term debt to total capital levels rose between
2013 and 2015, driven by strong capital spending
levels, share repurchases and a number of
acquisitions, but have declined in recent years as
capital spending growth has slowed.
 We believe levels will likely stabilize and rise
slightly as we expect share repurchases could
accelerate again.
Forward P/E Ratio

 After a strong bull run for chemical stocks
following the great recession, chemical stocks
declined sharply in late 2018 as higher interest
rates and slowing overseas economic growth
triggered fears of slowing economic growth in the
US.
 The decline in stock prices resulted in a significant
drop in chemical company PE ratios.
 We believe that current PE ratios support stock
price expansion as we continue to see the potential
for further growth in EPS.

KEY INDUSTRY DRIVERS
Oil /Natural Gas Prices

 While oil prices have declined from relatively high
levels in 2014, they remain at prices that give US
chemical manufacturers a competitive advantage
over competitors that use oil or other fuels as a
feedstock for commodity chemicals.
 In general, oil prices would have to drop to levels
less than seven times Henry Hub natural gas prices
in order to become competitive again.
 Given the 20x differential, US chemical companies
that use natural gas as a feedstock enjoy a
comfortable cushion against those that use oil.
U.S. Chemical Railcar Loadings

(railcar loads)
 Chemical railcar loadings are an important
430,000
2014 2015 2016 2017 2018 2019*
indicator of chemical production volumes.
 Railcar loadings mostly consist of ethanol (more
than half of tonnage), plastic materials and
synthetic resins (26%) and fertilizers &
400,000
agricultural chemicals (less than 25%) according
to data from the Association of American Railroads.
 Data indicates strong volumes in 2018 and in early
2019.
370,000
1-13 14-26 27-39 40-52
(Weeks since start of year)
*Data through March 16; last two weeks use average of first 11 weeks.
Sources: Association of American Railroads.
Industrial Production
 We believe the industrial production index is an
important indicator of economic activity. Rising
industrial production is a positive indicator for the
chemicals industry.
 Chemical materials make up 12.5% of the
industrial production index and many chemical
products are used to manufacture other products
in the index.
 We believe this makes it important to monitor the
index for signs of economic strength or weakness.

Housing starts
 The housing market is an important source of
demand for the chemicals industry, including
paints, PVC products, and epoxies.
 Following the great recession, housing starts
generally rose through the end of 2016, but have
since bounced between 1.1 million and 1.3 million
units before a momentary drop in December 2018.
 Housing starts fell 5.3% to a seasonally adjusted
annual rate (SAAR) of 1.20 million units in
September, while building permits fell 0.6% to 1.24
million units.
Global and U.S. Auto Sales

 Automobile manufacturing is a source of demand
for chemical companies that make automotive
paints/coatings, epoxies, plastics, tire additives and
other products that are used to manufacture
automobiles or automobile parts.
 While not on the chart, U.S. domestic auto sales
were up just 0.5% and global sales fell 0.3% in
2018.
 CFRA expects domestic sales to fall 3.6% and
global sales to fall 3.0% in 2019.
Green Markets Index

 We believe the price recovery that started in mid-
2017 has been helped by continued strong plant
nutrient affordability levels.
 We believe limited increases in plant nutrition
production in coming years and continued growth
in demand will lead to more balanced markets for
plant nutrition, especially for nitrogen-based
products.
 The price rally has weakened affordability levels
somewhat, but they remain strong and we believe
prices have room to rise further given improving
supply and demand dynamics.

Corn Prices
 World corn inventories are expected to drop in
2019, driven by high consumption levels. Corn
prices are expected to rise somewhat but remain
relatively low and are a significant factor in
determining plant nutrition affordability.
 However, soybean prices are expected to drop
slightly, increasing affordability, on a projected
increase in ending stocks driven by strong
production Wheat prices are expected to rise on
lower ending stocks.
 Overall, we see these trends leading to higher plant
nutrition volumes worldwide.

INDUSTRY TRENDS

Competitive Environment
Improving Fundamentals at the Sub-Industry Level
Within the industry, the competitive landscape varies by product line. Technology requirements
are among the factors that determine the degree of competition within a given product line.
Distribution is another factor; for products that are costly to transport, distant companies are at a
competitive disadvantage. Yet another factor is the availability and proximity of the necessary
raw materials, such as mineral ores, energy and primary chemicals.
An improving economy also helps drive top and bottom line growth. Higher oil prices than a year
ago have helped to drive price increases and improve U.S. petrochemical competitiveness
compared to overseas production. U.S. petrochemical producers typically use natural gas as a
feedstock while overseas producers use more expensive feedstocks, such as naphtha.
With the stronger economic growth of emerging markets (China, India etc.), CFRA thinks that
companies in the U.S. chemicals industry with foreign operations or investment in these emerging
markets could fare better than their peers who are more focused in developed markets. Merger
savings and cost containment efforts are further helping the profitability outlook for the industry.
The chemicals industry is comprised of the following sub-industries:
COMMODITY CHEMICALS
 Outlook Our fundamental outlook for the commodity chemicals sub-industry for the next 12
months is positive. We project that the business environment for the sub-industry will remain
healthy, assuming continual expansion in the global and U.S. economy. Feedstock cost of the U.S.
petrochemical industry versus other global regions remains competitive due to low U.S. natural gas
prices, thus helping boost U.S. industry exports and reducing the competitiveness of imports.
We think the housing market appears to be in the midst of a long-term gradual recovery, which
should help chlorine and PVC sales among others. While auto sales are expected to trend lower in
2019, we think continued weight reduction efforts will lead to higher organic and inorganic
chemical usage. Chlorine and co-produced caustic soda production has been trending higher since
2012. We believe that recent chlor-alkali global capacity reductions and increased internal demand
in China will likely benefit U.S. companies as they look to increase caustic soda exports.
We see new capacity helping earnings as the capacity is targeted at products where supply and
demand dynamics are attractive. A trend of chemical industry consolidation will likely continue
longer term as part of an effort to reduce costs, in our view. We expect lower gross margins in 2019
to be partly offset by higher volumes leading to pressure on profitability, but see improving
margins leading to strong EPS growth in 2020. S&P Capital IQ consensus estimates indicate EPS
growth of 7.3% in 2019 and 14.0% in 2019 as of March 15, 2019.
 Competition. The commodity chemicals sub-industry is very competitive with commodity

products and commodity inputs. Brand identity and product specialization are of little importance
for the commodity products. Within the commodity chemicals sub-industry, there are many larger
companies, including those from the diversified chemicals sub-industry, that compete with each
other for market share in many different petrochemical, chlorine and caustic soda-based products.
Substitute products are not necessarily a threat for companies in the commodity chemicals sub-
industry, and commodity chemical companies work to increase existing plant efficiency and build
new more efficient plants to keep or increase their market share within the global sub-industry.
Due to high barriers to entry stemming from high capital costs, new competitors are unlikely to
pose a challenge to companies in the sub-industry, except for the ones with more efficient plants.
We see high bargaining power for customers and low bargaining power for suppliers as products
and inputs are widely produced and used. Overall, we see the commodity chemicals sub-industry
being the least attractive among chemical sub-industries based on competitive pressures.
DIVERSIFIED CHEMICALS
 Outlook. Our fundamental outlook for the diversified chemicals sub-industry for the next 12
months is positive, based on U.S. real GDP growth forecasts by Action Economics of 3.0% in 2019.
We see some pressure on the commodity chemicals businesses that are part of the diversified
chemicals companies in 2019 leading to pressure on EPS. But low U.S. natural gas prices relative to
global crude oil prices help the energy and feedstock cost competitiveness of the U.S. petrochemical

segment versus other global regions, such as Europe, thereby helping boost U.S. industry exports
and reducing imports into the U.S. Thus, we look for higher industry volumes in 2019 and 2020.
According to forecasts from the American Chemistry Council (ACC), chemical production in North
America is expected to increase by 3.6% in 2019 after a 3.1% increase in 2018. Recent data for the
U.S. show that output has been fairly good and we see higher volumes for 2019. We see capacity
utilization in the global chemicals improving slightly to a level higher than the 1987 through 2017
average that was reported by the American Chemistry Council. We see slightly higher average U.S.
producer prices in 2019 with synthetic rubber, inorganic chemicals, agricultural chemicals, and
manufacture fibers benefiting the industry. However, we also see higher average feedstock prices
than a year ago.
We think the factors that influence the sales, earnings and share prices of these companies are
similar to those in the commodity and specialty chemicals industries. Within fertilizers and
agricultural chemicals, these companies participate in the agricultural chemicals businesses, chiefly
selling pesticides and herbicides. Over the long term, we see earnings having more cyclicality than
specialty chemicals, but less than the commodity chemicals sub-industry. Looking at the next few
years, the S&P Capital IQ consensus estimates on March 15, 2019, indicate -3.8% EPS growth for the
sub-industry in 2019 and 16.5% in 2020.
 Competition. The diversified chemicals are chiefly involved in three parts of the chemicals
business: fertilizers and agricultural chemicals, commodity chemicals and specialty chemicals. We
see individual commodity product supply and demand dynamics setting pricing trends for
commodity chemical inputs and outputs.
Within the specialty chemicals, we see many smaller competitors competing with individual
products of larger diversified chemical companies and see competition among the larger companies
in fertilizer and agricultural chemicals. Some publicly-traded diversified chemical companies’
products may not have direct competition from competitors due to patent protections; however,
there is always the threat of new substitute products being introduced by competitor companies
through product innovation.
New competitors with significant scale are unlikely to pose a challenge to companies in the
diversified chemicals sub-industry, but within the more commodity-like chemicals product lines,
large companies can build large new more efficient plants to try to win market share. We believe
that bargaining power of customers is relatively low for specialty products given the specialization
of products with some exceptions and higher customer bargaining power for more commodity-like
products. We see higher bargaining power with some suppliers for more specialized products and
lower bargaining power with some suppliers of more commodity-like products. Overall, we see the
diversified chemicals sub-industry being more attractive than the commodity chemicals, fertilizer
and agricultural chemicals, and industrial gases sub-industries based on competitive pressures.

FERTILIZERS & AGRICULTURAL CHEMICALS
 Outlook. We have a positive fundamental 12-month outlook for the fertilizers & agricultural
chemicals sub-industry, which consists of makers of agricultural fertilizers, herbicides, pesticides,
seeds, and lawn and garden products. The U.S. farm economy and crop markets are generally
mature, with cultivation of corn the largest use for agricultural chemicals. According to the March
2019 USDA Agricultural Projections to 2028 report, eight major U.S. field crops (corn, sorghum,
barley, oats, wheat, rice, upland cotton and soybeans) planting acreage is expected to remain
relatively steady with declines in corn and wheat being mostly offset by increases in soybeans. One
of the reasons for the decline in corn acreage includes significantly increasing yields per acre of
corn planted. While declining acreage could be a slight negative for herbicide and pesticide use,
increasing yields likely will require significantly more nutrients. Much of the growth in global
nutrient use has come from developing countries in Asia and Latin America, as these regions’ rising
populations and income levels boost the demand for grain. We expect fertilizer and seed companies
to focus more on these markets in the coming years. In the U.S., plant nutrient affordability remains
very healthy and we see higher crop-related volumes and prices in 2019.
Since mid-2017, fertilizer prices have risen, but are still a fraction of their peak levels in 2008.
Fertilizer prices have tended to follow corn prices over the past several years, but excess corn
capacity and high corn inventories have hurt prices.
Fertilizer and agricultural chemical producers remain optimistic about the long-term fundamentals,
based on rising consumption of meat around the globe and general affordability of fertilizers
relative to grain prices. Natural gas, which is a major component of production costs for nitrogen
producers, is considerably lower in price than recent historical averages, and prompted a large
number of fertilizer companies to explore capacity expansion opportunities in North America.
Chinese producers have cut production significantly in the past few years, which should support
demand for North American producers. Looking at the next few years, the S&P Capital IQ consensus
estimates indicate 21.9% EPS growth for the sub-industry in 2019 and 15.3% in 2020.
 Competition. Generally, the fertilizer and agricultural chemicals sub-industry is competitive

with ample competitors in each of different product lines, including various fertilizers and crop

protection products. Brand identity and product specialization are important for the crop
protection products and some seed lines, but we view most plant nutrients as being commodity
products. We see high barriers to entry in the plant nutrient space due to either the capital required
to build efficient plants or the scarcity of rock reserves for certain nutrients. Within plant nutrition,
several companies compete to sell commodity-like products. Within crop protection, companies’
products may not face direct competition due to patents held; however, there is always the threat of
new substitute products being introduced by competitor companies through product innovation
and many companies spend significant amounts of money on research and development in order to
maintain market share. While new competitors with significant scale are unlikely to pose a
challenge to companies in the sub-industry, we believe that bargaining power of customers is
somewhat strong given the ability of customers to switch to competitor products to achieve desired
results. We see even higher customer bargaining power for the more commodity-like plant
nutrition products. Overall, we see the fertilizer & agricultural chemicals sub-industry being one of
the least attractive among the chemical sub-industries based on competitive pressures.
INDUSTRIAL GASES
 Outlook. We have a positive fundamental outlook for the industrial gases sub-industry for the
next 12 months. We project that the business environment for the industrial gases industry will
continue to improve, aided by the start-up/ramp-up of new projects and an improving economy.
Consumption of industrial gases over the longer term will likely continue to increase at the
historical rate of 1.5 to 2 times that of industrial production, in CFRA’s view.
We see higher sales in fiscal year 2019 helped by acquisitions, continued volume increases,
improved pricing and additional pass-throughs of higher energy costs to customers. We see
continued acquisitions of smaller industrial gasses companies by the larger companies continuing
industry consolidation at a much smaller pace. S&P Capital IQ consensus estimates indicate that
EPS will increase by 11.3% in 2019 and 14.0% in 2020.
 Competition. Generally, the industrial gases sub-industry is competitive with a handful of large
global companies competing with many smaller local companies. Brand identity is less important in
this sub-industry, but product specialization at the on-site cryogenic plants to match customer

specifications is required. The industrial gases sub-industry is marked by high levels of
competition, especially in the high-volume bulk and low-volume cylinder markets. On-site plants
face competition during the project bidding process, but once built, the customer has a very low
ability to switch. Large industrial gases companies focus on efficiency in order to keep or expand
their market-share. While new competitors with significant scale are unlikely to pose a challenge to
the large companies in the sub-industry, there is stiff competition at the local level. We believe that
bargaining power of customers is relatively high as onsite plants are often chosen through a
bidding process and industrial gases are basically a commodity product. Overall, we see the
industrial gases sub-industry being more attractive than the commodity chemicals and fertilizer &
agricultural chemical sub-industries based on competitive pressures.
SPECIALTY CHEMICALS
 Outlook. We have a positive fundamental outlook for the specialty chemicals sub-industry for
the next 12 months, although business conditions vary for individual companies. Specialty chemical
producers are generally smaller in terms of revenue and market cap than traditional diversified
chemical producers; some focus on only one product line, while others boast a diverse product mix.
Many companies generate a significant share of total sales from outside the U.S. We think
consolidation within product lines will continue as companies try to boost sales and earnings
growth.
We expect many specialty chemical companies to report organic sales and profit growth in coming
quarters aided by forecasts for U.S. GDP growth, partly offset by slower economic growth from non-
U.S. operations. We estimate that sales and net income for the industry will improve further in
2019, and we see gross profit margin growth being hindered by rising energy and feedstock costs
but offset by pass-through of such costs to customers.
Although long-term prospects vary widely for different types of specialty chemical producers, we
think industry sales growth over the longer term will moderately exceed real economic growth.
Purchase decisions for specialty chemical products, which are specialized products for specific uses,
are made more on the basis of performance specifications than price. Specialties generally require
higher R&D spending and incur greater marketing and customer service costs; however, their

production is typically less capital intensive than that of commodity chemicals. Specialty chemical
producers are generally less affected by cyclical changes in the economy and supply/demand
balances than commodity producers. Therefore, we expect specialty companies to have more stable
profit margins over a business cycle than commodity manufacturers. Looking at the next few years,
the S&P Capital IQ consensus estimates indicate 7.3% EPS growth for the sub-industry in 2019 and
14.0% in 2020.
 Competition. Generally, the specialty chemicals sub-industry is competitive with several

companies competing within the same product lines, such as paint companies. Brand identity and
product specialization are also important for the specialty products. Within the specialty chemicals
sub-industry, there are typically many smaller companies that compete with the larger companies
for individual products. Some publicly traded specialty chemical companies’ products may not have
direct competition from competitors due to patents held; however, there is always the threat of
new substitute products being introduced by competitor companies through product innovation.
Specialty chemical companies continually work to innovate their products and develop new
products in order to keep their market share within the sub-industry. While new competitors with
significant scale are unlikely to pose a challenge to companies in the sub-industry, we believe that
bargaining power of customers is relatively low given the specialization of products with some
exceptions, but we see higher bargaining power with some suppliers of more specialized products
and lower bargaining power with some suppliers of more commodity-like products. However, each
company is fairly different within the sub-industry, so it is hard to make broad generalizations.
Overall, we see specialty chemicals sub-industry being more attractive than other chemical sub-
industries based on competitive pressures.
Operating Environment
Lower Gas Costs Improve U.S. Competitiveness
As of February 2019, oil (WTI) is forecast to average about $54.19 per barrel in 2019 and $60.76
per barrel in 2020, according to the U.S. Energy Information Administration (EIA). These prices
would be up from the average of $50.79 per barrel in 2017. For natural gas, the EIA expects the
average Henry Hub spot prices to decrease to $2.89 per MMBtu in 2019 from an average of $3.15 in
2018 before increasing marginally to $2.92 in 2020. However, the projected spot price is still lower
compared with historical levels, which is beneficial for the cost competitiveness of the chemicals
industry.
The abundant supply of natural gas and lower prices have improved the feedstock cost
competitiveness of the U.S. petrochemicals segment versus other global regions such as Europe,
thus helping boost production in the U.S., and making the U.S. a preferred destination for global
investment in the chemicals industry. The competitive advantage from shale gas also continues to
benefit the U.S. chemicals industry in terms of investments, as well as in terms of increased
production to meet the expected surge in global demand in the next several years, according to the
ACC’s December 2017 “2017 Year-end Chemical Industry Situation and Outlook.”
While overall energy trends should remain favorable for the industry, each company’s cost trends
for energy and raw materials will vary, depending on the specific raw materials purchased and the
terms included in their individual supply contracts.
Business Environment Seeing Healthy Growth

