Chemicals
This broad sector produces commodity organic and inorganic chemicals in bulk to serve as raw materials for a wide variety of downstream manufacturing industries.
Why it exists
Chemicals convert basic feedstocks (oil, gas, minerals) into molecules that enable modern life: plastics, solvents, fibers, detergents, etc.
Why it’s necessary
They’re embedded in nearly every product and supply chain. Without them, modern manufacturing, healthcare, and consumer goods would collapse or become vastly more expensive.
Key components
Commodity/petrochemicals: ethylene, propylene, methanol, etc.
Industrial gases: oxygen, nitrogen, hydrogen
Bulk intermediates: acids, solvents, resins
Large integrated complexes near cheap feedstock
How to evaluate businesses
Cost position is everything: access to cheap feedstock, scale, integration. Evaluate product mix (how commoditized), margin volatility across cycles, capacity additions globally, and the firm’s ability to maintain utilization during downturns. Balance sheet strength matters because cycles can be brutal. Watch environmental and regulatory risk.
How the industry could be improved
More circularity (recycling, chemical upcycling), cleaner processes (electrification, green hydrogen), and tighter integration with downstream customers to design materials for re-use and lower footprint. Better real-time monitoring and optimization using data and AI.
Anything to add?