IHS Consulting for the Chemical Industry

In today’s uncertain economic environment, chemical and energy enterprises need a clear, timely picture of ongoing events as well as an objective analysis of probable future trends and developments. Drawing on the information insight and expertise of the former CMAI, SRI Consulting and Harriman Chemsult organizations, IHS Consulting is most trusted and respected provider of strategic market, technology and process economic analysis in the chemical industry. Together, we can offer what many economic and management consultancies cannot-- a history exclusively dedicated to the chemicals business and how it integrates with upstream oil & gas operations.

For more than 60 years, we have served global corporate and public sector clients in all areas of the chemical industry, including the emerging bio-based chemical markets that often face difficult strategic investment decisions. Our regular coverage of more than 300 chemical products and over 1,300 chemical processes in major geographic regions of the world, offers a deep understanding and a unique perspective to every consulting project we undertake. Find out how we can help you formulate timely, successful plans for growth in this rapidly changing industry.

IHS Consulting enables you to:

• Understand global chemical market fundamentals and driving forces to provide a sound basis for gauging possible paths for prices and the key uncertainties facing upstream and downstream sectors
• Anticipate the implications for changes in energy prices for investment profitability, as well as opportunities and challenges facing various segments across the supply chain
• Analyze the interactions between energy, chemicals and markets to assess the effects on regional prices and profits
• Identify the regional and geographical factors affecting energy and chemical opportunities and fiscal terms
• Recognize how corporate strategy will enable you to maintain your competitive advantage and profitably expand your business operations
• Understand the competitive environment in the chemical industry that you are operating in or considering to enter
• Competently evaluate existing or emerging technologies and how these developments may impact your business
• Evaluate your carbon footprint and environmental impact to understand the potential economic impact and how you can improve your carbon emissions 

IHS consultants provide chemical companies, financial institutions, governments, investors and businesses worldwide information and forecasts for better decision making to increase their competitiveness across the chemical supply chain. Our consultants can help you:

• Understand the size of your carbon footprint and provide solutions for reducing it
• Understand your competitive position as it relates to technology or market position for a broad range of chemicals and technologies
• Assess upstream pricing changes and impacts on your product margins
• Evaluate strategic investment opportunities
• Evaluate commercial and technical due diligence opportunities to minimize risk exposure and understand the full value potential of the acquisition or partnering opportunity
• Conduct detailed benchmarking studies in areas such as R&D, sales and production economics to support your strategic decision making
• Assess upstream integration opportunities to select optimum feedstock and sourcing opportunities to maximize your company value 
• Assess licensor opportunities and selection
• Provide litigation support and expert witness testimony
• Provide insurance adjustment support

Strategic investment opportunities: Companies are often faced with different options for growth, such as the expansion of particular product areas or and investment into different technologies. Identifying strategic growth alternatives and selecting the most value-maximizing one is a critical function of a company’s business planning group. IHS Consulting can help your strategic planning efforts in several ways, including:

• Rapid prioritization of investment opportunities (products, technology, licensors, markets)
• Rigorous analysis of technical, fiscal, commercial, regulatory and security factors to develop prioritization criteria
• Timely updates of information in response to changes in the chemical market to test prioritization and to respond quickly to opportunities
• Delivery of information with rich clear insight to facilitate organizational buy-in

See Case Study #1

Case Study #1
Specialty Oilfield Chemicals Post-merger Market
Analysis

Challenge: The use of specialty chemicals in oil and gas exploration, development and production is highly complex as a result of the number of different types of chemistries involved and the varied technical and economic aspects of their uses in different oil and gas formations around the world. In addition, booming demand in a number of oil and gas applications has made it difficult to separate market trends from a realistic, longer-term growth outlook. A client engaged IHS Chemical Consulting to help them make sense of conflicting market information after an acquisition, in order to facilitate their planning, market and product strategies at both the end-user and the chemical manufacturers’ level.

Solution: IHS performed a bottom-up analysis of present and forecast oil field chemical supply and demand, tailored to the client’s product portfolio, both from the perspective of the broad applications by segments (such as emulsifiers in oil-based drilling muds) and chemistries by uses (such as guar gum viscosifiers in hydraulic fracturing).

Results: Our analysis enabled the client to develop a much more insightful marketing plan and strategy based on a realistic outlook for the market and their position within it.

Case Study #2
Bio-based Production Alternatives to Meet the High Demand for Butadiene

Challenge: Butadiene is a monomer used in the production of a wide range of polymers, copolymers as well as numerous intermediate chemicals. The largest single use of butadiene is in the production of styrene butadiene rubber used primarily in the manufacture of tires. Alternative bio-based production routes are underway to meet the high demand for butadiene. The client wanted to explore novel ways to make butadiene from bio-based routes and approached IHS Chemical Consulting for support.