The business environment for the chemicals industry is likely to experience strong volume
expansion in 2019. Economic growth continued at a moderate pace in 2018, on the back of an

uncertain global economic environment. The U.S. economic activity, as measured by real GDP, grew
1.6% in 2016, 2.2% in 2017 and 2.9% in 2018 according to data from Action Economics. On March
4, 20919, Action Economics forecasted that real GDP would grow 2.7% in 2019, 2.5% in 2020 and
2.3% in 2021.
INDUSTRIAL PRODUCTION INDEXES
(2012=100)
INDEX 2000 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total index 95.2 99.6 94.1 97.1 100.0 102.0 105.2 104.1 102.1 103.7 107.8
Manufacturing 98.2 103.4 94.7 97.5 100.0 100.9 102.0 101.5 100.7 101.9 104.3
Nondurables 103.3 109.5 101.9 102.3 100.0 99.5 99.2 99.9 100.1 100.1 102.2
Chemicals & products 92.9 117.3 103.9 105.8 100.0 90.9 91.5 93.6 91.8 90.2 92.0
Basic chemicals 92.9 101.4 99.7 97.2 100.0 100.2 97.1 94.4 96.3 96.9 99.9
Alkalies & chlorine 76.3 132.3 89.6 89.9 100.0 94.5 92.8 100.0 101.9 102.2 98.1*
Inorganic chemicals 113.0 124.8 98.3 95.2 100.0 92.7 88.8 86.4 86.1 79.9 80.2
Industrial organic chemicals 84.9 91.8 100.1 98.0 100.0 103.1 100.3 97.5 100.3 103.5 107.5
Synthetic materials 143.8 130.4 104.7 98.5 100.0 105.1 96.5 95.3 94.2 95.8 97.8
Manmade fibers 161.8 119.1 96.3 103.6 100.0 97.6 94.4 88.9 85.3 85.6 86.0
Plastic materials 101.8 108.4 97.5 94.7 100.0 100.4 99.0 94.1 95.2 95.7 100.7*
Paints, coatings & adhesives 102.4 111.6 103.5 108.2 100.0 94.0 97.9 97.6 95.3 97.6 101.0
Soaps & toiletries 81.0 105.4 103.5 112.2 100.0 89.3 93.7 93.8 91.0 90.4 93.8
Agricultural chemicals 95.5 102.6 93.5 88.4 100.0 116.1 108.1 94.6 96.5 116.8 121.8
*Data through November.
Source: Federal Reserve Board.
Globalization
Foreign trade and investment have become increasingly important to the U.S. chemicals industry, as
demand from chemical markets in developing Asian, Middle Eastern and Latin American countries is
growing faster than in Europe and the U.S. due to higher birth rates, improving living standards and
industrialization. Total global chemical shipments, excluding pharmaceuticals, rose at a compound
annual growth rate (CAGR) of 5.0% from 2007 through 2017, substantially higher than the relatively
flat U.S.’s chemical shipments over the same period, according to ACC’s “Business of Chemistry 2018“.
Between 2014 and 2022, U.S. chemical shipments are expected to grow at an average rate of 3.3%,
according to ACC’s December 2017 “Year-end 2017 Chemical Industry Situation and Outlook.”
With access to plentiful and affordable natural gas supplies, the U.S. continues to be an attractive
location for global chemicals industry investment, according to the ACC’s “Mid-Year 2018 Chemical
Industry Situation and Outlook” report. The U.S. chemical production is expected to grow 3.4% in
2018 and 3.6% in 2019. ACC also projects that the U.S. chemical exports (excluding pharmaceuticals)
will improve 7.2% this year to 139.2 billion in 2018.

CHEMICAL TRADE BALANCE
(in $, millions)
YEAR CHEMICALS U.S. TRADE BALANCE

EXPORTS IMPORTS TRADE BALANCE TOTAL EXCLUDING CHEMICALS
2018* 179,635 236,113 (56,478) (815,176) (758,698)
2017 181,272 221,116 (39,844) (783,685) (743,841)
2016 186,258 217,323 (31,065) (734,330) (703,265)
2015 195,802 216,155 (20,353) (745,662) (725,309)
2014 203,108 207,805 (4,697) (735,194) (730,497)
2013 198,851 195,456 3,395 (689,471) (692,866)
2012 198,062 196,189 1,873 (730,448) (732,321)
2011 197,432 198,379 (947) (725,448) (724,501)
2010 181,039 173,315 7,724 (635,363) (643,087)
2009 153,357 151,073 2,283 (503,582) (505,866)
2008 174,231 176,825 (2,594) (816,199) (813,605)
*Data through November.
Source: U.S. Census Bureau.
New Petrochemical Plants in the Planning Stages and for Startup

The U.S. has become more attractive for the construction of new petrochemical capacity due to
increased global cost competitiveness of U.S. feedstocks (primarily ethane), combined with
increased chemicals industry production levels. In early 2011, a number of companies announced
plans to either expand existing or build new ethylene facilities, which would be the first for the U.S.
since before the turn of the century.
Notable plant expansions/startups in the U.S.

DowDuPont Mar 2016 Commissioned 750,000 mtpa propane dehydrogenation unit in Freeport,
Texas.
Dec 2016 Expanded ethylene production facility in Louisiana by 250,000 mtpa.

|
Sep 2017 Announced new 1.5 million mtpa ethylene production facility and 400,000
mtpa ELITE enhanced PE production facility in Freeport, Texas.
Q1 2018 Started 200,000 mtpa NORDEL metallocene EPDM facility and 350,000 mtpa
specialty LDPE plant in Plaquemine, Louisiana.
Aug 2018 Commenced construction to expand the ethylene production facility to 2.0
million mtpa in Texas by end-2019.
Chevron Phillips Jul 2016 Completed PE pilot plant at Bartlesville facility, Oklahoma.
Chemical Co. |
Jun 2017 Completed expansion of its low viscosity PAO capacity at Cedar Bayou plant
by 10,000 mtpa.
Sep 2017 Commissioned two PE units —one plant for bimodal HDPE and another for
metallocene LLDPE—in Old Ocean, Texas.
Mar 2018 Announced successfully introduction of feedstock and commenced

operations of the new ethane cracker in Cedar Bayou facility.

LyondellBasell Sep 2016 Announced the building of 1.1 billion-pounds-per-year HDPE plant at La Porte
Industries N.V. manufacturing complex, Texas.
Sep 2017 Completed the 800 million pounds-per-year ethylene expansion project in
Corpus Christi site, Texas.
May 2017 Commenced construction on HDPE plant at La Porte manufacturing complex;

startup expected by 2019.
Jul 2017 Completed front-end engineering design work and received the required
environmental permits for PO/TBA facility.
Aug 2018 Commenced construction on PO/TBA facility; expected to be completed by

mid-2021.
Westlake Chemical Jul 2016 Completed the 250 million pounds capacity expansion at Lake Charles plant.
Corp. |
May 2017 Completed expansion of ethylene capacity at Calvert City by 70 million
pounds per year
Royal Dutch Shell plc. Feb 2016 Commenced expansion of the 425,000 mtpa alpha olefins at Geismar facility,
Louisiana to over 1.3 million mtpa.
Nov 2017 Commenced construction of a major petrochemical complex in Pennsylvania,

comprising an ethane cracker and three polyethylene units with a PE capacity
of 1.6 million mtpa.
M&A Environment
Extensive Activity Rules
The chemicals industry witnessed extensive consolidation over the past 12 years, which CFRA
expects to continue this year, when not considering the slit up of Dow Dupont into three separate
more focused companies. Some companies in the industry are under pressure to consolidate and
reduce costs in response to competitive forces where customer bargaining power forces price
reductions as industry inefficiencies are removed. Some companies are also responding to investor
pressure to boost earnings growth through merger savings and other synergies. When companies
merge, the surviving larger company can reduce costs in areas such as overhead, selling and
manufacturing. It also can achieve greater efficiencies in procurement and establish best practices
for manufacturing and logistics.
Most transactions are relatively small, involving individual product lines or plants. Companies
seeking growth within industry sectors may make acquisitions to achieve production or marketing
efficiencies. Those that are divesting businesses usually do so because they want to exit certain
geographic regions, because they are unwilling or unable to make the investments needed to
remain competitive, or because they want to focus on other businesses with better sales growth
opportunities. However, in the past two years, high-value transactions have been announced
and/or completed in the chemicals industry.
In 2018, a total of nine merger & acquisition deals with transaction values of above $1 billion were
announced, of which six transactions were completed. The largest transaction announced was the
proposed acquisition of Esterline Technologies Corporation by TransDigm Group Incorporated .
The proposed deal, valued at $4.4 billion, was announced on October 10, 2018 and is expected to
complete in the second half of 2019.
INDUSTRY M&A TRANSACTIONS*
(Top transactions announced from 2016 to present, arranged b y size)
ANNOUNCEMENT COMPLETION TARGET ACQUIRER SIZE ($M)

DATE DATE
05/18/16 06/07/18 Monsanto Company Bayer Aktiengesellschaft 66,279
11/29/16 10/31/18 Linde Aktiengesellschaft Linde plc (formerly Praxair) 53,395
02/03/16 05/24/17 Syngenta AG China National Chemical Corporation 46,323
03/20/16 06/01/17 The Valspar Corporation The Sherwin-Williams Company 11,455
05/09/18 01/31/19 Yantai Wanhua Chemical Co., Ltd. Wanhua Chemical Group Co., Ltd. 8,613
05/07/18 10/04/18 Frutarom Industries Ltd. International Flavors & Fragrances Inc. 7,241
07/05/18 12/03/18 Praxair Deutschland Holding GmbH & Taiyo Nippon Sanso Corporation 5,748
07/20/18 01/31/19 Arysta LifeScience Corporation UPL Corporation Limited 4,200
05/17/18 12/03/18 Sociedad Química y Minera de Chile Tianqi Lithium Corporation 4,066
06/10/16 08/31/16 Axiall Corporation Westlake Chemical Corporation 3,887
10/06/16 01/31/17 Atotech B.V. The Carlyle Group L.P. 3,200
12/10/18 03/01/19 Linde Aktiengesellschaft Linde plc 3,200
03/01/17 05/04/17 Yingde Gases Group Company Ltd PAG Asia Capital 3,052
09/13/18 - MPM Holdings Inc. KCC Corporation; Wonik QnC 2,866
09/25/16 04/21/17 LANXESS Solutions US Inc. LANXESS Deutschland GmbH 2,637
01/25/18 09/12/18 Clariant AG Saudi Basic Industries Corporation 2,501
10/03/18 - Sahara Petrochemicals Company Saudi International Petrochemical 2,305
02/15/18 08/21/18 A. Schulman, Inc. LyondellBasell Industries N.V. 2,264
04/17/17 07/06/17 Williams Olefins, L.L.C. NOVA Chemicals Inc. 2,100
12/19/16 01/08/18 Vale Fertilizantes S.A. The Mosaic Company 2,027
*Cancelled transactions are not included in the results.
Source: CFRA, S&P Global Market Intelligence.
Regulatory Environment
The chemicals industry transforms raw materials—many of which can be dangerous—into other
products, using complex methods that can generate solid and liquid wastes as unwanted
byproducts. Consequently, the industry is subject to a large number of state and federal laws and
regulations involving public health, worker safety and environmental protection.
TSCA Modernization Act

The Toxic Substances Control Act (TSCA), passed in 1976, oversees the safety of chemical products
and provides the Environmental Protection Agency (EPA) with authority to review and regulate
chemicals in commerce. After several years of attempting to reform the TSCA, President Barack
Obama finally signed the bipartisan Frank R. Lautenberg Chemical Safety for the 21st Century Act
(LCSA), which also includes updates for the TSCA, into law on June 22, 2016, reforming the TSCA
after 40 years.
On November 29, 2016, the EPA released the first 10 chemicals that would be evaluated under the
new TSCA legislation. Meanwhile, in June 2017, the EPA issued three process rules for the amended
TSCA: the prioritization process rule for identifying high-priority and low-priority chemicals for risk
evaluation; the chemical risk evaluation process rule to establish the EPA’s process in evaluating high-
priority chemicals; and the inventory notification rule that requires manufacturers to inform the EPA
of manufactured and processed chemicals in the U.S. over the past decade.

Toxic Waste Emissions Climbing
The chemicals industry had made considerable improvements in its toxic waste emissions. It had
moved from being the largest toxic waste emitter in the U.S. in 1988 to the third largest in 2009,
according to the EPA’s Toxics Release Inventory (TRI) database, far outstripping the average
reduction achieved by other industries.
Despite earlier success, emissions from the industry have been on the rise Between 2007 and 2017,
the chemical segment’s toxic releases increased by 1.7%. Total releases (i.e., discharges on-site and
off-site) for all TRI segments in 2017 were 3.9 billion pounds, according to the latest available TRI
(released in September 2018). Of that, almost 13% were emitted by the chemicals manufacturing
segment, second only to the metal mining segment of 50%. In 2016, the chemical industry emitted
1.1% lesser toxic waste.
Greenhouse Gas Controls

A major potential regulatory and legislative change that could affect the chemicals industry is the
current “climate change” proposal, including global talks and proposed U.S. regulations designed to
reduce greenhouse gases (GHG) such as carbon dioxide and methane. Total GHG emissions for the
chemicals industry totaled 184.1 million metric tons of carbon dioxide equivalent in 2017, an
increase of 3.8% from 2016, according to the EPA. Non-fluorinated chemicals accounted for 94.6%
of total chemical GHG emissions, while the rest came from fluorinated chemicals.
In August 2018, in fulfilling its promises of a more relaxed regulation, the EPA proposed a new rule
known as Affordable Clean Energy (ACE), to replace Obama’s Clean Power Plan (CPP) introduced in
2015. Most notably, under the proposed ACE rule, carbon emission guidelines are set by the federal
government, but states will have the flexibility to determine their own emissions standards for
coal-fired power plants. As opposed to the CPP that was intended to close coal power plants, the
ACE aims to keep coal power plants running and makes them cleaner, modern and more efficient.
Although the power sector’s carbon dioxide emissions are expected to fall to about 34% below
2005 levels by 2030 if the ACE proposal is fully implemented (similar to CPP), the EPA estimates
coal production for power sector use to grow 4.5%-5.8% by 2025. The ACE rule is expected to
generate $400 million in net benefits annually, with a 0.2%-0.5% reduction in retail electricity
prices by 2025. The proposed ACE is open for public comment through October 31, 2018 and a final
rule was initially expected by the first quarter of this year. However, according to S&P Global Platts,
the partial government shutdown had led to a push back in timeline to the second quarter of this
year.

HOW THE INDUSTRY OPERATES
The chemicals industry is one of the largest industries in the U.S. and comprises a wide array of
companies that produce different chemical substances that range from commodity raw materials
used in other industries, to finished consumer products such as medicines and soap.
Industry Characteristics
Cyclicality
The manufacturing, automobile, agriculture and housing segments are the largest customers of the
chemical industry. As such, the chemical industry is cyclical in nature and generally correlates with
the health of economy or commercial viability of its end products. However, some businesses
within the industry are not as cyclical as others. The paint and coating segment, for instance, can be
negatively affected by an economic downturn as housing markets and car sales dwindles.
Adding to the industry’s cyclicality are imbalances in supply and demand caused by capacity
additions. Certain areas of the industry in which large capacity additions are commonly made—such
as the production of commodity inorganic chemicals, petrochemicals and plastics—can experience
sharp price swings in response to changing supply and demand conditions.
Such imbalances, however, generally do not apply to specialty chemicals as they are manufactured
in lower volumes than basic chemicals and are largely used in final products for specific
applications. These specialized products are less susceptible to cyclical demand thus reducing
pricing volatility. The value of specialty chemicals to the customer also raises the “switching cost”,
offsetting the bargaining power of customers. Capacity additions for specialty chemicals are
commonly small or designed for unique products, and thus can be done relatively quickly to closely
match demand growth.
Capital Intensity
The cost of adding new facilities for high-volume commodity chemicals could amount to hundreds
of millions of dollars. These large plants are required to achieve economies of scale that enable
efficient manufacturing of chemicals products. Other factors include the complex nature of
technology used in plants and equipment; ancillary investments in utilities, storage and distribution
systems; and the high levels of expensive, sophisticated safety and environmental protection
equipment required for today’s chemical facilities.
The specialty chemicals sub-industry is less capital intensive than the commodity chemicals sub-
industry. Manufacturing plants for specialty chemicals are usually small to medium in size and cost
from a few million to several tens of millions of dollars. However, specialty chemicals companies
may need many manufacturing or distribution sites for the large number of unique, low-volume
products that their customers require.
Both commodity and specialty chemicals firms must maintain capital budgets for the continual
upgrading and replacement of existing plants. Facilities periodically undergo extensive
modernization programs, often resulting in the expansion of rated capacity potential. Long lead
times are normal for the construction of new facilities—especially for commodity products—because
larger plants are needed. Local authorities must be notified, in order to obtain zoning and
environmental approvals, and plants must be designed, constructed, and put into operation. Thus, it

is difficult for a chemical company to make short-term changes in capital spending and for capacity
to match major changes in demand.
Energy Intensity
The chemicals industry is highly energy intensive, accounting for about 6.5% of U.S. energy
consumption for use (as fuel and power and as raw materials) in 2017. Natural gas and oil comprise
the bulk of the industry’s energy consumption, with the remainder mainly consisting of electricity
and coal. The bulk chemicals industry consumes about 30% of total industrial energy and is
expected to grow at average of 1.2% per year, according to the EIA’s “Annual Energy Outlook 2019”
report.
Energy costs amounted to about $67.5 billion in 2017, or around 8.8% of the value of chemicals
industry shipments, according to the ACC. Of the chemicals industry’s total energy consumption,
energy inputs used for raw materials accounted for 54.6% by volume (72% by value) in 2017, with
the rest used for fuel and power. Companies purchase much of their energy needs under long-term
contracts, which help reduce sensitivity to fluctuations in spot oil and natural gas prices. For
manufacturers of some products, such as petrochemicals, energy consumption for both fuel and raw
materials accounts for the majority of the total cost of production.
Distribution Methods Vary

