For purposes of analysis, the chemicals and allied products industry (CPI) has traditionally been divided into eight key segments: agricultural chemicals, drugs and medicines, industrial inorganic chemicals, industrial organic chemicals, paints and allied products, plastic materials and synthetics, soap and toiletries, and miscellaneous chemical products. With its products used by virtually every other manufacturing industry, the chemical industry is one of paramount importance. U.S. chemical sales exceed $450 billion, while for the world as a whole the figure is closer to $1.8 trillion. The CPI will remain one of the cornerstone industries of the world economy well into the twenty first century.

Agricultural Chemicals
Agricultural chemicals can be said to fall into one of two key categories: fertilizers or pesticides. Generally speaking, the demand for agricultural chemicals is relatively mature, especially in the United States, where there is little expansion in farming. Pesticide sales have been limited by the ever-increasing use of crops that have been genetically modified to resist a variety of pests. This trend is likely to continue.

Drugs and Medicines
Characterized by both their large size and relatively solid growth, sales of drugs and pharmaceuticals exceed $400 billion worldwide. This global market is likely to grow at rate of between six and eight percent over the next few years. North America accounts for about a third of the global pharmaceutical market, with Europe accounting for roughly another third.

Industrial Inorganic Chemicals
This sector of the chemical industry is mainly comprised of chlor-alkalis, industrial gases, and other inorganic chemicals, such as those used in pigments. Although some of the most significant U.S. markets for inorganic chemicals are relatively mature, growth will come from expanding markets in developing nations. Currently, Latin America, and Asian countries other than China and Japan, account for only about six percent of total inorganic chemical sales by U.S. companies--a figure which has the potential to increase significantly. Domestically, demand for inorganic chemicals is closely bound to such industries as construction, transportation, paper, and coatings.

Industrial Organic Chemicals
Organic chemicals can be defined as those that contain carbon atoms. Included in the industrial organic chemicals sector are, among others, organic pigments, aliphatics, aromatics, pesticides, solvents, and petrochemicals. The competitive nature of this sector has continued to grow as suppliers emerge in the developing nations, with a significant amount of new capacity coming from Asia, the Middle East, and Latin America.

Paints and Allied Products
Paints and allied products are used in a wide variety of end-use applications. These include, most importantly, automobile manufacturing and repair, construction, consumer product manufacturing, and building refurbishing. Sector profitability may be increasingly threatened by environmental legislation, and the price pressures associated with the mass merchandising of architectural (house) paints by such retailers as the Home Depot and WalMart.

Plastic Materials and Synthetics
This sector of the chemical industry includes the manufacture of synthetic resins, plastics, and nonvulcanizable elastomers. The sector has recently experienced a trend of mergers and acquisitions prompted by depressed prices and overcapacity. Sales will likely increase somewhat more slowly than the overall economy over the next few years.

Soap and Toiletries
This sector includes soap and detergents, surface active agents, finishing agents, and a number of cosmetic preparations including perfumes, toiletries, cosmetics, and other personal use products. In developed areas of the world, soap and toiletries producers are constantly attempting to overcome the effects of saturated markets. In other parts of the world market opportunities will expand as disposable incomes expand.

Miscellaneous Chemical Products
This sector of the CPI includes such areas as adhesives and sealants, explosives, printing inks, and carbon black. About 20 percent of U.S. exports from this sector go to Canada, while about a quarter of U.S. imports come from Japan. Product shipments in this sector are expected to grow roughly in line with the gross domestic product over the next few years.

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