Oil Prices, Sluggish Economy Hurt Chemical Industry Sales In 2016

The nation's top chemical manufacturers saw lower sales last year amid low oil prices and slow economic growth.

Chemical & Engineering News reports that the 50 largest U.S. chemical producers in 2016 reported $260 billion in combined sales for the year, a drop of more than 5 percent compared to sales by 2015's top 50 companies.

Just nine of those 50 companies reported sales increases last year, including just one of the 10 largest chemical makers — PPG Industries at no. 4.

Market leader Dow Chemical reported a decline of at 1.3 percent, followed by a 7.4 percent decline from no. 2 ExxonMobil and a 4.9 percent slide by third-ranked DuPont. Praxair rounded out the top five with 2.2 percent lower sales.

Companies also reported a nearly 10 percent decline in income compared to 2015, but CE&N noted that profits, although lower, remained at "historically high" levels.

The report said that although the price of oil — a common feedstock material — rebounded from multi-year lows by the end of 2016, chemical prices generally did not have time to reflect that increase. Overall sluggishness in the U.S. economy also hampered the chemical industry despite strong employment and consumer spending levels.

Last year was marked by consolidation in the chemical industry as companies instead looked to mergers and acquisitions to fuel growth.

Among the nine companies reporting year-over-year sales increases, CE&N indicated that several — including Olin, Kraton and Westlake Chemical — were largely due to acquisitions.

Analysts also expect that pattern to continue. A massive merger between Dow and DuPont — two of the nation's three largest chemical makers — remains under review from antitrust regulators but is expected to close this year.