Chemical manufacturing facilities are located in every state, but almost two thirds of U.S. chemical
production is concentrated in 10 states. The chemicals industry has a wide range of customers;
hence, distribution methods play a key role in the industry.
The chemicals industry shipped nearly 917 million tons of chemicals and products (including
consumer products and drugs) within the U.S. in 2017, according to the ACC. The ACC estimates
that the total cost of transportation for the chemicals industry was nearly $49.8 billion in 2017,
accounted for 6.5% of the value of total chemicals industry shipments.
About 56.1% of all chemical and product tonnage in 2017 was shipped by truck. Trucking is most
widely used for small-volume packaged products, as well as for industrial gases and consumer
products, such as pharmaceuticals and detergents.
Rail is the most common means of shipping commodity chemicals such as chlorine, fertilizers, bulk
petrochemicals and inorganic chemicals, although waterborne transport moved at a higher
percentage share in 2017. Railroads accounted for 19.2% of tonnage in 2017, while waterborne
transport moved 20.8% of chemical tonnage, mainly for shipping of large-volume commodity
chemicals.
Other modes of transportation include pipelines, rail/truck intermodal and air cargo. Pipelines
accounted for 3.3% of volume in 2017, mainly for short-distance transportation of industrial gases
and petrochemicals such as ethylene. In some regions, suppliers commonly connect directly to their
customers’ plants by pipeline.
Chemicals Products
The products reviewed in this Survey include both commodity and specialty chemicals.
Commodities include basic inorganics (inorganic chemicals, chlor-alkalis and industrial gases),
organic chemicals (ethylene, propylene, benzene and their derivatives), plastics and fertilizer
materials. Most are generally high-volume products with little product differentiation from one

manufacturer to the next. Commodity chemicals operations are characterized by limited research
and development (R&D) spending and a strong emphasis on reducing feedstock, energy
requirements and labor costs through engineering process improvements.
Specialty chemicals (or “specialties”) are generally made from basic chemicals, and, because they
are designed for specific applications and/or customers, they may be produced in small volumes.
Specialties are sold largely based on their performance attributes and are often critical components
of the end products in which they are used. They require higher R&D spending and incur a greater
amount of marketing and customer service costs than do commodity chemicals. Products include
paints and coatings, pesticides, adhesives and sealants, catalysts and plastics additives. (For reasons
of space, we provide details on only the paint and coatings segment in this Survey.)
BASIC CHEMICALS
Basic chemicals include inorganic chemicals, chlor-alkalis and industrial gases. The majority of
basic chemicals are produced from mineral ores or brines, atmospheric gases, or gases created as a
byproduct or co-product of various manufacturing processes, such as primary metal production,
petroleum refining and coal processing. Basic chemicals are used as building-block materials and as
processing aids and catalysts in the production of other chemical and nonchemical products. The
largest consumers of basic chemicals are companies within the industrial and agricultural
segments.
Inorganic Chemicals
Inorganic chemicals—including sulfur, sulfuric acid and titanium pigments—comprise the bulk of
basic chemicals produced. This segment supplies building-block inorganic chemicals, catalysts and
reagents used in other products.
 Sulfur. The bulk of sulfur produced in the U.S. is from numerous companies that recover it
during oil refining and natural gas processing, with a smaller amount produced as byproduct
sulfuric acid derived from nonferrous metal smelters.
About 90% of domestic sulfur consumed in 2017 was in the form of sulfuric acid, according to the
U.S. Geological Survey (USGS). By far the largest-volume inorganic chemical, sulfuric acid is used
directly or indirectly in a wide variety of industrial processes, primarily as a chemical reagent. Its
predominant end use is in the production of fertilizer.
Sulfuric acid is manufactured primarily through the oxidation of sulfur. Phosphate fertilizer
companies are the largest producers. A small amount is derived as a byproduct of metal ore
smelting and from the regeneration of acid previously used as catalysts in petroleum refining or
chemical processing.
 Titanium dioxide. Titanium dioxide is made from titanium through one of two discrete
processes: sulfate treatment and chloride treatment. The USGS estimated worldwide titanium
dioxide capacity at about 7.3 million metric tons in 2017, with U.S. capacity at almost 1.4 million
metric tons of chloride process. U.S. production in 2017 was estimated at nearly 1.3 million tons, up
1.6% from 2016.
In 2017, about 68% of U.S. titanium dioxide demand came from the paint and coatings segment,
which uses it for white pigmentation. The other major end uses are plastics (25% of demand) and
paper (3%). The remaining 4% of consumption included catalysts, ceramics, coated fabrics and
textiles, floor coverings, printing ink and roofing granules, according to USGS.

Chlor-Alkalis
Chlor-alkalis include chlorine and caustic soda (sodium hydroxide) and other alkalis such as soda
ash (sodium carbonate).
 Chlorine and caustic soda. Chlorine and caustic soda are co-products of salt brine electrolysis.
Because chlorine gas is a dangerous product that is expensive to store, demand for chlorine usually
fuels chlorine–caustic soda production. Chlorine is affected by economic change more quickly than
is caustic soda; thus, when demand for chlorine increases or ebbs, its co-product caustic soda can be
in long or short supply. Domestic chlorine production in 2017 was about 11.2 million tons, up
slightly from 11.1 million tons in 2016, according to the ACC. Caustic soda output was 11.8 million
tons in 2017, which was also slightly above the production level in 2016.
Pricing is based on the electrochemical unit (ECU)—a ton of chlorine with the commensurate
amount of caustic soda. Chlorine is used largely to make polyvinyl chloride plastics and a variety of
chemicals including titanium pigment. Industrial uses include pulp bleaching and paper production,
water and sewage treatment, and metal extraction.
About half of caustic soda output is used in the production of other chemicals, and about 25% is
used in pulp and paper manufacturing. Other important markets for caustic soda are soaps and
detergents, textiles, water treatment, aluminum, and petroleum and gas processing.
 Soda ash (sodium carbonate). Soda ash was the largest alkali in terms of volume in 2017,
according to the ACC. Production in 2017 increased to 12.0 million metric tons, up 1.7% from 2016,
according to the ACC. In the U.S., soda ash is extracted mainly from trona, a natural vitreous mineral
that is mined in Wyoming.
Glass manufacturing is the largest U.S. market for soda ash, accounting for 49% of U.S. consumption
in 2017, as estimated by the USGS. Other uses of soda ash are chemicals production, distributors,
soap and detergents, flue gas desulfurization, pulp and paper manufacturing, and water treatment.
Industrial Gases
Industrial gases are produced primarily by air separation; that is, they are extracted from the
atmosphere. Examples of gases produced in this manner are nitrogen, oxygen, argon and the rare
gases. Some gases, including hydrogen, acetylene and carbon dioxide, are co-products or
byproducts of other processes. Air separation plants are sometimes built on the customer’s
property, which leads to low customer switching in those locations. There are two other basic
distribution methods for industrial gases: bulk supply (high volume) and cylinders (low volume).
In the dominant cryogenic air separation process, air is cooled and pressurized until it becomes a
liquid, with the various gases extracted through fractional distillation. However, non-cryogenic
production technologies are a growing source of nitrogen and oxygen. The two key non-cryogenic
systems are membrane separation and pressure swing adsorption. Facilities based on either of these
systems tend to be significantly smaller than cryogenic plants, and thus can be located directly on a
customer’s site. Due to their lower capital and energy requirements, these two methods produce
gases at a much lower cost—as much as 50% less than the traditional cryogenic method.
These lower costs have spurred the development of new applications for industrial gases, opening
up new gas markets in which cryogenic gases would be uneconomical. Non-cryogenic methods also
are taking some existing small-volume business away from cryogenically produced gases, freeing
up much-needed cryogenic production capacity.

ORGANIC CHEMICALS
Organic chemicals are substances that contain the element carbon. Their main sources are crude oil
and natural gas. Organics include aliphatics, aromatics and methanol, which can be further
processed into intermediates and solvents. End products include plastics as well as synthetic
rubbers and fibers, detergents, pharmaceuticals, adhesives, inks, dyes and explosives. The
distinctions among these classifications are often blurred, with certain basic and intermediate
chemicals frequently sold as end products.
Production of major organic chemicals in the U.S. was erratic in the early 2000s, due to two
economic recessions and recoveries, very high natural gas prices, and hurricane-related plant
shutdowns and transportation disruptions. Production had since recovered in 2011, but has
remained below record levels, except for ethylene, which reached record production levels of 27.2
million metric tons in 2017.
PRODUCTION OF SELECTED ORGANIC CHEMICALS

(in thousands of metric tons)
CHEMICAL PRODUCTION AVERAGE ANNUAL

PERCENT CHANGE
2007 2013 2014 2015 2016 2017* 1-YR. 10-YR.
Aniline 980 1,050 895 760 770 795 3.2 (2.1)
Benzene 7,000 5,430 5,270 5,010 4,855 5,155 6.2 (3.0)
1,3-Butadiene 1,935 1,405 1,365 1,345 1,400 1,430 2.1 (3.0)
Cumene 3,700 2,510 2,595 2,580 2,445 2,605 6.5 (3.4)
Ethylbenzene 5,665 4,625 4,565 4,810 5,110 4,645 (9.1) (2.0)
Ethylene 25,415 25,035 24,660 26,185 26,130 27,220 4.2 0.7
Ethylene dichloride 9,565 8,375 8,310 9,215 9,310 9,975 7.1 0.4
Ethylene oxide 3,415 2,525 2,535 2,725 2,855 2,885 1.1 (1.7)
Propylene 16,445 13,250 13,265 14,150 14,660 14,740 0.5 (1.1)
Styrene 5,100 4,465 4,400 4,660 4,820 4,365 (9.4) (1.5)
o-Xylene 6,195 5,030 4,795 3,910 3,770 4,245 12.6 (3.7)
*Latest available.
Source: American Chemistry Council.
Aliphatics
Also called olefins, aliphatics are straight-chain hydrocarbons. Ethane, propane and butane from
natural gas are treated using the “steam-crack” process (the cracking of feedstocks done in the
presence of steam) to yield varying percentages of ethylene, propylene and butadiene. These three
substances are the most important aliphatics, as they are the building blocks for most organic
chemicals and synthetic materials.
 Ethylene. This is the largest-volume organic chemical produced in the U.S., with long-term
shipment growth estimated at about 3%–4% a year. U.S. production in 2017 was 27.2 million
metric tons, up 4.2% from the prior year, according to the ACC. Demand for plastics (polyethylene,
or PE, polyvinyl chloride and polystyrene) accounts for about three quarters of final ethylene
demand. Other important uses are for the manufacture of antifreeze, synthetic fibers and rubbers,
solvents and detergents.
 Propylene. Propylene is the second-largest organic chemical in terms of volume, at 14.7 million
metric tons in 2017, relatively flat from the 2016 production level. The chemical’s largest market, at
about 50%, is for the manufacture of polypropylene resin. It is also used to make derivative
chemicals such as acrylonitrile, propylene oxide, cumene and isopropanol. In turn, those chemicals
are needed to make acrylic fibers, phenolic resins, acrylonitrile-butadiene-styrene (ABS) resins,
polyurethane resins and coatings, unsaturated polyester plastics and solvents. They are also used
as blending agents in gasoline.
Aromatics
Aromatics, including benzene, toluene and the xylenes, are derived primarily from petroleum
refining and from olefin operations that use steam cracking. Some aromatics are produced from
coal tar. Important chemical end uses of aromatics are for the manufacture of plastic resins, fibers
and rubber. Aromatics also can be added to gasoline to increase its octane rating.
A large percentage of aromatics are produced through petroleum refining, so the economies of
aromatics production are linked to those of gasoline production. Aromatics’ prices are thus closely
tied to the demand for and the price of crude oil and gasoline. As a result, prices for aromatics are
among the most volatile of any chemical group.
 Benzene. Benzene is the simplest aromatic compound, in terms of chemical composition, and the
most widely used. Benzene output in 2017 totaled 5.2 million metric tons, according to the ACC.
Major end uses include styrenic plastics (polystyrene and ABS), phenolic resins, polycarbonate and
epoxy resins, polyurethanes, nylon, synthetic rubbers and detergents.
 Benzene derivatives. With nearly 4.4 million metric tons produced in 2017, styrene is one of
the most widely produced derivatives of benzene. Its primary market is polystyrene production
(more than 60% of total consumption). Styrene is also used in the production of styrene-butadiene
rubber and latex, ABS resins, unsaturated polyester resins and other plastics.
Phenol, another common benzene derivative, is employed primarily in the production of bisphenol-A
(used in polycarbonate engineering plastics and epoxy resins) and phenolic resins (used in
adhesives). Other phenol derivatives are caprolactam (nylon resins) and aniline (polyurethanes).
Phenol is generally produced from cumene; its co-product is acetone (acrylic plastics). Major phenol
producers are Sunoco Inc., Royal Dutch Shell, INEOS Group and DowDuPont.
PLASTICS
Plastics are polymers that are combined with additives and other ingredients—stabilizers, colorants,
flame retardants and reinforcing agents—and then shaped or molded into a solid state under heat
and pressure. Plastics are produced directly or indirectly from such organic chemicals as ethylene,
propylene, butadiene and benzene. Plastics output may be formed into pellets, flakes, granules,
powders, liquid resins, sheeting or film.
There are two kinds of plastics: thermoplastics, which can be re-softened to their original condition
by heat, and thermosets, which cannot be re-softened. Thermoplastics have accounted for about
85% of total plastics production in recent years, given the ability of thermoplastic to be recycled
and lower production costs.
Much of the demand for plastics comes from the packaging and consumer markets, two segments
that tend to be fairly recession-resistant. In 2017, the largest market for plastics was packaging,
such as bags, bottles, and food containers. These items accounted for 34% of all plastics use,
according to the ACC Plastics Industry Producers’ Statistics Group. Consumer and institutional

goods, such as kitchenware, toys, sporting goods and medical products was the second largest
market, followed by exports.
The volume of industry sales and production (both measured in pounds) grew in most years for the
past two decades. During this period, increases were achieved in most years. CFRA thinks that
much of the long-term growth in plastics came from their use as substitutes for natural materials—
including wood, glass, paper and metals—in applications such as packaging, durable goods and
personal care products.
PRODUCTION OF PLASTIC MATERIALS & RESINS

(in thousands of metric tons)
PRODUCT PRODUCTION AVERAGE ANNUAL

PERCENT CHANGE
2007 2013 2014 2015 2016 2017* 1-YR. 10-YR.
Nylon resins 587 562 590 585 600 595 (0.8) 0.1
Polyethylene
Low density† 3,596 3,139 3,227 3,191 3,216 3,140 (2.4) (1.3)
Linear low density† 6,162 6,284 6,286 6,618 6,658 6,881 3.3 1.1
High density‡ 8,266 8,119 7,944 8,524 8,695 8,528 (1.9) 0.3
Polypropylene 8,821 7,452 7,461 7,782 7,782 7,878 1.2 (1.1)
Polystyrene resins 2,729 2,650 2,838 2,808 2,791 2,781 (0.4) 0.2
Polyvinyl chloride and
copolymers 6,626 6,973 6,821 6,670 7,011 7,199 2.7 0.8
*Latest available. †0.940 density and below. ‡Density above 0.940.
Source: American Chemistry Council.
Thermoplastics
The five largest-volume thermoplastics are polyethylene, polyvinyl chloride, polypropylene,
polystyrene and polyester plastics.
 Polyethylene. The thermoplastic polyethylene (PE)—including high-, low-, and linear low-
density polyethylene (LLDPE)—was the largest-volume plastic on a combined basis in 2017.
Packaging is the largest market for PE, followed by consumer and institutional products, exports
and other. Major PE producers in the U.S. are ExxonMobil Chemical, DowDuPont, LyondellBasell,
Chevron Phillips Chemical, Westlake Chemical and INEOS Group.
 High-density polyethylene (HDPE) is the largest-volume polyethylene. Its primary uses include
blow moldings (mainly for bottles and containers), films and sheets for packaging and bags,
injection moldings (pails, crates, and tubs and containers), pipes and conduits, and extruded
products.
 Linear low-density polyethylene (LLDPE) has been the fastest-growing PE for many years and is
the second-largest volume PE plastic. LLDPE can be produced with less pressure and at lower
temperatures than are required by traditional low-density polyethylene (LDPE) resin
production processes. As a result, production costs and energy requirements for LLDPE are
lower than for LDPE. In addition, LLDPE film is stronger than LDPE film.
Most LLDPE is made in “swing” plants (that are also capable of making HDPE). Major uses of
LLDPE include film products (bags and liners, along with packaging and stretch/shrink-wrap

films), extruded products (including sheet and pipe and conduit), injection molding and roto-
molding resins.
 Low-density polyethylene (LDPE) is the smallest volume PE plastic, and it experienced modest
fluctuations from 1999 to 2017. Major end uses include films and sheets (mainly for packaging,
bags and liners), extrusion coatings, extruded products (including wire and cable) and injection
moldings.
 Polypropylene. Polypropylene (PP) was the plastic resin with the second-largest volume in
2017. Much of the growth were propelled by broadening applications in the automotive, durable
goods and textile markets. The major end markets for PP are packaging, consumer and institutional
products, furniture/furnishings, transportation and exports, according to the ACC. The leading
domestic product uses for PP include injection moldings (for packaging, consumer products,
transportation and appliances), fiber and filaments (primarily for nonwoven textiles and carpets),
and films and sheets.
 Polyvinyl chloride. Polyvinyl chloride (PVC) was the third-largest plastic in terms of volume in
2017. Demand is highly dependent on housing and construction-related markets, which account for
about 70% of domestic consumption. Construction uses include pipes, siding, window and
doorframes, fencing and decking. Extrusion—in which plastic is shaped into a hard form by being
pushed through a die—is the primary end use for PVC. Other important end uses include calender
(or pressed) items for packaging films and sheets and for flooring; molded bottles and pipefittings;
and coatings for flooring, textiles and paper.
 Polystyrene. The leading domestic markets for polystyrene (PS) are consumer and institutional
products, and packaging, including foodservice ware, according to the ACC. Other leading PS
markets are building and construction, electrical/electronic products (including appliances) and
exports.
 Polyester plastics. Polyester plastics consist largely of polyethylene terephthalate (PET) resins,
which are typically used in beverage and food containers.
Thermosets
This category includes phenolics, polyester resins, epoxies, urea and melamine, which are
considered relatively mature products. Demand for these low-volume products is closely tied to the
highly cyclical building and construction markets, which generally account for about two thirds of
demand.
FERTILIZERS
Fertilizers are substances or mixtures that contain one or more of the major plant nutrients and
sometimes secondary and/or trace nutrients. They are added to soil to replace essential nutrients
depleted by crops. The main nutrients are phosphorus (in the form of ammonium phosphates and
superphosphates derived from phosphate rock), nitrogen (supplied as anhydrous ammonia and
urea) and potassium (supplied as potash). Secondary and trace nutrients include calcium,
magnesium, sulfur, iron, copper and zinc.
Fertilizer Markets
Fertilizer markets are both seasonal and volatile. Demand is a function of grain prices, government
farm programs, the acreage and mix of crops planted, weather patterns, farming practices and the
value of the U.S. dollar. Population growth and dietary trends play important roles as well. The

cultivation of corn is the largest single use of fertilizer in the U.S., followed by wheat, soybeans,
cotton and other crops.
The U.S. farm economy is generally mature, as is the domestic fertilizer market. Fertilizers are
already widely used in the growth of important crops, such as corn and soybeans. Thus, year-over-
year changes in fertilizer demand reflect the level of planted acreage and application rates. These,
in turn, are affected by grain prices, government farm policies and weather conditions. More
recently, the rapid growth in the production of biofuels initiatives, including ethanol, has been
driving a boost in grain and oilseed use globally.
In February 2019, the USDA, in its World Agricultural Supply and Demand Estimates, suggested
that the total planted area for nine major crops would reach about 354 million acres by end-2019
(including 100.2 million acres of feed grains, 89.1 million acres of corn and soybeans, respectively,
and 47.8 million acres of wheat), relatively flat from the projected 353 million acres as of mid-2018.
The USDA estimated that domestic corn plantings fell 1.1 million acres year over year to 89.1
million acres as of March 2019, while soybeans plantings fell 1.0 million acres to 89.1 million acres
and soybeans plantings are expected to decline to 82.5 million acres by next year. Meanwhile,
wheat plantings rose 1.8 million acres to 47.8 million acres as of March 2019, and the USDA
projects an increase to 51.0 million acres by 2019.
Global demand for nutrients in 2019 will likely be comfortably above the depressed levels seen in
2008 and 2009, reflecting increased plantings resulting from tight global supply/demand
fundamentals for grains and other crops. CFRA thinks that demand in 2019 will be up moderately
from 2018, due to the expected increase in planted acreage of the major crops this year.
Nitrogen
Nitrogen is the largest-volume nutrient. It must be reapplied via fertilizer each year because it is
absorbed by crops or escapes from the soil through leaching, volatilization, or erosion and runoff.
As a result, nitrogen-based fertilizer typically sees more stable demand, on a per-acre-planted basis,
than does either phosphate or potash.
Produced from natural gas, ammonia is the simplest form of nitrogen fertilizer and is the primary
raw material for the production of enhanced nitrogen fertilizers, such as urea and ammonium
nitrate solutions. Approximately 88% of domestic ammonia consumption in 2017 was for fertilizer
use, according to USGS.
Domestic ammonia production in the past decade has remained below the production levels of the
late 1990s, as very high and volatile prices in the past decade for natural gas have caused a large
percentage of capacity to be periodically idled or, in some cases, permanently closed. In 2017, the
U.S. producers operated at around 75% capacity, compared to 80% in 2013. With a 15% increase in
domestic production from 2013 to 2017, imports in 2017 were 33% lower than in 2013 and net
imports declined 42%. Apparent consumption in 2017 fell to 13.3 million tons from 13.9 million
tons in 2013. The share of imports declined from 36% in 2013 to 25% in 2017.
The USGS, in its annual “Minerals Commodity Summaries 2018” for nitrogen, noted that a long
period of low and stable natural gas prices in the U.S. has spurred companies to upgrade existing
plants and plan for new nitrogen projects. In the next four years, it is projected that about 2.5
million tons of annual production capacity will be added in the U.S. Global ammonia capacity is
expected to increase as well by 8% during the next four years, as new capacity additions are
expected in Africa, Central Asia and Eastern Europe.

