Who Are the Consumers of the Chemicals Sector?

Chemical products are a major fact of life throughout the world. In the United States, they are consumed by many companies in a variety of industries. In fact, 96% of all goods produced in the U.S. use chemical industry products.

Chemical companies process raw materials such as crude oil into chemicals that are used to produce an enormous range of products. The chemicals industry is a powerful force in the economy.

According to the latest available figures, the chemicals industry accounts for more than 25% of the nation’s gross national product (GDP) and is valued at $486 billion.

Key Takeaways

• A variety of consumers, such as consumer goods makers, automakers, manufacturers, and agricultural companies depend on the products of chemical companies.
• The chemical industry itself is the largest consumer of chemical products.
• The industry accounts for more than 25% of GDP and is valued at $486 billion.
• Chemical companies keep a close watch on economic trends because many of their customers are in industries that are sensitive to changes in consumer demand.
• Crude oil has a tremendous impact on the chemicals industry because many plastics and polymers are manufactured from it.

Companies That Consume Chemicals

The chemicals produced by the chemicals industry have a broad range of uses and consumers, from the manufacturer to the individual.

Products manufactured with chemicals are found in homes, businesses, schools, farms, and industrial and manufacturing concerns across the U.S. Consumers of chemicals include:

• Consumer goods manufacturers of products such as soaps, detergents, bleach, toothpaste, cosmetics, deodorants, and paints
• Companies in the automotive, aerospace, agriculture, cosmetics, and food industries that depend on specialty chemicals
• Companies that make dyes, medical devices, food and beverage packaging, pulp and paper, fertilizer, and electronics with basic chemicals
• Companies that manufacture, store, and/or formulate agricultural and household pest control chemicals with agricultural chemicals

The Largest Consumer of All

The chemicals industry itself is the largest single purchaser of chemical products. These products are used to create reactions and produce other materials.

For this reason, factories supplying essential chemicals are often located next to other chemical production facilities.

Staying in close proximity to businesses that manufacture required products, provide markets, and supply critical components is important to the success of chemical companies.

Raw Materials

The consumption of raw materials is high for many industrial chemical processes, so locating factories near these material producers also makes sense for many companies within the industry.

Businesses with relatively lower energy costs may invest in factories near their consumer markets to more cheaply transport supplies to the site.

Note

The U.S. chemical industry directly employs 529,000 people in the U.S. and creates millions of more jobs in related industries.

Polymers and Plastics

Common chemical sector products include pigments, synthetic rubber, polymers, resins, and explosives. Approximately 80% of the chemicals sector is involved in polymer and plastic production.

A total of 26% of these goods are then used by the chemical industry itself in other production processes. Polymers include polyethylene, polyvinyl chloride, and polystyrene.

Major markets for plastics are packaging, toys, transportation, appliances, and home construction.

Global consumer spending and economic growth have driven the demand for goods that require the use of chemicals in their manufacture.

Oil

Oil is essential to the production of many chemical products. Polymers as well as many plastics are manufactured from it. So the oil industry and chemicals industry are very closely linked.

Oil price fluctuations can have a tremendous impact on chemical prices. Some companies pass higher prices along to customers through the use of surcharges to insulate themselves somewhat from the impact of volatile costs.

The pricing of other raw materials also impacts the industry and may reduce demand if costs are prohibitively high. These critical suppliers can significantly impact the variable expenses associated with increased production.

Chemical companies have to manage supply chain risks carefully to minimize the challenges created by these costs.

Does the Consumer Products Market Affect the Chemicals Industry?

Yes. Chemical companies are very sensitive to market demand, so the chemicals industry monitors demand levels in many industries. Growing demand for consumer products and the increased manufacturing activity that results means greater demand for chemical goods.

What Role Does Crude Oil Play for Chemicals?

Crude oil is an essential raw material for the chemicals industry. It’s used to produce petrochemicals, which in turn go into the making of a vast range of consumer goods as well as industrial and manufacturing products.

Which Country Has the Largest Chemicals Industry?

China. As of 2022, it produced 44% of the world’s chemicals. The U.S. took the second spot, producing 13%.

The Bottom Line

Chemicals are omnipresent in the world today. Some of the consumers of the chemicals sector are consumer goods makers, the food, aerospace, auto and agriculture industries, manufacturers, and industrial concerns.

By far, the largest chemical consumer of all is the chemicals industry itself.