Phosphates
The U.S. is the world’s largest consumer and importer of phosphate rock and the largest processor
and exporter of phosphate chemicals converted from phosphate rock. The USGS estimates that
fertilizer accounts for over 95% of annual domestic demand of phosphate rock, which totaled 28.8
million metric tons in 2017. Animal feed supplements and industrial and consumer applications
accounted for the balance of demand; there is now no exporting of phosphate rock. A small amount
of rock is imported (accounting for about 7.3% of demand), virtually all from Peru and Morocco; the
bulk is used by three phosphoric acid producers.
Phosphate rock is combined with sulfuric acid to yield phosphoric acid, which is then further
processed into fertilizers such as diammonium phosphate. All phosphate rock mining companies are
vertically integrated with one or more fertilizer plants, usually located near the mine.
About 50% of the wet-process phosphoric acid produced in 2017 was exported by the U.S. in the
form of upgraded granular diammonium and monoammonium phosphate fertilizer, and merchant-
grade phosphoric acid. U.S. marketable phosphate rock production in 2017 increased 2.2% to 27.7
million metric tons. U.S. phosphate rock used in 2017 was 2.1% higher than 2016.
Potash
The term potash generally applies to naturally occurring potassium salts. About 85% of the potash
consumed in the U.S. is used for fertilizer. The balance is sold to the animal feed and nonagricultural
markets, where it is used in the manufacture of chemicals, glass, and soaps, and as an ice melt and a
water softener.
Potash is mined primarily from deposits of potassium salts. Canada is by far the world’s largest
producer, followed by Russia, Belarus, China and Germany. Increased global consumption in recent
years had tightened supplies after many years of oversupply. Total demand reached 6.1 million
metric tons in 2017 amid stronger demand for potash fertilizers. CFRA expects global demand to
rise slightly in 2019.
CFRA thinks the global growth markets of the future are nations with limited or no indigenous
potash production, such as Brazil, India and China. The U.S. is the world’s largest consumer and
importer of potash. Imports accounted for 93% of the 6.1 million metric tons of potash consumed
domestically in 2017, according to the USGS.
PAINTS AND COATINGS

Used to create a protective and/or decorative layer, paints and coatings are among the industry’s
major product categories. The substances used to make them include resins, solvents, additives,
pigments, and, in some products, a diluent. They fall into three broad categories: architectural
coatings, product coatings for original equipment manufacturers and special-purpose coatings.
Paint
The U.S. paint segment is generally considered mature. Longer-term unit growth is expected to
average about 1%–2% annually.
The paint segment is under pressure to reduce emissions of volatile organic compounds (VOCs)
from paints and to limit the consumption of solvents. Solvents are the dispersion media for the
solids—primarily pigments and binders—that are used in paint. Particular attention has been focused
on the emissions of VOCs and solvents in original equipment and industrial applications.

Manufacturers have introduced a number of alternatives to conventional high-solvent paints and
new process techniques to increase application efficiency. Ironically, these techniques have led to a
decline in paint and solvent consumption, lowering the industry’s unit growth rate (traditionally
reported in gallons), especially in the original equipment and special-purpose paints categories.
The coatings segment consists of four main product categories, described below.
 Architectural coatings. These are general-purpose paints, varnishes and lacquers used on
residential, commercial, institutional and industrial structures. Sold through wholesalers and
retailers, they are classified as stock or shelf goods. The architectural coatings market is mature,
with long-term growth projected at about 1%–2% per year. Sales generally reflect the level of home
redecorating, maintenance, and repair, as well as sales of existing homes, construction of new
homes, and, to a lesser extent, commercial and industrial construction. The architectural coating
segment faces competition from alternative materials, such as aluminum and vinyl siding, interior
wall coverings, wood paneling and glass.
 OEM coatings. Formulated to customer specifications, original equipment manufacturer (OEM)

coatings are applied to original equipment during manufacturing. The category also includes
powder coatings (about 10% of category, which also appears to be understated), which are dry,
solventless coatings. OEM coatings are used on such durable goods as automobiles, trucks,
appliances, furniture and fixtures, metal containers and building products, as well as industrial
machinery and equipment.
 Special-purpose coatings. These coatings, which can be classified as stock or shelf goods, are
formulated for special applications or environmental conditions, such as extreme temperatures,
exposure to chemicals, or corrosive conditions. Major markets include industrial construction and
maintenance, automotive and machinery refinishing, marine, highway and traffic markings, aerosol
paints, metallic paints and roof coatings.
 Others. Miscellaneous products include paint removers, thinners, cleaners, wood fillers and
sealants, and putty and glazing compounds.

HOW TO ANALYZE A COMPANY IN THIS INDUSTRY
When analyzing a company in the chemicals industry, one should take into account such factors as
economic and end-market conditions, the nature of the company’s product lines (such as
commodity or specialty) and any issues that may be unique to the company.
The level of demand for a company’s products is determined in large part by economic conditions.
These include growth in GDP and/or industrial production, as well as conditions in important end
markets. (For more information on factors that influence the entire industry, see the “Key Industry
Ratios and Statistics” section of this Survey.)
Some companies are more markedly affected by changing economic conditions than others, due to the
nature of their customers or product applications. For example, synthetic rubbers are used largely
in automobile tires and parts. Because automobile sales vary over the course of a business cycle,
demand for synthetic rubber also will vary. In contrast, some chemicals and plastics are used
extensively in household goods and packaging applications, which experience relatively stable
demand throughout an economic cycle.
Product Line Fundamentals

Various questions about a company’s product lines need to be considered. What kinds of chemicals
does the company produce? Is the company’s product mix commodity or specialty in nature? How
sensitive are those products to the business cycle? What is the outlook for industry capacity
additions or reductions in those product lines? How great is the company’s ability to pass on raw
material cost increases to customers? To what extent is the company forced to pass any
manufacturing or raw material cost savings on to customers? Is the company changing or
improving its product mix?
Commodity Versus Specialty

Basic, or commodity, chemicals are generally produced in large volumes, and there is little product
differentiation between one manufacturer and another. Companies that manufacture commodity
products have little control over selling prices during economic downturns or periods of excess supply.
Specialty chemicals are products designed for specific applications and/or customers; thus, they may
be made in small volumes. Companies with products that sell more on performance attributes have
greater control over prices, and thus have more stable profit margins than do commodity producers.
Selling prices for specialties tend to be set by their value in use, not by costs, giving their
manufacturers greater control over prices than is exercised by makers of commodity chemicals.
Specialty chemicals require higher research and development (R&D) spending and incur a greater
amount of marketing and customer service costs than do commodity chemicals.
Scrutinizing Supply
Changes in industry capacity in a company’s product line should be assessed. Industry capacity
changes can greatly influence a product’s selling prices and profit margins. Generally, changes in
industry capacity play a greater role for commodities than for specialties.
To take advantage of economies of scale, commodity chemicals are usually produced in larger
facilities than are specialties. Commodity producers have sizable fixed costs, which must be spread
over many units of production for the firm to make a profit. Thus, capacity additions or reductions

can significantly affect a commodity chemical’s balance of supply and demand, influencing capacity
utilization rates, prices and profit margins.
In the case of new supply, a producer of commodity chemicals that has brought the new capacity on-
stream will attempt to sell its new supply. In addition, other producers will try to maintain their
existing volumes in the face of the new competition. Consequently, all producers may be forced to
reduce selling prices to win or maintain customers. It is common, however, for suppliers to obtain
long-term supply agreements from customers, which help to stabilize production volumes. In
addition, given the large capital requirements for new production facilities, suppliers often line up
customers for some or all the output of a new facility before beginning construction.
When falling demand leads to excess supply, chemical producers may reduce selling prices to
maintain volumes. The lower prices and/or volumes can cause certain facilities to operate at a loss,
in which case their owners may reduce capacity to cut their losses. The product’s supply/demand
situation should then move closer to equilibrium; depending on the situation, its supply may even
be permanently reduced.
As economic growth or new applications increase demand for a product, excess capacity is used up.
Eventually, a product’s supply and demand come into balance. Producers can then stabilize or even
increase selling prices. If rising demand leads to tight capacity and significantly higher prices,
producers are encouraged to add new capacity. Thus, the business cycle repeats itself.
In the analysis of specialty chemicals companies, industry capacity changes generally play a small
role. Again, because specialty chemicals are largely sold based on their performance attributes, and
because their demand is relatively stable, industry supply/demand balances exert less influence
over selling prices and profit margins than is the case with commodities. Capacity additions for
specialties are commonly small or are designed for unique products; either way, they can be
completed relatively quickly. Thus, specialty chemicals companies can readily make short-term
changes in capital spending and capacity in response to significant changes in demand.
Company Characteristics
When analyzing a company, consider its specific characteristics, such as geographic reach,
acquisition strategy and new products.
Geographic Reach
The extent of a company’s geographic reach is important in that it can diversify risk. A broad
international mix of customers helps to reduce a company’s exposure to an economic downturn in
any one country, and thus to smooth its sales and earnings trends.
Geographic expansion may provide growth opportunities. The countries of the Asia-Pacific region,
Latin America and Eastern Europe have higher potential economic growth rates than do U.S. and
Western European economies, which are more mature. However, the cost of such expansions—in
terms of capital spending, acquisitions, product development or marketing—may hurt near-term
financial results. Changes in currency exchange rates also will affect results.
Acquisition Strategy
A company’s acquisition strategy must be considered. Companies that perceive limited growth
opportunities in existing markets or products may see acquisitions as the main avenue to growth.
When assessing such a company, the investor needs to ask several questions.

How does the company’s management allocate capital to internal growth and acquisition-based
external growth? What are its acquisition criteria? How does management address the conflict
between investments that serve to reduce cyclical exposure and those that sharpen the company’s
focus on current markets and customers? Are the company’s acquisitions closely related to its
existing businesses, or is the company diversifying its product mix? Is the company’s diversification
strategy consistent with its core competencies?
New Products
All companies in the chemicals industry introduce new products, but producers of specialty
chemicals must do so continually. Questions to ask include the following: At what rate is the
company releasing new products? Are customers accepting those products? Is the company
improving its product mix by introducing higher-margin goods? Is the company’s response to
customer demand being driven by changes in final consumer preferences, government regulations,
or technology? Is it maintaining or increasing its market share? This latter question is often hard to
answer in the specialty chemicals sub-industry, since information on individual products is often
lacking and most segments have few public competitors.
Looking at the Income Statement

When looking at the income statement, six key items to review are sales, operating margins, special
items, interest expense, net income and earnings per share (EPS).
Sales
A natural place to begin a financial analysis of a chemicals company is with its sales figures.
Changes in sales are largely due to fluctuations in sales volume, selling prices, product mix and
currency exchange rates. Acquisitions and divestitures also play a part.
When evaluating any period of less than one year (such as one quarter, six months or nine months),
compare it with the same period in prior years. This neutralizes such variations as holidays,
normally scheduled plant shutdowns or seasonal cycles in end markets such as agriculture. If
possible, look at sales for ongoing businesses or product lines to eliminate the impact of
acquisitions and divestitures.
For an indication of emerging business trends, look at sequential changes in sales. Sequential trends
can reveal early signs of changes in selling prices or demand. For example, if industry conditions
worsen throughout the year and selling prices remain low compared with the preceding year, it
could lead to a negative analysis for the near term. However, if sequential trends reveal that prices
have begun to turn up, they would support a more positive outlook.
Compare changes in sales with the company’s historical growth rates and the rates of its
competitors. Are the company’s sales growing or declining, and why? Are its core markets or
product lines growing faster or slower than in the past? Is it becoming more efficient in its use of
resources to generate sales? Is it adding new capacity or introducing new products, gaining or
losing market share? [Note: market share in the chemicals industry is often hard to determine
because of a lack of information for many individual products.]
The investor may wish to consider other questions as well. Are the company’s customers
themselves losing or gaining market share? Could the factors that account for any deviation from
historical trends reverse quickly? (Such factors might include selling prices, currency exchange
rates or temporary situations involving production plants, key customers or the competition.) Does

the company have enough capacity to sustain future growth? How long would it take and how much
would it cost to build additional capacity?
Watch Out! Chemical companies provide certain cash sales incentives to and allow returns from
customers. Therefore, management must make a variety of estimates in calculating provisions for
appropriate allowances at the time of sale. Revenues are presented net of these provisions, while
accounts receivable are presented net of the related allowances. Consequently, the amount of the
provision can be manipulated to manage revenues and earnings up or down in any given period.
Operating Margins
Operating margins are calculated by taking a company’s sales figure and subtracting costs of labor,
raw materials, energy and utilities, plant operations, and depreciation of plant and equipment. Also
subtracted are expenses for selling, marketing, administration and R&D. The resulting operating
profit is divided by the sales figure to derive the operating margin.
In general, costs for raw materials, manufacturing and depreciation account for a larger percentage
of total costs for a commodity chemicals company than they do for a specialty company. Operating
margins over a business cycle are generally more volatile for commodities than for specialties, due
to more rapid changes in selling prices, raw material costs and production levels. Even relatively
small changes in selling prices and production levels can dramatically alter margins for commodity
chemicals. Changes in raw material costs also can widen or narrow margins. Operating margins for
specialty chemicals are usually relatively stable over a business cycle, due to the low volatility in
production levels and selling prices. Therefore, margins normally do not vary significantly from one
year to the next.
Changes in the cost of various commodity chemicals and other raw materials can materially affect
margins for specialty chemicals, as their selling prices may not change or may lag changes in costs.
Therefore, during periods of robust demand for commodity chemicals, higher raw material costs
can result in a margin squeeze for specialty products. In times of weak demand, margins can widen.
In either case, the impact will vary by specialty product and company.
A company’s margins and expenses for any given year should be compared with prior years and
with those of similar firms. Does the company appear to be controlling its expenses? Is it efficient in
its use of assets, personnel, and other resources compared with its competition? Does the income
statement reflect unusual expenses that may not occur again?
Other factors that may change margins for a company in the chemicals industry are the costs
associated with businesses recently acquired or divested, major new plant construction or
maintenance programs, environmental cleanup projects, and an unusual number of new product
introductions. Technology improvements for manufacturing processes initially incur some costs but
may reduce costs and improve profit margins in the long term.
Watch Out! Chemical companies generally incur substantial costs related to R&D. Under U.S.
GAAP, R&D costs must be expensed as incurred. A sharp decline in R&D costs relative to sales
raises concern that a company may be delaying or cutting back on R&D costs in the current period
to boost earnings. This practice may benefit current period earnings at the expense of future
earnings as the company suffers due to inadequate investment in new products resulting from
lower R&D.

Special Items
Companies may report special or nonrecurring charges or gains for various reasons. Nonrecurring
items may include gains or losses from the sale of assets, costs associated with a major acquisition,
or charges for the expected costs of restructuring a business line or the overall company.
Restructuring charges taken by a company can relate to downturns in a certain chemicals market or
the overall industry, or to conditions specific to the company. Such restructuring costs may include
employee severance, plant closings, or the write-down of assets such as plants and equipment,
inventories and goodwill for a previously acquired product or business. Normally, these actions
lead to lower future expenses in areas such as personnel and depreciation.
Watch Out! Special charges for unusual or infrequent items, e.g., restructuring charges, are often
excluded from non-GAAP earnings and therefore provide the potential for a dishonest
management to enhance analysts’ perception of its profitability through aggressive use of these
special charges. The company may also position itself to boost reported earnings in future periods
by either (a) recording excess reserves on the liability side of the balance sheet or (b) by reducing
the carrying value of assets that will be used in subsequent periods.
Interest Expense
Despite the industry’s capital intensity, interest expense is normally less important in an analysis of
a chemicals company than are the factors discussed earlier. The industry is generally profitable,
with a positive cash flow.
Acquisitions and divestitures, as well as changes in capital spending and the pace of stock
repurchases, can result in a company seeing higher or lower debt and interest expense than in prior
years. The change in interest expense could be temporary, as a company might plan to return to
prior debt levels. Alternatively, it could be a permanent change, if the company intends to leverage
its balance sheet more or less than in the past.
The use of debt for acquisitions or new production capacity could result in new sources of future
sales and earnings. Stock repurchases boost a company’s future EPS.
Net Income
Net income is the bottom line: the profit or loss remaining after all expenses and income taxes are
paid. To get the best idea of a company’s true earnings, look at net income for a company’s ongoing
businesses before special items. For example, while a company’s net income may be growing
because of acquisitions, its other businesses could have earnings problems. Changes in accounting
methods—such as for inventory valuations, depreciation schedules and assumption of pension costs—
can also affect net income comparisons.
A company’s net profit margin (net income divided by sales) should be compared with historical
levels and with other companies’ net margins. Changes in net margins indicate whether a company
is using its resources more or less efficiently than in past years and in comparison with other
companies. Other factors, such as rapid changes in selling prices and/or raw material costs, also can
affect net margins. Again, for reasons discussed earlier in this section, earnings and margins are
more volatile for commodity companies than for specialty companies.

Watch Out! Companies in the Chemicals industry are fixed asset intensive, making depreciation a
significant expense for most of these companies. Since depreciation is based on estimates of asset
lives, management can manipulate these estimates to manage earnings. Specifically, extending the
depreciable life of an asset will boost a company’s earnings while shortening depreciable lives will
decrease earnings.
Watch Out! Companies can use the environmental and legal liability accounts to help manipulate
earnings. Many companies in this sector have environmental liabilities and book reserves related
to them. In addition, these companies may be subject to litigation for a variety of reasons, including
product liability and patent infringement
Watch Out! Companies in the Chemicals industry sometimes provide some form of warranty on
their products. The warranty reserve that a company accrues is an estimate that is generally
based on past warranty claims experience and other considerations. Since warranty expense is
based on estimated future claims, a company can manage earnings by manipulating future claims
estimates. As warranties are generally accrued for each product sold, the level of warranty
expense should not fluctuate greatly relative to sales.
Earnings per Share

Earnings per share (EPS) should be adjusted for nonrecurring items to obtain accurate
comparisons with prior years. Investors naturally like to see a company’s EPS growth accelerate
from year to year. However, changes in the number of shares used in calculating EPS—if the
company issues new shares or buys back outstanding shares—can result in EPS growth that is
slower or faster than net income. In recent years, many chemicals companies have been
repurchasing stock. The potential impact on a company’s EPS from the conversion of any
outstanding stock options should also be considered. If converted into new stock, such options can
have a significant impact on EPS.
Balance Sheet Data

Investors should look at a company’s balance sheet to determine its financial strength or potential
problems. Changes in the working capital ratio—the ratio of current assets to current liabilities—will
show whether the company is using more or less cash than usual for normal operations and
whether the business has a potential liquidity problem. A buildup in accounts receivable as a
percentage of sales may indicate problems with customers’ bill payments, while growth in the
inventory-to-sales ratio can foretell a slowdown in production levels or asset write-offs.
The capital structure of the balance sheet should be examined. Specialty chemicals companies tend
to have lower debt-to-capital ratios than do commodity companies, reflecting lower capital
requirements. The chemicals industry’s long-term debt-to-total capitalization ratio was 69.7% in
2017, according to the American Chemistry Council (ACC). A debt analysis should also include the
earnings-to-fixed-charges coverage ratio, which is the number of times interest expense is earned
by operating profits.

Return on equity (ROE)—net income divided by equity—indicates the company’s earnings power.
Increases in a company’s ROE may indicate improved utilization of financial resources or debt
leverage, or a reduction in its equity level.
It Is Not Easy Being Green

For most companies in the chemicals industry, one major potential liability that may not be fully
recorded on the balance sheet is the future cost for environmental remediation of existing plants or
hazardous waste sites. When a company can reasonably determine its probable liability for the
partial or full cleanup of a particular site, it makes a reserve against earnings in that amount. Total
reserves for environmental remediation costs may be found in the company’s notes to financial
statements, although the extent of disclosure varies by company.
If changing environmental regulations result in additional potential costs—or if new liability is

determined for additional sites—the company may need to set aside new reserves, reducing
reported earnings. The notes to a company’s financial statements may also indicate its annual
expenses for operating and maintaining environmental facilities, as well as capital outlays for
environmental equipment.
Cash Flow
Given that the commodity chemicals sub-industry is quite capital intensive, any company analysis
should include an examination of cash flow. Cash flow analysis reveals how a company’s cash is
generated and how much of it is available from normal operations to fund capital expenditures,
make acquisitions, distribute as dividends or repay debt.
In its simplest definition, cash flow is net income plus depreciation and amortization (D&A)
expenses. D&A are non-cash charges—that is, companies deduct them as expenses, but they require
no cash outlays. A broader definition of cash flow includes changes in working capital (current
assets minus current liabilities), because these changes can consume—or free up—cash.
Cash flow as a percentage of revenues and cash flow as a percentage of assets are ratios that
indicate how much cash flow is generated by each dollar of a company’s revenue or assets. Cash
flow analysis will show whether a company can fund unusual expenses or capital projects from
internally generated sources or if it will need to borrow to pay for them. New chemicals facilities
can cost several hundred million dollars. A careful analysis will also indicate whether the dividend
can be raised or is under pressure for cutting or elimination to help conserve cash. The availability
of cash flow above normal needs would let the company repay debt or repurchase common stock.
The cyclical nature of the commodity chemicals sub-industry means that a company’s cash flow
changes during a business cycle. During the down portion of the cycle, a company will trim expenses
and capital outlays to conserve cash. A reduced need for working capital that results from lower sales
and/or inventories will also free up cash. A severe downturn may force a company to cut or eliminate
its dividend, both of which are unusual occurrences in the chemicals industry.
As cash flow rises in a business upturn, a company should be able to increase capital spending if
additional capacity is needed, and to boost dividends to shareholders. At such times, a company is likely
to use cash to raise its level of working capital. Major capacity expansions may also require external
funds, but completion of such projects could result in the company generating free cash flow.

Watch Out! Some companies engage in supplier financing arrangements (aka reverse factoring).
Basically, a company arranges for a financial institution to pay its suppliers and the company
repays the financial institution later. This effectively lengthens the supplier payment terms and can
result in overstated cashflows and understated leverage ratios.
Valuation Methods
Stocks in the chemicals industry generally tend to be somewhat volatile, partly reflecting the
underlying cyclicality of the industry. As discussed earlier in this section, prospects for future profit
growth are paramount in determining a company’s worth.
Common valuation measurements include multiples of EPS and cash flow. Keep in mind that
valuations depend on various factors, including overall investor sentiment, industry and economic
conditions, the level of interest rates and the extent to which future earnings seem predictable. As is
the case with other measures, valuations of a particular company should be compared with those of
similar companies in the same industry. An investor should also examine a company or industry’s
historical valuations relative to a benchmark price-to-earnings ratio.
For the chemicals industry, especially for commodity companies, wide swings in the valuation ratios can
occur over the business cycle, as the sector’s earnings are affected by changing economic conditions, as
well as by the sector going into and out of favor with investors. At the extremes of the business and
earnings cycles, the valuation measures can produce results that border on the meaningless.
Caution must be exercised in the interpretation of these metrics. A company that appears cheap
relative to its peers, for example, may be at certain competitive disadvantages, such as a relative
lack of new product innovations, higher debt levels or lower profit margins, to name a few reasons.
As a result, other investors may place a lower valuation on the shares of such a company.
It is also important to take into account how management is performing and how well it is using the
company’s capital, such as by examining the profitability on various assets, as discussed earlier in
this section. A change in management can lead to an increase in the value of a company’s stock if
investors perceive that steps will be taken to produce higher returns.
 P/E ratio. The most common means of valuing equities, the price-to-earnings (P/E) ratio is
calculated as the share price divided by net EPS, for either the past 12 months or the projected EPS
for a specified future period.
 EV/EBITDA. As an alternative to the standard P/E ratio, to eliminate distortions caused by

differing tax rates and leverage, and to better evaluate a company’s operating performance,
investors compare the company’s enterprise value (EV), which is a combination of net debt and
stock market value, to its earnings before interest, taxes, depreciation and amortization
(EBITDA)—EV/EBITDA.

GLOSSARY
Commodity chemicals—Basic chemicals that are utilized by other chemical companies or other industries.
Fertilizers & agricultural chemicals—Largely nitrogen-based fertilizers, as well as pest and weed control products
for agriculture.
Industrial gas—Produced gases for various industrial uses.
Specialty chemicals—More refined chemical products that are used in many sectors of the S&P 1500, including
energy, industrials, and health care, as well as other industries in the materials sector.
Toxics Release Inventory (TRI) — A publicly available database from the U.S. EPA that contains information on
toxic chemical releases and other waste management activities. The TRI requires certain companies to report the
amount and kinds of toxic chemicals released into the environment, according to a list specified by the EPA.

INDUSTRY REFERENCES
PERIODICALS U.S. Chlorine & Caustic Production Statistics Report
http://www.chlorineinstitute.org
Chemical & Engineering News (C&EN) Reports on chlor-alkali industry production and
http://cen.acs.org/index.html operating rates.
Covers the chemicals profession and the chemicals
processing industries; presents industrial, TRADE ASSOCIATIONS
commercial, educational, and government
viewpoints. American Chemistry Council (ACC)
http://www.americanchemistry.com
The Fertilizer RECORD Trade association representing the U.S. chemicals
http://www.tfi.org/our-industry/market-intelligence industry on public policy issues; coordinates
Reports on production and shipments of fertilizer research and testing programs, and administers the
products. industry’s environmental, health, and safety
programs. Member companies account for more
Fertilizers and Related Chemicals than 90% of U.S. industrial chemicals capacity.
Inorganic Chemicals
Paint, Varnish, and Lacquer American Coatings Association (ACA)
http://www.census.gov/manufacturing/cir/index.ht http://www.paint.org
ml Represents paint and chemical coatings
U.S. government publications providing data on manufacturers, and their raw materials and
production and shipments of selected products, equipment suppliers.
including nitrogen fertilizer materials, phosphoric
and sulfuric acid, major inorganic chemicals, and American Fuel & Petrochemical
paint and coatings. Manufacturers (AFPM)
(formerly National Petrochemical & Refiners
Fertilizer Use and Price Association)
http://www.ers.usda.gov/data-products/fertilizer- http://www.afpm.org
use-and-price.aspx Gathers and disseminates historical and scientific
Reports data on fertilizer consumption by selected information, and statistics pertaining to the
major crops. petroleum refining and petrochemical
manufacturing industries.
ICIS Chemical Business
http://www.icis.com/chemicals The Chlorine Institute (CI)
News and prices on industrial and specialty chemicals, http://www.chlorineinstitute.org
allied products, drugs, flavors, perfumes, and plastics. Trade association for companies involved or
interested in the production, distribution, and use of
IHS Chemical Week chlorine and related alkali chemicals.
http://www.chemweek.com/cw
Interprets news for business and technical managers CropLife America (CLA)
in the chemicals processing industries. http://www.croplifeamerica.org
Promotes the environmentally sound use of crop
Monthly Statistical Reports—Resins protection products; members include producers of
http://www.americanchemistry.com agricultural pesticides.
Provides production and sales data for the largest-
volume plastic resins. The Fertilizer Institute (TFI)
http://www.tfi.org
PlasticsToday Fertilizer industry trade association involved in
http://www.plasticstoday.com legislative and public affairs; provides statistical
Covers developments in resin technology, information.
machinery, processing techniques, and additives.

Plastics Industry Association (PLASTICS)
http://www.plasticsindustry.org
Trade association with members that include resin
suppliers, processors, distributors, and machinery
builders.
GOVERNMENT AGENCIES
U.S. Census Bureau

http://www.census.gov
Agency within the U.S. Department of Commerce;
collects and provides data about the U.S. population
and the economy.
U.S. Department of Agriculture (USDA)

http://www.usda.gov
Federal agency that, among many other things,
tracks crop acreage and fertilizer usage.
U.S. Department of Labor (DOL)

http://www.dol.gov
Federal agency that, among other things, tracks
changes in employment, prices, and other national
economic measurements.
U.S. Environmental Protection Agency (EPA)

http://www.epa.gov
Federal agency charged with protecting public health
and the natural environment; enforces government
regulations affecting air, water, and land resources.
U.S. Geological Survey (USGS)

http://www.usgs.gov
Agency within the U.S. Department of the Interior;
provides the nation with information helping to
describe and understand the Earth.
CONSULTING FIRMS
Young & Partners LLC

http://www.youngandpartners.com
International investment banking firm focused on
the chemicals and life science industries.

COMPARATIVE COMPANY ANALYSIS
Operating Revenues
Million $ CAGR(%) Index Basis (2011=100)
Ticker Com pany Yr. End 2018 2017 2016 2015 2014 2013 2012 10-Yr. 5-Yr. 1-Yr. 2018 2017 2016 2015 2014 2013
COMMODITY CHEMICALS
ASIX § ADVANSIX INC. DEC 1,515.0 1,475.2 1,191.5 1,329.4 1,790.4 1,766.6 1,766.6 NA (3.0) 2.7 86 84 67 75 101 100
CBT † CABOT CORPORATION SEP 3,242.0 2,717.0 2,411.0 2,871.0 3,647.0 3,456.0 3,291.0 0.2 (1.3) 19.3 99 83 73 87 111 105
HWKN § HAWKINS, INC. # APR 0.0 504.2 483.6 414.0 364.0 348.3 350.4 10.4 7.5 4.3 0 144 138 118 104 99
KOP § KOPPERS HOLDINGS INC. DEC 1,710.2 1,475.5 1,416.2 1,626.9 1,555.0 1,478.3 1,555.0 2.3 3.0 15.9 110 95 91 105 100 95
LYB [] LYONDELLBASELL INDUSTRIES N.V. DEC 39,004.0 34,484.0 29,183.0 32,735.0 45,608.0 44,062.0 45,352.0 (2.6) (2.4) 13.1 86 76 64 72 101 97
OLN † OLIN CORPORATION DEC 6,946.1 6,268.4 5,550.6 2,854.4 2,241.2 2,515.0 2,184.7 14.7 22.5 10.8 318 287 254 131 103 115
TG § TREDEGAR CORPORATION # JAN 0.0 961.3 828.3 896.2 951.8 959.3 882.2 NA NA NA 0 109 94 102 108 109
VVV † VALVOLINE INC. SEP 2,285.0 2,084.0 1,929.0 1,967.0 2,041.0 1,996.2 1,996.2 NA 2.7 9.6 114 104 97 99 102 100
DWDP [] DOWDUPONT INC. DEC 85,977.0 62,484.0 48,158.0 48,778.0 58,167.0 57,080.0 56,786.0 4.1 8.5 37.6 151 110 85 86 102 101
EMN [] EASTMAN CHEMICAL COMPANY DEC 10,151.0 9,549.0 9,008.0 9,648.0 9,527.0 9,350.0 8,102.0 5.5 1.7 6.3 125 118 111 119 118 115
LXU § LSB INDUSTRIES, INC. DEC 378.2 427.5 374.6 437.7 495.9 701.2 759.0 (6.6) (11.6) (11.5) 50 56 49 58 65 92
CC † THE CHEMOURS COMPANY DEC 6,638.0 6,183.0 5,400.0 5,717.0 6,432.0 6,859.0 7,365.0 NA (0.7) 7.4 90 84 73 78 87 93
FERTILIZERS AND AGRICULTURAL CHEMICALS

AVD § AMERICAN VANGUARD CORPORATION DEC 454.3 355.0 312.1 289.4 298.6 381.0 366.2 6.7 3.6 27.9 124 97 85 79 82 104
CF [] CF INDUSTRIES HOLDINGS, INC. DEC 4,429.0 4,130.0 3,685.0 4,308.0 4,743.0 5,474.7 6,104.0 1.2 (4.2) 7.2 73 68 60 71 78 90
FMC [] FMC CORPORATION DEC 4,727.8 2,878.6 2,538.9 2,491.0 3,258.7 3,130.7 3,409.9 4.3 8.6 64.2 139 84 74 73 96 92
MOS [] THE MOSAIC COMPANY DEC 9,587.3 7,409.4 7,162.8 8,895.3 9,055.8 8,170.1 10,044.0 (0.2) 3.3 29.4 95 74 71 89 90 81
SMG † THE SCOTTS MIRACLE-GRO COMPANY SEP 2,663.4 2,642.1 2,506.2 2,371.1 2,578.3 2,773.7 2,770.5 (0.6) (0.8) 0.8 96 95 90 86 93 100
INDUSTRIAL GASES
APD [] AIR PRODUCTS AND CHEMICALS, INC. SEP 8,930.2 8,187.6 7,503.7 7,824.3 10,439.0 10,180.4 9,611.7 (1.5) (2.6) 9.1 93 85 78 81 109 106
LINDE PLC # JAN 0.0 11,437.0 10,534.0 10,776.0 12,273.0 11,925.0 11,224.0 NA NA NA 0 102 94 96 109 106
45 FOOD & STAPLES RETAILING / DECEMBER 2018 INDUSTRY SURVEYS

Operating Revenues (Cont.)
SPECIALTY CHEMICALS
ALB [] ALBEMARLE CORPORATION DEC 3,375.0 3,072.0 2,677.2 2,826.4 2,445.5 2,394.3 2,519.2 3.2 7.1 9.9 134 122 106 112 97 95
ASH † ASHLAND GLOBAL HOLDINGS INC. SEP 3,743.0 3,260.0 3,019.0 3,420.0 6,121.0 6,091.0 6,472.0 (7.7) (9.3) 14.8 58 50 47 53 95 94
BCPC § BALCHEM CORPORATION DEC 643.7 594.8 553.2 552.5 541.4 337.2 310.4 10.7 13.8 8.2 207 192 178 178 174 109
ECL [] ECOLAB INC. DEC 14,668.2 13,835.9 13,151.8 13,545.1 14,280.5 13,253.4 11,838.7 9.1 2.0 6.0 124 117 111 114 121 112
FTK § FLOTEK INDUSTRIES, INC. DEC 177.8 243.1 188.2 270.0 319.9 371.1 312.8 (2.4) (13.7) (26.9) 57 78 60 86 102 119
FF § FUTUREFUEL CORP. DEC 291.0 275.0 253.2 299.6 341.8 444.9 351.8 3.9 (8.1) 5.8 83 78 72 85 97 126
FUL § H.B. FULLER COMPANY DEC 3,041.0 2,306.0 2,094.6 2,083.7 2,104.5 2,047.0 1,886.2 8.1 8.2 31.9 161 122 111 110 112 109
NGVT § INGEVITY CORPORATION DEC 1,133.6 972.4 908.3 958.3 1,035.5 980.0 939.0 NA 3.0 16.6 121 104 97 102 110 104
IPHS § INNOPHOS HOLDINGS, INC. DEC 801.8 722.0 725.3 789.1 839.2 844.1 862.4 (1.5) (1.0) 11.1 93 84 84 92 97 98
IOSP § INNOSPEC INC. DEC 1,476.9 1,306.8 883.4 1,012.3 960.9 818.8 776.4 8.7 12.5 13.0 190 168 114 130 124 105
IFF [] INTERNATIONAL FLAVORS & FRAGRANCES INC. DEC 3,977.5 3,398.7 3,116.4 3,023.2 3,088.5 2,952.9 2,821.4 5.2 6.1 17.0 141 120 110 107 109 105
KRA § KRATON CORPORATION DEC 2,011.7 1,960.4 1,744.1 1,034.6 1,230.4 1,292.1 1,423.1 5.1 9.3 2.6 141 138 123 73 86 91
MTX † MINERALS TECHNOLOGIES INC. DEC 1,807.6 1,675.7 1,638.0 1,797.6 1,725.0 1,018.2 996.8 5.0 12.2 7.9 181 168 164 180 173 102
NEU † NEWMARKET CORPORATION DEC 2,289.7 2,198.4 2,049.5 2,140.8 2,335.4 2,280.4 2,211.9 3.5 0.1 4.2 104 99 93 97 106 103
POL † POLYONE CORPORATION DEC 3,533.4 3,229.9 2,938.6 2,928.8 3,835.5 3,771.2 2,860.8 2.6 (1.3) 9.4 124 113 103 102 134 132
PPG [] PPG INDUSTRIES, INC. DEC 15,374.0 14,748.0 14,270.0 14,241.0 14,791.0 14,265.0 12,686.0 (0.3) 1.5 4.2 121 116 112 112 117 112
KWR § QUAKER CHEMICAL CORPORATION DEC 867.5 820.1 746.7 737.6 765.9 729.4 708.2 4.1 3.5 5.8 122 116 105 104 108 103
RYAM § RAYONIER ADVANCED MATERIALS INC. DEC 2,134.4 961.3 868.7 941.4 957.7 1,046.6 1,095.4 NA 15.3 122.0 195 88 79 86 87 96
RPM † RPM INTERNATIONAL INC. # MAY 0.0 5,321.6 4,958.2 4,813.6 4,594.6 4,376.4 4,078.7 3.9 5.5 7.3 0 130 122 118 113 107
SXT † SENSIENT TECHNOLOGIES CORPORATION DEC 1,386.8 1,362.3 1,383.2 1,376.0 1,447.8 1,462.1 1,453.6 1.0 (1.1) 1.8 95 94 95 95 100 101
SCL § STEPAN COMPANY DEC 1,993.9 1,925.0 1,766.2 1,776.2 1,927.2 1,880.8 1,803.7 2.2 1.2 3.6 111 107 98 98 107 104
SHW [] THE SHERWIN-WILLIAMS COMPANY DEC 17,534.5 14,983.8 11,855.6 11,339.3 11,129.5 10,185.5 9,534.5 8.2 11.5 17.0 184 157 124 119 117 107
Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

Net Income
COMMODITY CHEMICALS
ASIX § ADVANSIX INC. DEC 146.7 34.1 63.8 83.9 118.7 118.7 0.0 NA NA 329.6 NA NA NA NA NA NA
CBT † CABOT CORPORATION SEP 248.0 147.0 (334.0) 199.0 153.0 388.0 236.0 6.8 (8.6) 68.7 105 62 (142) 84 65 164
HWKN § HAWKINS, INC. # APR (9.2) 22.6 18.1 19.2 18.1 17.1 22.7 10.8 (0.1) 24.3 (40) 99 80 85 80 75
KOP § KOPPERS HOLDINGS INC. DEC 29.1 29.3 (72.0) (32.4) 40.4 65.6 36.9 (7.5) (15.0) (0.7) 79 79 (195) (88) 109 178
LYB [] LYONDELLBASELL INDUSTRIES N.V. DEC 4,879.0 3,836.0 4,476.0 4,174.0 3,857.0 2,848.0 2,147.0 22.1 11.4 27.2 227 179 208 194 180 133
OLN † OLIN CORPORATION DEC 549.5 (3.9) (1.4) 105.7 178.6 149.6 241.7 NA 29.7 NM 227 (2) (1) 44 74 62
TG § TREDEGAR CORPORATION DEC 38.3 24.5 (32.1) 36.9 21.9 28.3 24.9 9.6 6.2 56.3 154 98 (129) 148 88 114
VVV † VALVOLINE INC. SEP 304.0 273.0 196.0 173.0 246.1 246.1 0.0 NA NA 11.4 NA NA NA NA NA NA
DWDP [] DOWDUPONT INC. DEC 1,460.0 4,318.0 7,685.0 3,772.0 4,787.0 1,182.0 2,742.0 (6.6) 4.3 (66.2) 53 157 280 138 175 43
EMN [] EASTMAN CHEMICAL COMPANY DEC 1,384.0 854.0 848.0 751.0 1,165.0 437.0 646.0 16.5 25.9 62.1 214 132 131 116 180 68
LXU § LSB INDUSTRIES, INC. DEC (29.2) 112.2 (34.8) 19.6 55.0 58.6 83.8 NA NM NM (35) 134 (41) 23 66 70
CC † THE CHEMOURS COMPANY DEC 746.0 7.0 (90.0) 400.0 423.0 1,057.0 1,431.0 NA (6.7) 10557.1 52 0 (6) 28 30 74

AVD § AMERICAN VANGUARD CORPORATION DEC 20.3 12.8 6.6 4.8 34.4 36.9 22.1 0.8 (11.3) 58.5 92 58 30 22 156 167
CF [] CF INDUSTRIES HOLDINGS, INC. DEC 358.0 (277.0) 700.0 1,390.0 1,464.6 1,848.7 1,539.2 (0.4) (28.0) NM 23 (18) 45 90 95 120
FMC [] FMC CORPORATION DEC 535.8 209.1 489.0 307.5 293.9 416.2 365.9 15.0 5.2 156.2 146 57 134 84 80 114
MOS [] THE MOSAIC COMPANY DEC (107.2) 297.8 1,000.4 1,028.6 582.9 1,852.1 1,852.1 NA NM NM (6) 16 54 56 31 100
SMG † THE SCOTTS MIRACLE-GRO COMPANY SEP 218.3 315.3 159.8 166.5 161.1 106.5 167.9 6.8 15.4 (30.8) 130 188 95 99 96 63
INDUSTRIAL GASES
APD [] AIR PRODUCTS AND CHEMICALS, INC. SEP 3,000.4 631.1 1,277.9 991.7 994.2 1,167.3 1,224.2 11.2 20.8 375.4 245 52 104 81 81 95
LINDE PLC DEC 1,247.0 1,500.0 1,547.0 1,694.0 1,755.0 1,692.0 1,672.0 0.6 (5.9) (16.9) 75 90 93 101 105 101

Net Income (Cont.)
SPECIALTY CHEMICALS
ALB [] ALBEMARLE CORPORATION DEC 54.9 643.7 334.9 133.3 413.2 311.5 392.1 (13.3) (29.3) (91.5) 14 164 85 34 105 79
ASH † ASHLAND GLOBAL HOLDINGS INC. SEP 1.0 (29.0) 309.0 233.0 683.0 26.0 414.0 (41.9) (47.9) NM 0 (7) 75 56 165 6
BCPC § BALCHEM CORPORATION DEC 90.1 56.0 59.7 52.8 44.9 40.0 38.8 18.8 17.6 60.9 232 144 154 136 116 103
ECL [] ECOLAB INC. DEC 1,504.6 1,229.0 1,002.1 1,202.8 967.8 703.6 462.5 13.4 16.4 22.4 325 266 217 260 209 152
FTK § FLOTEK INDUSTRIES, INC. DEC (27.4) (49.1) (13.5) 53.6 36.2 49.8 31.4 NA NM (44.2) (87) (156) (43) 171 115 159
FF § FUTUREFUEL CORP. DEC 23.5 56.3 46.4 53.2 74.0 34.3 34.5 10.8 (7.3) (58.3) 68 163 135 154 215 99
FUL § H.B. FULLER COMPANY DEC 59.4 121.7 86.7 49.8 96.8 125.6 89.1 (5.3) (13.9) (51.2) 67 137 97 56 109 141
NGVT § INGEVITY CORPORATION DEC 126.5 35.2 79.7 129.0 119.0 119.0 119.0 NA 1.2 259.4 106 30 67 108 100 100
IPHS § INNOPHOS HOLDINGS, INC. DEC 22.4 48.0 26.3 64.5 49.5 74.2 86.5 NA (21.3) (53.2) 26 55 30 75 57 86
IOSP § INNOSPEC INC. DEC 61.8 81.3 119.5 84.1 77.8 66.9 47.1 7.7 (1.6) (24.0) 131 173 254 179 165 142
IFF [] INTERNATIONAL FLAVORS & FRAGRANCES INC. DEC 295.7 405.0 419.2 414.5 353.5 254.1 266.9 1.8 3.1 (27.0) 111 152 157 155 132 95
KRA § KRATON CORPORATION DEC 97.5 107.3 (10.5) 2.4 (0.6) (16.2) 90.9 NA NM (9.1) 107 118 (12) 3 (1) (18)
MTX † MINERALS TECHNOLOGIES INC. DEC 195.1 133.4 107.9 92.4 80.3 74.1 67.5 NA 21.4 46.3 289 198 160 137 119 110
NEU † NEWMARKET CORPORATION DEC 190.5 243.4 238.6 233.3 264.7 239.6 206.9 7.2 (4.5) (21.7) 92 118 115 113 128 116
POL † POLYONE CORPORATION DEC (57.7) 165.2 144.6 79.2 243.8 71.9 172.6 NA NM NM (33) 96 84 46 141 42
PPG [] PPG INDUSTRIES, INC. DEC 1,594.0 873.0 1,406.0 2,102.0 3,231.0 941.0 1,095.0 6.7 11.1 82.6 146 80 128 192 295 86
KWR § QUAKER CHEMICAL CORPORATION DEC 20.3 61.4 51.2 56.5 56.3 47.4 45.9 2.7 (15.6) (67.0) 44 134 112 123 123 103
RYAM § RAYONIER ADVANCED MATERIALS INC. DEC 325.0 73.3 55.3 31.7 219.8 242.1 213.8 NA 6.1 343.4 152 34 26 15 103 113
RPM † RPM INTERNATIONAL INC. # MAY 337.8 181.8 354.7 239.5 291.7 98.6 215.9 (1.3) (3.4) (48.7) 156 84 164 111 135 46
SXT † SENSIENT TECHNOLOGIES CORPORATION DEC 89.6 126.3 106.8 73.6 113.3 123.9 120.5 1.4 (6.3) (29.0) 74 105 89 61 94 103
SCL § STEPAN COMPANY DEC 91.6 86.2 76.0 57.1 72.8 79.4 72.0 19.7 2.9 6.3 127 120 106 79 101 110
SHW [] THE SHERWIN-WILLIAMS COMPANY DEC 1,727.9 1,132.7 1,053.8 865.9 752.6 631.0 441.9 10.9 22.3 52.6 391 256 239 196 170 143

Return on Revenues (%) Return on Assets (%) Return on Equity(%)
Ticker Com pany Yr. End 2017 2016 2015 2014 2013 2012 2017 2016 2015 2014 2013 2012 2017 2016 2015 2014 2013 2012
COMMODITY CHEMICALS
ASIX § ADVANSIX INC. DEC 9.9 2.9 4.8 4.7 6.7 0.0 14.0 3.8 7.6 10.2 NA NA 49.6 9.8 14.2 0.0 0.0 0.0
CBT † CABOT CORPORATION SEP 9.1 6.1 NM 5.5 4.4 11.8 7.4 4.8 NM 4.9 3.6 8.8 18.2 11.9 NM 10.4 8.0 11.4
HWKN § HAWKINS, INC. # APR NM 4.7 4.4 5.3 5.2 4.9 NM 5.4 4.2 7.7 7.6 7.7 NM 10.8 9.2 10.2 10.3 10.5
KOP § KOPPERS HOLDINGS INC. DEC 2.0 2.1 NM NM 2.7 4.2 2.4 2.7 NM NM 5.1 8.4 44.6 244.1 NM NM 22.5 48.9
LYB [] LYONDELLBASELL INDUSTRIES N.V. DEC 14.1 13.1 13.7 9.2 8.8 6.3 18.6 16.4 19.7 17.2 14.1 11.8 65.2 60.8 60.0 40.0 32.6 26.2
OLN † OLIN CORPORATION DEC 8.8 NM NM 4.7 7.1 6.8 6.0 NM NM 3.9 6.4 5.4 21.9 NM NM 9.9 17.0 15.1
TG § TREDEGAR CORPORATION DEC 4.0 3.0 NM 3.9 2.3 3.2 5.1 3.8 NM 4.7 2.8 3.6 11.7 8.4 NM 9.3 9.3 11.2
VVV † VALVOLINE INC. SEP 14.6 14.2 10.0 8.5 12.3 0.0 15.9 15.0 20.0 16.0 NA NA NM 190.2 29.2 0.0 0.0 0.0
DWDP [] DOWDUPONT INC. DEC 2.3 9.0 15.8 6.5 8.4 2.1 0.8 5.4 11.3 5.5 6.9 1.7 2.6 16.5 31.3 14.9 19.2 4.8
EMN [] EASTMAN CHEMICAL COMPANY DEC 14.5 9.5 8.8 7.9 12.5 5.4 8.7 5.5 5.4 4.7 9.8 3.7 27.5 19.9 22.4 20.2 34.0 18.0
LXU § LSB INDUSTRIES, INC. DEC NM 29.9 NM 4.0 7.8 7.7 NM 8.8 NM 1.7 5.1 10.2 NM NM NM 1.2 14.4 18.2
CC † THE CHEMOURS COMPANY DEC 12.1 0.1 NM 6.2 6.2 14.4 10.2 0.1 NM 6.7 7.5 19.9 154.2 6.0 NM 11.6 13.2 0.0

AVD § AMERICAN VANGUARD CORPORATION DEC 5.7 4.1 2.3 1.6 9.0 10.1 3.8 3.0 1.5 1.0 7.7 9.2 6.9 4.7 2.4 1.6 14.0 17.9
CF [] CF INDUSTRIES HOLDINGS, INC. DEC 8.7 NM 16.2 29.3 26.8 30.3 2.7 NM 5.5 12.4 13.7 18.2 6.8 NM 16.4 28.7 26.2 34.3
FMC [] FMC CORPORATION DEC 18.6 8.2 19.6 9.4 9.4 12.2 5.8 3.4 7.7 5.8 5.6 9.5 NM 6.7 NM 19.6 23.8 32.4
MOS [] THE MOSAIC COMPANY DEC NM 4.2 11.2 11.4 7.1 18.4 NM 1.8 5.8 5.6 3.0 10.6 NM 3.1 9.9 9.3 4.8 0.0
SMG † THE SCOTTS MIRACLE-GRO COMPANY SEP 8.3 12.6 6.7 6.5 5.8 3.8 7.9 11.4 6.3 8.1 8.3 5.1 28.4 36.0 21.4 22.8 24.3 19.2
INDUSTRIAL GASES
APD [] AIR PRODUCTS AND CHEMICALS, INC. SEP 36.6 8.4 16.3 9.5 9.8 12.1 16.2 3.5 7.4 5.6 5.6 6.9 13.3 15.4 12.7 12.9 14.3 15.8
LINDE PLC DEC 10.9 14.2 14.4 13.8 14.7 15.1 6.1 7.8 8.4 8.6 8.7 9.4 21.8 29.7 28.7 25.9 26.3 27.5
SPECIALTY CHEMICALS
ALB [] ALBEMARLE CORPORATION DEC 1.8 24.0 11.8 5.5 17.3 12.4 0.7 7.9 3.5 2.6 11.5 9.1 2.6 13.0 13.4 14.3 23.7 18.0
ASH † ASHLAND GLOBAL HOLDINGS INC. SEP 0.0 NM 9.0 3.8 11.2 0.4 0.0 NM 3.1 2.1 5.7 0.2 NM NM NM 1.8 12.9 0.3
BCPC § BALCHEM CORPORATION DEC 15.1 10.1 10.8 9.8 13.3 12.9 9.3 5.9 6.8 6.1 11.9 12.8 15.8 11.4 14.0 14.6 14.8 15.8
ECL [] ECOLAB INC. DEC 10.9 9.3 7.4 8.4 7.3 5.9 7.5 6.7 5.4 6.2 4.9 4.0 20.8 17.9 14.2 16.5 14.3 11.8
FTK § FLOTEK INDUSTRIES, INC. DEC NM NM NM 16.8 9.7 15.9 NM NM NM 12.7 9.6 22.6 NM NM 2.4 14.2 17.9 42.7
FF § FUTUREFUEL CORP. DEC 8.5 22.3 15.5 15.6 16.6 9.8 5.5 10.6 9.5 11.5 17.9 9.7 6.9 15.5 12.3 15.5 25.1 12.5
FUL § H.B. FULLER COMPANY DEC 2.6 5.8 4.2 2.4 4.7 6.7 1.4 5.9 4.2 2.7 5.2 7.0 6.0 13.4 10.0 5.5 11.2 9.2
NGVT § INGEVITY CORPORATION DEC 13.0 3.9 8.3 12.5 12.1 12.7 13.6 4.2 10.2 18.0 20.1 NA 70.4 13.6 18.0 35.5 0.0 0.0
IPHS § INNOPHOS HOLDINGS, INC. DEC 3.1 6.6 3.3 7.7 5.9 8.6 2.9 7.5 3.9 8.8 6.6 10.0 6.6 14.1 6.6 13.9 10.9 17.7
IOSP § INNOSPEC INC. DEC 4.7 9.2 11.8 8.8 9.5 8.6 4.4 6.9 11.6 8.4 9.8 11.5 8.5 12.9 21.3 18.2 21.4 20.3
IFF [] INTERNATIONAL FLAVORS & FRAGRANCES INC. DEC 8.7 13.0 13.9 13.4 12.0 9.0 6.4 10.1 11.3 11.9 10.6 7.8 17.8 25.1 26.9 27.7 26.0 21.5
KRA § KRATON CORPORATION DEC 5.0 6.2 NM 0.2 NM NM 3.3 3.7 NM 0.2 NM NM 16.0 23.7 NM 0.2 NM NM
MTX † MINERALS TECHNOLOGIES INC. DEC 11.6 8.1 6.0 5.4 7.9 7.4 6.6 4.7 3.6 2.9 6.6 6.1 17.2 13.9 12.2 10.6 10.6 10.0
NEU † NEWMARKET CORPORATION DEC 8.7 11.9 11.1 10.0 11.6 10.8 11.1 17.2 18.6 18.9 19.9 19.0 35.1 55.9 59.0 47.0 49.7 49.9
POL † POLYONE CORPORATION DEC NM 5.6 4.9 2.1 6.5 2.5 NM 6.0 5.6 3.0 8.3 3.4 26.2 23.2 20.0 8.8 11.5 8.7
PPG [] PPG INDUSTRIES, INC. DEC 10.8 6.1 9.9 14.2 22.6 7.4 9.6 5.5 8.2 12.0 20.4 5.9 26.3 11.3 25.8 21.2 20.4 17.5
KWR § QUAKER CHEMICAL CORPORATION DEC 2.5 8.2 6.9 7.4 7.7 6.7 2.8 8.9 7.5 8.5 9.6 8.8 5.4 15.9 14.1 16.4 18.6 18.2
RYAM § RAYONIER ADVANCED MATERIALS INC. DEC 33.8 8.4 5.9 3.3 21.0 22.1 12.3 5.2 4.3 2.4 19.6 26.3 71.8 75.3 NM 7.0 26.0 40.4
RPM † RPM INTERNATIONAL INC. # MAY 6.3 3.7 7.4 5.2 6.7 2.4 6.4 3.6 7.4 5.1 6.7 2.4 22.1 13.1 26.8 15.9 20.9 8.2
SXT † SENSIENT TECHNOLOGIES CORPORATION DEC 6.6 9.1 7.8 5.1 7.7 8.5 5.2 7.6 6.3 4.2 6.1 7.0 10.6 14.6 11.3 7.1 9.5 11.4
SCL § STEPAN COMPANY DEC 4.8 4.9 4.3 3.0 3.9 4.4 6.2 6.4 6.1 4.9 6.2 8.1 13.3 14.4 13.9 10.5 14.0 18.0
SHW [] THE SHERWIN-WILLIAMS COMPANY DEC 11.5 9.6 9.3 7.8 7.4 6.6 8.7 16.8 18.2 15.2 11.8 10.1 64.0 82.5 113.1 62.5 42.2 38.1

Current Ratio Debt/Capital Ratio(%) Debt as a % of Net Working Capital
COMMODITY CHEMICALS
ASIX § ADVANSIX INC. DEC 1.3 1.0 1.2 1.1 0.0 0.0 39.8 55.2 0.0 0.0 NA NA 273.0 3093.9 0.0 0.0 NA NA
CBT † CABOT CORPORATION SEP 1.8 2.6 2.4 2.2 1.8 1.6 30.0 41.0 43.6 34.7 41.4 39.7 124.8 145.7 167.9 146.5 197.2 235.5
HWKN § HAWKINS, INC. # APR 2.2 2.2 2.3 3.1 3.2 3.2 31.0 30.3 38.1 0.0 0.0 0.0 122.0 145.0 159.5 0.0 0.0 0.0
KOP § KOPPERS HOLDINGS INC. DEC 1.8 1.5 1.6 1.9 2.4 2.7 86.3 94.7 101.9 90.6 61.5 63.8 295.2 427.4 416.6 323.7 109.0 98.7
LYB [] LYONDELLBASELL INDUSTRIES N.V. DEC 2.5 2.1 2.3 2.1 2.6 2.4 49.0 61.5 56.2 46.3 31.9 28.4 123.7 176.1 147.1 112.2 64.2 61.2
OLN † OLIN CORPORATION DEC 1.8 1.7 1.7 2.2 2.1 1.7 56.9 61.1 60.1 39.4 38.1 40.9 488.6 571.8 462.9 150.3 156.9 219.0
TG § TREDEGAR CORPORATION DEC 1.9 1.7 1.8 2.0 1.9 1.9 30.7 23.4 27.6 26.9 25.7 25.6 114.3 107.7 111.6 105.9 127.0 111.3
VVV † VALVOLINE INC. SEP 1.7 1.8 1.6 1.9 0.0 0.0 120.9 179.9 0.0 0.0 NA NA 355.4 225.2 0.0 0.0 NA NA
DWDP [] DOWDUPONT INC. DEC 1.9 1.9 2.2 2.1 2.1 2.1 24.3 43.5 39.3 45.6 38.4 48.4 134.7 187.5 130.0 152.2 132.7 166.6
EMN [] EASTMAN CHEMICAL COMPANY DEC 1.6 1.6 1.4 1.6 1.9 2.0 52.9 57.8 62.2 66.9 52.3 61.2 529.5 589.3 803.8 631.1 310.5 358.0
LXU § LSB INDUSTRIES, INC. DEC 1.5 1.5 1.7 2.7 2.6 2.4 40.3 39.7 46.2 51.7 54.0 18.2 750.9 680.9 360.2 171.5 212.5 45.9
CC † THE CHEMOURS COMPANY DEC 2.1 1.4 1.6 1.4 1.3 1.5 82.6 97.1 96.8 0.0 0.0 0.0 222.1 451.3 468.9 0.0 0.0 0.0

AVD § AMERICAN VANGUARD CORPORATION DEC 2.0 2.3 2.6 3.5 2.3 2.0 20.2 12.7 20.3 27.4 16.8 13.8 60.2 31.5 48.9 47.9 37.6 33.3
CF [] CF INDUSTRIES HOLDINGS, INC. DEC 2.5 3.9 0.9 2.6 3.2 3.0 41.2 47.1 55.8 50.1 36.3 20.3 530.2 293.4 NM 296.1 171.9 86.1
FMC [] FMC CORPORATION DEC 1.7 2.0 2.0 1.5 1.5 1.9 54.1 49.9 54.4 61.5 66.7 38.9 213.7 134.0 141.4 162.3 189.6 91.6
MOS [] THE MOSAIC COMPANY DEC 2.3 2.1 2.0 3.3 2.5 3.9 33.6 28.2 28.5 26.2 21.2 7.5 188.9 239.1 181.0 104.8 62.6 21.9
SMG † THE SCOTTS MIRACLE-GRO COMPANY SEP 1.6 1.5 1.8 1.7 1.7 2.3 69.7 66.3 69.3 61.8 47.9 57.1 396.9 359.9 230.1 200.3 155.0 141.5
INDUSTRIAL GASES
APD [] AIR PRODUCTS AND CHEMICALS, INC. SEP 2.4 1.3 0.8 1.1 1.1 1.3 26.2 43.6 48.0 47.9 45.7 45.0 105.3 469.8 NM 1824.4 2729.2 720.1
LINDE PLC DEC 1.0 1.2 1.4 1.1 1.1 1.1 56.1 65.1 66.5 62.2 57.4 54.8 NM 2326.1 1258.5 2642.7 3495.2 2339.6
SPECIALTY CHEMICALS
ALB [] ALBEMARLE CORPORATION DEC 2.1 2.9 1.1 2.9 3.4 3.7 27.0 35.0 48.0 59.9 37.7 26.2 110.9 97.9 1466.1 100.6 100.7 67.2
ASH † ASHLAND GLOBAL HOLDINGS INC. SEP 2.0 2.3 2.1 2.1 1.7 1.7 47.1 45.4 57.5 49.9 43.4 48.8 301.5 151.2 222.5 172.9 284.0 271.2
BCPC § BALCHEM CORPORATION DEC 1.8 1.9 2.4 1.9 7.8 7.0 23.0 32.0 36.0 43.2 0.0 0.0 202.3 280.8 222.7 346.8 0.0 0.0
ECL [] ECOLAB INC. DEC 1.3 1.4 0.9 1.1 1.3 1.6 47.0 47.1 43.6 47.4 47.6 53.6 605.2 490.1 NM 1194.2 529.0 346.6
FTK § FLOTEK INDUSTRIES, INC. DEC 2.1 2.2 2.3 2.7 2.2 2.3 0.0 2.7 5.8 7.7 12.5 12.7 0.0 7.8 21.5 22.3 47.5 41.4
FF § FUTUREFUEL CORP. DEC 8.8 2.8 7.4 6.4 7.0 5.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
FUL § H.B. FULLER COMPANY DEC 2.3 2.1 2.3 2.4 2.2 2.3 70.4 40.8 45.3 39.8 35.0 39.6 372.4 148.6 155.1 128.3 113.6 110.8
NGVT § INGEVITY CORPORATION DEC 2.4 2.2 3.0 1.9 2.2 0.0 56.7 74.9 1.8 0.7 20.8 NA 168.9 253.5 4.8 2.3 70.5 NA
IPHS § INNOPHOS HOLDINGS, INC. DEC 2.6 3.0 2.8 4.0 5.0 4.4 48.2 34.8 38.5 22.2 25.5 27.9 166.0 98.3 110.2 47.2 51.7 57.9
IOSP § INNOSPEC INC. DEC 2.1 2.4 2.2 1.9 2.6 2.0 20.3 28.3 17.9 21.2 25.8 7.3 67.5 100.2 52.1 72.7 56.7 16.7
IFF [] INTERNATIONAL FLAVORS & FRAGRANCES INC. DEC 2.5 1.8 2.0 3.3 2.9 2.5 49.1 39.5 37.0 38.0 38.9 41.3 144.7 150.1 131.4 78.4 85.4 93.5
KRA § KRATON CORPORATION DEC 2.1 2.2 2.9 3.7 3.5 4.0 70.3 77.6 51.4 42.8 38.8 46.8 415.5 414.5 131.2 91.9 73.4 78.3
MTX † MINERALS TECHNOLOGIES INC. DEC 2.7 2.5 2.5 2.6 4.5 3.1 43.2 51.2 57.5 61.9 8.5 1.9 178.2 236.2 260.2 260.0 12.7 3.0
NEU † NEWMARKET CORPORATION DEC 2.6 2.8 2.9 3.1 3.6 3.4 49.8 51.0 56.8 47.7 39.2 53.1 115.5 92.7 101.1 71.6 56.7 87.7
POL † POLYONE CORPORATION DEC 1.9 1.9 1.9 1.7 2.1 1.9 68.0 63.1 61.5 55.0 49.9 52.7 257.3 281.9 243.8 238.5 151.4 163.9
PPG [] PPG INDUSTRIES, INC. DEC 1.7 1.5 1.4 1.3 1.7 1.7 42.2 44.7 44.6 41.5 39.7 44.3 160.4 167.4 200.9 232.7 110.5 104.7
KWR § QUAKER CHEMICAL CORPORATION DEC 2.6 3.0 2.9 2.8 2.5 2.6 13.0 13.7 17.6 17.1 5.0 9.7 24.2 26.4 34.9 33.2 9.2 18.2
RYAM § RAYONIER ADVANCED MATERIALS INC. DEC 2.1 4.1 2.5 2.4 3.1 2.3 64.0 78.5 102.1 107.1 0.0 0.0 363.5 197.1 433.0 519.4 0.0 0.0
RPM † RPM INTERNATIONAL INC. # MAY 2.5 1.9 2.1 2.3 2.2 2.0 57.1 56.1 54.3 56.1 46.0 50.4 148.4 158.0 144.3 138.2 119.6 144.0
SXT † SENSIENT TECHNOLOGIES CORPORATION DEC 3.4 3.4 3.4 3.4 3.5 3.7 42.9 42.5 43.5 31.2 22.3 23.8 120.7 119.9 122.9 87.4 62.6 64.7
SCL § STEPAN COMPANY DEC 2.5 2.3 2.5 2.3 2.3 2.1 26.6 31.2 35.9 31.5 29.8 23.7 57.3 74.4 83.1 75.7 69.3 54.2
SHW [] THE SHERWIN-WILLIAMS COMPANY DEC 1.1 1.3 1.2 1.0 1.2 1.7 77.7 40.5 70.1 85.0 42.1 49.7 2506.1 156.9 377.8 NM 193.4 133.7

Price/Earnings Ratio (High-Low) Dividend Payout Ratio(%) Dividend Yield(High-Low, %)
COMMODITY CHEMICALS
ASIX § ADVANSIX INC. DEC 10 - 4 21 - 13 NA - NA NA - NA 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
CBT † CABOT CORPORATION SEP 15 - 12 22 - 13 NM - NM 20 - 14 18 - 14 7 - 4 31 44 NM 27 33 13 2.4 - 1.8 2.5 - 2.0 2.8 - 1.8 2.7 - 1.6 2.0 - 1.3 2.5 - 1.8
HWKN § HAWKINS, INC. # APR 26 - 18 25 - 18 24 - 18 26 - 20 26 - 19 21 - 14 NM 38 46 41 41 40 2.7 - 1.6 2.2 - 1.5 2.6 - 1.8 2.3 - 1.7 2.1 - 1.6 2.0 - 1.6
KOP § KOPPERS HOLDINGS INC. DEC 37 - 24 30 - 10 NM - NM NM - NM 25 - 19 13 - 10 0 0 NM NM 52 30 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 5.5 - 0.0 3.6 - 2.1 2.8 - 2.0
LYB [] LYONDELLBASELL INDUSTRIES N.V. DEC 9 - 6 10 - 8 11 - 8 14 - 9 12 - 8 11 - 6 29 36 32 34 29 29 4.6 - 3.0 4.6 - 3.4 4.8 - 3.2 4.0 - 2.7 3.6 - 2.4 8.9 - 2.5
OLN † OLIN CORPORATION DEC 11 - 8 NM - NM NM - NM 22 - 16 13 - 10 12 - 10 24 NM NM 60 36 43 4.1 - 2.1 3.2 - 2.2 6.3 - 3.0 5.1 - 2.5 3.4 - 2.8 3.9 - 3.1
TG § TREDEGAR CORPORATION DEC 22 - 13 34 - 16 NM - NM 25 - 15 45 - 29 30 - 15 38 59 NM 30 41 24 2.8 - 1.7 3.0 - 1.7 3.8 - 1.9 3.5 - 1.6 2.1 - 1.0 1.3 - 0.9
VVV † VALVOLINE INC. SEP 17 - 13 15 - 14 NA - NA NA - NA 13 0 0 0 0 0 1.5 - 0.8 1.0 - 0.8 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
DWDP [] DOWDUPONT INC. DEC 80 - 71 NA - NA NA - NA NA - NA NA - NA NA - NA 232 57 29 54 31 173 2.9 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
EMN [] EASTMAN CHEMICAL COMPANY DEC 10 - 8 13 - 10 15 - 11 18 - 14 11 - 8 22 - 13 21 32 28 28 12 44 3.0 - 2.0 2.6 - 2.2 3.1 - 2.2 2.5 - 1.7 2.0 - 1.6 2.0 - 1.5
LXU § LSB INDUSTRIES, INC. DEC NM - NM 6 - 2 NM - NM 49 - 34 18 - 12 17 - 10 0 7 NM 2 1 1 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
CC † THE CHEMOURS COMPANY DEC 14 - 5 700 - 81 NM - NM NA - NA NA - NA 3 314 NM 0 0 0 3.5 - 0.2 0.6 - 0.2 3.8 - 0.5 2.1 - 1.2 0.0 - 0.0 0.0 - 0.0

AVD § AMERICAN VANGUARD CORPORATION DEC 34 - 22 44 - 23 69 - 43 144 - 56 28 - 18 28 - 10 8 5 17 117 14 9 0.5 - 0.3 0.4 - 0.2 0.3 - 0.0 1.9 - 0.0 2.1 - 0.7 0.9 - 0.4
CF [] CF INDUSTRIES HOLDINGS, INC. DEC 28 - 17 NM - NM 23 - 13 10 - 8 10 - 7 8 - 5 78 NM 40 18 9 6 3.3 - 2.1 4.7 - 3.1 5.6 - 2.6 2.7 - 1.7 2.5 - 1.5 1.9 - 0.7
FMC [] FMC CORPORATION DEC 24 - 14 38 - 22 18 - 9 36 - 22 35 - 26 19 - 14 17 42 18 25 25 11 0.9 - 0.7 1.2 - 0.7 2.0 - 1.2 2.0 - 0.9 1.2 - 0.7 1.0 - 0.7
MOS [] THE MOSAIC COMPANY DEC NM - NM 37 - 26 19 - 10 19 - 15 47 - 30 14 - 10 NM 129 38 37 63 16 0.4 - 0.3 4.8 - 0.4 5.0 - 3.4 3.6 - 1.9 2.5 - 2.0 2.5 - 1.6
SMG † THE SCOTTS MIRACLE-GRO COMPANY SEP 26 - 22 16 - 11 26 - 21 23 - 20 21 - 15 32 - 22 55 37 70 65 55 71 3.0 - 1.9 2.5 - 2.1 3.2 - 2.4 3.3 - 2.6 3.3 - 2.8 3.3 - 2.5
INDUSTRIAL GASES
APD [] AIR PRODUCTS AND CHEMICALS, INC. SEP 11 - 10 54 - 40 27 - 20 29 - 22 23 - 16 17 - 13 26 114 53 63 57 44 2.9 - 2.2 2.8 - 2.2 2.8 - 2.2 2.6 - 1.9 2.8 - 2.3 3.4 - 2.6
LINDE PLC DEC NA - NA NA - NA NA - NA NA - NA NA - NA NA - NA 72 57 53 45 40 39 2.2 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
SPECIALTY CHEMICALS
ALB [] ALBEMARLE CORPORATION DEC 292 - 174 16 - 8 21 - 14 43 - 31 14 - 12 19 - 14 256 21 36 63 19 22 1.5 - 0.9 1.4 - 0.9 2.4 - 1.4 2.8 - 1.8 2.1 - 1.4 1.7 - 1.2
ASH † ASHLAND GLOBAL HOLDINGS INC. SEP 7908 - 3769 NM - NM 29 - 21 36 - 28 11 - 8 230 - 128 7700 NM 32 44 13 242 1.5 - 1.2 2.5 - 1.2 1.7 - 1.3 1.6 - 1.0 1.6 - 1.2 1.7 - 1.0
BCPC § BALCHEM CORPORATION DEC 32 - 26 49 - 30 36 - 27 39 - 28 39 - 24 30 - 19 13 19 15 15 0 29 0.6 - 0.4 0.5 - 0.4 0.6 - 0.4 0.6 - 0.4 0.5 - 0.4 0.6 - 0.4
ECL [] ECOLAB INC. DEC 26 - 23 30 - 24 36 - 29 29 - 24 33 - 22 30 - 24 30 35 40 29 23 44 1.3 - 1.0 1.3 - 1.1 1.4 - 1.1 1.3 - 1.0 1.1 - 0.9 1.3 - 0.9
FTK § FLOTEK INDUSTRIES, INC. DEC NM - NM NM - NM NM - NM 33 - 16 33 - 17 14 - 8 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
FF § FUTUREFUEL CORP. DEC 30 - 24 13 - 8 15 - 9 18 - 9 11 - 7 15 - 11 45 19 23 39 26 48 2.1 - 1.3 1.9 - 1.5 2.4 - 1.6 4.4 - 1.5 4.4 - 2.2 5.9 - 2.8
FUL § H.B. FULLER COMPANY DEC 50 - 40 21 - 13 27 - 19 53 - 38 27 - 17 14 - 9 50 23 30 46 20 13 1.5 - 1.1 1.2 - 1.0 1.6 - 1.1 1.6 - 1.0 1.3 - 0.8 1.1 - 0.8
NGVT § INGEVITY CORPORATION DEC 27 - 17 66 - 30 NA - NA NA - NA 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
IPHS § INNOPHOS HOLDINGS, INC. DEC 48 - 36 23 - 9 48 - 22 21 - 15 25 - 20 17 - 13 167 78 146 60 64 33 7.2 - 3.8 4.6 - 3.4 8.3 - 3.5 6.5 - 3.1 3.6 - 2.6 3.4 - 2.5
IOSP § INNOSPEC INC. DEC 29 - 21 21 - 13 12 - 8 14 - 10 15 - 10 12 - 9 30 20 12 16 15 0 1.4 - 1.0 1.4 - 0.9 1.5 - 1.0 1.5 - 1.1 1.5 - 1.0 1.1 - 1.0
IFF [] INTERNATIONAL FLAVORS & FRAGRANCES INC. DEC 42 - 31 28 - 20 24 - 19 21 - 16 21 - 15 22 - 17 70 46 38 32 25 52 2.3 - 1.8 2.2 - 1.8 2.2 - 1.7 2.2 - 1.5 2.0 - 1.5 2.1 - 1.7
KRA § KRATON CORPORATION DEC 16 - 8 11 - 4 NM - NM 382 - 211 NM - NM NM - NM 0 0 0 0 0 0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0 0.0 - 0.0
MTX † MINERALS TECHNOLOGIES INC. DEC 15 - 11 22 - 10 24 - 15 29 - 18 26 - 17 19 - 13 4 5 6 7 9 6 0.4 - 0.3 0.3 - 0.2 0.5 - 0.2 0.4 - 0.3 0.4 - 0.3 0.5 - 0.3
NEU † NEWMARKET CORPORATION DEC 30 - 24 22 - 16 25 - 18 22 - 17 17 - 12 16 - 10 44 31 30 25 19 17 1.9 - 1.6 1.8 - 1.4 2.0 - 1.4 1.7 - 1.2 1.5 - 1.1 1.4 - 1.0
POL † POLYONE CORPORATION DEC NM - NM 19 - 12 25 - 18 50 - 38 14 - 8 26 - 14 NM 24 25 38 9 24 2.5 - 1.5 1.7 - 1.3 2.0 - 1.3 1.5 - 1.0 1.2 - 0.7 1.1 - 0.7
PPG [] PPG INDUSTRIES, INC. DEC 19 - 15 35 - 27 23 - 16 15 - 12 8 - 6 22 - 13 27 47 27 17 11 38 2.0 - 1.5 1.8 - 1.4 1.8 - 1.2 1.7 - 1.1 1.5 - 1.2 2.0 - 1.3
KWR § QUAKER CHEMICAL CORPORATION DEC 108 - 82 29 - 15 24 - 20 22 - 16 19 - 12 15 - 10 92 29 32 26 23 27 1.0 - 0.7 1.1 - 0.9 1.8 - 1.1 1.7 - 1.3 1.7 - 1.2 2.0 - 1.2
RYAM § RAYONIER ADVANCED MATERIALS INC. DEC 3 - 2 10 - 4 18 - 5 58 - 29 NA - NA NA - NA 8 21 21 19 0 0 2.3 - 1.3 2.3 - 1.5 4.7 - 1.8 4.7 - 1.1 1.1 - 0.7 0.0 - 0.0
RPM † RPM INTERNATIONAL INC. # MAY 41 - 34 19 - 14 29 - 22 20 - 14 45 - 33 16 - 11 50 86 41 57 43 119 2.7 - 2.1 2.6 - 2.0 2.9 - 2.0 2.6 - 2.0 2.9 - 2.2 3.5 - 2.8
SXT † SENSIENT TECHNOLOGIES CORPORATION DEC 41 - 35 29 - 19 30 - 25 41 - 31 23 - 16 16 - 14 60 39 45 65 40 35 2.3 - 1.7 1.8 - 1.4 2.0 - 1.4 1.8 - 1.4 2.0 - 1.7 2.5 - 1.7
SCL § STEPAN COMPANY DEC 23 - 18 23 - 11 17 - 11 27 - 15 21 - 16 15 - 11 21 20 21 27 20 16 1.3 - 1.0 1.2 - 0.9 1.8 - 1.0 1.9 - 1.3 1.8 - 1.0 1.3 - 1.0
SHW [] THE SHERWIN-WILLIAMS COMPANY DEC 22 - 14 25 - 19 26 - 19 29 - 20 26 - 20 26 - 14 18 28 24 25 27 26 0.9 - 0.7 1.3 - 0.9 1.4 - 1.0 1.2 - 0.8 1.2 - 0.9 1.3 - 0.9

Earnings per Share($) Tangible Book Value per Share($) Share Price (High-Low, $)
COMMODITY CHEMICALS
ASIX § ADVANSIX INC. DEC 4.72 1.12 2.09 2.75 0.00 0.00 11.85 6.57 15.22 0.00 0.00 0.00 46.51 - 20.88 23.35 - 12.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00
CBT † CABOT CORPORATION SEP 3.91 2.32 (5.27) 3.04 2.35 6.02 19.60 15.79 14.84 16.45 17.84 15.83 64.66 - 50.21 54.24 - 36.12 48.00 - 30.70 61.46 - 39.41 51.72 - 32.13 44.97 - 31.70
HWKN § HAWKINS, INC. # APR (0.87) 2.13 1.72 1.81 1.71 1.62 6.83 4.10 1.93 16.19 15.76 14.86 54.80 - 34.20 54.50 - 30.53 44.00 - 33.94 45.13 - 32.98 44.00 - 35.29 42.93 - 31.06
KOP § KOPPERS HOLDINGS INC. DEC 1.32 1.39 (3.51) (1.58) 1.94 3.14 (10.49) (14.42) (17.57) (16.83) 4.18 2.89 51.80 - 33.90 42.70 - 13.58 27.40 - 15.78 45.92 - 22.52 49.99 - 34.69 40.61 - 29.30
LYB [] LYONDELLBASELL INDUSTRIES N.V. DEC 12.23 9.13 9.59 7.99 6.75 4.92 19.80 12.30 12.21 14.33 19.99 16.53 111.62 - 78.01 93.75 - 69.10 107.32 - 71.74 115.40 - 70.06 80.33 - 55.02 57.16 - 33.11
OLN † OLIN CORPORATION DEC 3.26 (0.02) (0.01) 1.33 2.21 1.85 (6.47) (6.30) (5.08) 1.84 2.72 1.23 37.52 - 25.43 26.93 - 12.29 34.34 - 15.73 29.28 - 20.43 29.52 - 21.29 23.48 - 18.40
TG § TREDEGAR CORPORATION DEC 1.16 0.75 (0.99) 1.14 0.67 0.88 5.33 4.87 3.68 4.87 5.49 4.12 25.15 - 14.65 25.60 - 11.37 24.13 - 12.42 28.80 - 16.68 31.89 - 20.93 26.76 - 12.33
VVV † VALVOLINE INC. SEP 1.49 1.60 1.15 0.84 0.00 0.00 (2.23) (2.91) 2.18 0.00 0.00 0.00 25.28 - 20.99 24.51 - 18.30 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00
DWDP [] DOWDUPONT INC. DEC 0.90 3.52 6.15 2.87 3.68 0.70 3.24 3.87 5.02 1.75 4.77 (0.48) 73.85 - 64.01 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00
EMN [] EASTMAN CHEMICAL COMPANY DEC 9.47 5.75 5.66 4.96 7.44 2.93 (10.47) (16.44) (21.84) (26.19) (4.17) (10.18) 94.96 - 74.78 78.79 - 56.03 83.90 - 62.84 90.55 - 70.38 82.96 - 63.48 68.22 - 39.16
LXU § LSB INDUSTRIES, INC. DEC (2.18) 2.54 (1.67) 0.85 2.33 2.49 14.81 16.95 17.18 18.08 17.93 15.68 11.71 - 5.55 15.50 - 3.68 47.33 - 5.38 42.41 - 28.91 42.79 - 28.15 45.00 - 24.85
CC † THE CHEMOURS COMPANY DEC 3.91 0.04 (0.50) 2.21 2.34 0.00 3.79 (0.38) (0.28) 19.12 0.00 0.00 58.08 - 20.76 27.29 - 3.06 21.80 - 4.58 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00

AVD § AMERICAN VANGUARD CORPORATION DEC 0.68 0.44 0.23 0.17 1.19 1.28 3.42 5.47 4.77 5.55 5.26 3.92 24.00 - 14.65 20.00 - 9.63 16.06 - 9.73 24.54 - 9.50 34.97 - 21.83 37.51 - 13.00
CF [] CF INDUSTRIES HOLDINGS, INC. DEC 1.53 (1.19) 2.96 5.42 4.95 5.72 4.63 3.75 6.39 8.59 10.51 12.04 43.42 - 25.04 40.95 - 20.77 70.32 - 39.64 58.06 - 44.02 47.88 - 33.87 45.60 - 29.92
FMC [] FMC CORPORATION DEC 3.99 1.56 3.66 2.29 2.16 3.00 (8.75) 5.29 1.62 6.74 6.21 7.00 96.02 - 56.42 60.00 - 32.24 64.72 - 32.58 83.94 - 51.04 75.68 - 55.18 59.41 - 42.93
MOS [] THE MOSAIC COMPANY DEC (0.31) 0.85 2.78 2.68 1.37 4.34 22.57 22.71 22.51 24.21 22.32 26.26 34.36 - 19.23 31.54 - 22.02 53.83 - 26.96 51.25 - 40.32 64.65 - 39.75 61.98 - 44.43
SMG † THE SCOTTS MIRACLE-GRO COMPANY SEP 3.63 5.09 2.57 2.65 2.58 1.72 (9.32) (5.75) (5.18) (1.65) 1.79 (0.24) 108.04 - 81.48 98.82 - 62.20 72.26 - 58.11 63.96 - 52.38 62.57 - 42.01 55.95 - 35.49
INDUSTRIAL GASES
APD [] AIR PRODUCTS AND CHEMICALS, INC. SEP 13.65 2.89 5.88 4.61 4.68 5.44 41.20 26.90 26.05 25.82 22.12 19.38 164.78 - 133.63 157.84 - 114.64 158.20 - 123.66 149.61 - 102.73 114.75 - 84.04 92.79 - 76.11
LINDE PLC DEC 4.32 5.21 5.35 5.73 5.87 5.61 7.78 4.64 2.93 6.56 9.58 11.42 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00
SPECIALTY CHEMICALS
ALB [] ALBEMARLE CORPORATION DEC 0.49 5.68 3.00 1.69 4.90 3.47 14.86 16.89 12.56 13.74 15.68 16.45 144.99 - 86.98 92.24 - 45.78 64.99 - 41.37 76.28 - 51.35 70.00 - 56.64 68.51 - 50.88
ASH † ASHLAND GLOBAL HOLDINGS INC. SEP 0.01 (0.46) 4.54 2.99 8.58 0.32 (6.35) 2.05 (9.15) (5.60) 4.84 (16.28) 128.19 - 59.80 125.00 - 88.30 132.38 - 97.58 121.35 - 88.76 97.68 - 72.11 80.84 - 56.83
BCPC § BALCHEM CORPORATION DEC 2.79 1.75 1.89 1.69 1.45 1.32 1.48 (2.09) (1.75) (4.91) 9.56 7.70 89.50 - 71.95 88.76 - 53.11 70.91 - 50.81 69.92 - 48.89 59.97 - 35.72 41.93 - 26.56
ECL [] ECOLAB INC. DEC 5.12 4.14 3.32 3.93 3.16 2.35 (12.45) (11.31) (12.47) (12.87) (14.29) (13.19) 137.96 - 117.29 124.60 - 98.62 122.48 - 97.78 118.46 - 97.65 108.34 - 71.99 72.79 - 57.44
FTK § FLOTEK INDUSTRIES, INC. DEC (0.48) (0.88) (0.24) 0.96 0.67 0.97 3.65 3.23 3.50 3.05 2.07 2.09 14.51 - 4.14 16.93 - 4.90 21.72 - 8.12 32.92 - 15.76 23.90 - 12.36 14.73 - 8.46
FF § FUTUREFUEL CORP. DEC 0.54 1.29 1.06 1.22 1.71 0.83 8.01 7.57 8.99 8.21 7.58 6.24 16.39 - 12.68 16.58 - 9.77 16.08 - 9.11 22.25 - 10.57 19.09 - 11.69 13.10 - 9.01
FUL § H.B. FULLER COMPANY DEC 1.15 2.37 1.68 0.97 1.89 2.48 (25.54) 7.31 6.12 8.74 8.97 5.85 58.74 - 46.93 50.92 - 32.49 45.57 - 30.72 53.31 - 36.92 52.16 - 35.17 35.55 - 22.99
NGVT § INGEVITY CORPORATION DEC 2.97 0.83 1.89 3.06 0.00 0.00 5.42 2.29 11.42 0.00 0.00 0.00 80.18 - 51.01 55.43 - 24.50 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00 0.00 - 0.00
IPHS § INNOPHOS HOLDINGS, INC. DEC 1.13 2.44 1.29 2.91 2.21 3.30 3.70 11.24 10.20 14.84 14.31 13.30 58.22 - 41.66 57.42 - 22.06 63.29 - 28.53 61.54 - 44.27 56.94 - 45.04 58.50 - 43.29
IOSP § INNOSPEC INC. DEC 2.52 3.33 4.86 3.38 3.22 2.81 11.04 5.58 7.01 2.42 3.89 4.26 74.75 - 54.10 73.40 - 41.61 59.52 - 38.44 47.50 - 35.00 49.41 - 34.76 34.87 - 25.18
IFF [] INTERNATIONAL FLAVORS & FRAGRANCES INC. DEC 3.72 5.05 5.16 5.06 4.29 3.09 1.42 3.29 4.29 9.49 9.42 6.70 156.64 - 113.16 143.64 - 97.24 123.08 - 97.59 105.84 - 82.91 90.30 - 67.50 67.79 - 52.05
KRA § KRATON CORPORATION DEC 3.07 3.43 (0.34) 0.07 (0.02) (0.50) (17.23) (24.27) 10.37 11.97 14.01 13.29 51.23 - 25.09 37.50 - 13.35 25.22 - 16.51 28.87 - 15.52 28.26 - 18.33 31.17 - 17.61
MTX † MINERALS TECHNOLOGIES INC. DEC 5.48 3.79 3.08 2.65 2.29 2.09 7.80 0.67 (2.40) (3.46) 22.71 20.64 83.85 - 62.55 83.20 - 35.89 74.87 - 44.91 77.95 - 48.50 60.75 - 38.24 40.00 - 28.63
NEU † NEWMARKET CORPORATION DEC 16.08 20.54 19.45 18.38 19.90 17.85 38.82 39.91 31.52 32.47 41.92 27.70 483.86 - 377.27 447.97 - 322.54 483.25 - 348.38 416.52 - 309.73 341.69 - 238.00 283.48 - 172.50
POL † POLYONE CORPORATION DEC (0.71) 1.95 1.63 0.84 2.52 0.80 (5.09) (1.82) (2.79) (1.98) 0.55 (1.30) 46.79 - 31.68 38.41 - 22.35 41.20 - 28.97 43.34 - 32.01 35.77 - 20.96 21.00 - 11.58
PPG [] PPG INDUSTRIES, INC. DEC 6.18 3.27 5.14 7.52 11.13 3.03 (1.71) (2.83) (3.24) (3.79) 2.11 0.71 119.85 - 94.57 117.00 - 88.37 118.95 - 82.93 116.84 - 85.78 95.04 - 64.10 68.40 - 41.64
KWR § QUAKER CHEMICAL CORPORATION DEC 1.52 4.63 3.84 4.26 4.27 3.63 18.79 18.74 16.60 15.72 18.67 14.44 165.93 - 124.92 139.92 - 68.20 95.74 - 75.04 93.56 - 65.19 81.52 - 53.54 54.00 - 35.82
RYAM § RAYONIER ADVANCED MATERIALS INC. DEC 5.81 1.55 1.30 0.75 5.21 5.74 12.26 4.89 (0.40) (1.46) 22.96 0.00 20.99 - 11.88 16.37 - 5.88 24.01 - 5.75 44.18 - 21.37 0.00 - 0.00 0.00 - 0.00
RPM † RPM INTERNATIONAL INC. # MAY 2.50 1.36 2.63 1.78 2.18 0.74 (1.09) (2.10) (3.18) (3.97) (1.68) (2.81) 56.48 - 47.87 55.92 - 36.78 51.42 - 40.11 51.97 - 37.57 41.63 - 29.11 29.60 - 22.96
SXT † SENSIENT TECHNOLOGIES CORPORATION DEC 2.03 2.81 2.31 1.50 2.27 2.49 10.10 10.04 9.74 12.95 15.54 13.91 84.98 - 71.21 83.38 - 52.69 70.53 - 56.71 63.35 - 46.08 53.35 - 35.54 41.08 - 33.13
SCL § STEPAN COMPANY DEC 3.92 3.73 3.32 2.49 3.18 3.49 30.94 26.17 23.69 22.61 23.15 21.01 92.97 - 68.51 87.00 - 41.42 55.67 - 37.20 66.51 - 36.34 67.20 - 52.34 55.90 - 38.05
SHW [] THE SHERWIN-WILLIAMS COMPANY DEC 18.20 11.99 11.15 8.77 7.26 6.02 (98.17) 5.37 (5.78) (4.79) 2.84 2.80 415.75 - 270.29 312.48 - 234.96 294.35 - 218.27 266.25 - 174.29 195.32 - 153.94 159.80 - 90.21
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Industry

34 How to Analyze a Company in this Industry

Copyright © 2019 CFRA, One

Chemical Companies’ Results Driven by a Handful of Companies

Commodity Chemicals Benefit from Strong Competitive Position in the U.S.

Higher Volumes and Prices Should Aid Specialty Chemicals Results

3 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 4

Earnings per Share

Dividends and Payout Ratio

5 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

LT Debt to Total Capital

Forward P/E Ratio

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 6

Oil /Natural Gas Prices

U.S. Chemical Railcar Loadings

7 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

Global and U.S. Auto Sales

Green Markets Index

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 8

9 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 10

The chemicals industry is comprised of the following sub-industries:

 Competition. The commodity chemicals sub-industry is very competitive with commodity

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 12

13 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

 Competition. Generally, the fertilizer and agricultural chemicals sub-industry is competitive

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 14

15 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 16

 Competition. Generally, the specialty chemicals sub-industry is competitive with several

Business Environment Seeing Healthy Growth

17 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

INDUSTRY SURVEYS CHEMICALS / MARCH 2019 18

YEAR CHEMICALS U.S. TRADE BALANCE

New Petrochemical Plants in the Planning Stages and for Startup

Notable plant expansions/startups in the U.S.

Dec 2016 Expanded ethylene production facility in Louisiana by 250,000 mtpa.

Mar 2018 Announced successfully introduction of feedstock and commenced

19 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

May 2017 Commenced construction on HDPE plant at La Porte manufacturing complex;

Aug 2018 Commenced construction on PO/TBA facility; expected to be completed by

Nov 2017 Commenced construction of a major petrochemical complex in Pennsylvania,

ANNOUNCEMENT COMPLETION TARGET ACQUIRER SIZE ($M)

TSCA Modernization Act

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Greenhouse Gas Controls

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Distribution Methods Vary

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PRODUCTION OF SELECTED ORGANIC CHEMICALS

CHEMICAL PRODUCTION AVERAGE ANNUAL

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PRODUCTION OF PLASTIC MATERIALS & RESINS

PRODUCT PRODUCTION AVERAGE ANNUAL

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31 CHEMICALS / MARCH 2019 INDUSTRY SURVEYS

PAINTS AND COATINGS

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