Solution: IHS Consulting completed a detailed process engineering design review for producing 1,3 butadiene via a bio-based route. We also compared production economics for producing 1,3 butadiene via a bio-based route compared to conventional petrochemical routes.

Results: The resulting information enabled the client to understand the competitive landscape for this alternative process and informed the company’s strategic plan.

Case Study #3
Acrylic Acid from Sugar

Challenge: Acrylic acid and esters are perhaps the most versatile series of monomers for providing performance characteristics to thousands of polymer formulations. With the growing interest in bio-based alternative products, developing these comparable production economics is a key factor in understanding a company’s competitiveness in this emerging industry. The client company wanted to explore novel ways to make acrylic acid from bio-based routes and approached IHS Chemical Consulting for support.

Solution: IHS Chemical Consulting developed a Class 3 design-and-production-cost estimate for producing acrylic acid via a bio-based fermentation route from sugar.

Results: The resulting information enabled the client to benchmark this process against conventional manufacturing routes, such as propylene oxidation or production from sugar via 3-hydroxy propionic acid (HPA) and could price its product competitively.

Case Study #4
Renewables in Packaging

Challenge: A major beverage brand owner was seeking a competitive advertising advantage   by moving from conventional, oil-based polyester to bio-based bottles and contracted IHS Consulting to analyze the options.

Solution: We first defined current and prospective technology platforms and for increasing the green content of polyester. Then we developed a market analysis to weigh the size of a potential green premium for bio-based polyester against a possible impact on packaging costs. We also recommended potential suppliers.

Results: Our analysis enabled the client to develop a strategy for the progressive greening of its bottles.

Case Study #5
Asian NOC Investment in US Shale Plays

Challenge: One of Asia’s major National Oil Companies (NOCs) retained IHS Chemical Consulting to evaluate the investment viability for an ethane cracker and derivative complex in one of the US shale gas plays.

Solution: The engagement scope included detailed shale gas and associated NGL development, including ethane availability and US pricing by region; identification of the mid-stream investments needed to monetize gas/gas-liquids; uncovering investment opportunities in an ethane cracker and derivatives complex, including detailed evaluations of industry structure from E&P, to mid-stream, to petrochemicals; analysis and forecasting of supply/demand/trade dynamics along the value chain; and pricing projections and competitiveness evaluations. In addition, IHS Chemical Consulting proposed potential business models for the NOC’s participation/investment and supported the client in prospective partnering discussions.

Results: Our analysis enabled the client company to develop a clear picture of the opportunities and potential risks for their investment and determine their strategy for moving forward.

Case Study #6
Determining Carbon Footprint

Challenge: An industry leader in supplying essential crop protection products was seeking to understand the cumulative carbon footprint for producing chloropicrin.

Solution: IHS Consulting drew up a list of assumptions about the supply chain from the natural gas liquids facility to the chloropicrin produced at the client’s facility. With the help of a carbon footprint tool that we have developed for making this type of analysis, we were able to estimate the cumulative carbon footprint as tons of CO2 per ton of chloropicrin.

Results: Our analysis delivered the carbon footprint to support the client’s funding initiative.

Case Study #7
Strategic Planning to Maximize Growth Potential

Challenge: A major oil and gas producer in South America was interested in defining attractive downstream investments in the petrochemical area. The objective was to define petroleum-based and renewable chemicals that consumed the existing feedstock base while maximizing growth potential.

Solution: Our consultants used IHS's extensive chemical database containing information on product supply, demand, consumption, trade, economic outlook as well as critical process economic information, to  generate a list of 50 potential petrochemical products and 30 renewable products, ranking the attractiveness of each. Workshops with the client served to narrow and rank the list.  For the Top 5 product chains we developed bankable feasibility analyses.

Results: From this strategic ranking of over 80 potentially attractive chemical products based on critical market and company-specific criteria, we generated a “road map” for the company to use in their strategic investment planning.

Case Study #8
Technical and Market Due Diligence

Challenge: An investment firm was considering investment in a producer of citral from turpentine oil. They wanted to understand that company’s process for making citral compared to processes used by its competitors as well as the market outlook for this industry.

Solution: IHS consultants performed due diligence, visited the manufacturing facility and generated a report on the target’s manufacturing capabilities. We then used our extensive chemical database to assess the market outlook for the citral industry. We also conducted primary research with producers in China which was considered a major competitive region. Our team developed cost- of-production economics for citral compared to turpentine oil viand isobutylene.

Results: The client made a well informed bid for the target and completed the transaction.

Case Study #9
Market Advice for the Financiers of a Major Joint Venture

Challenge: A major chemicals joint venture in the Kingdom of Saudi Arabia was seeking to raise approximately $20 billion in tranches through project finance.  The lenders, comprising commercial banks, export credit agencies and export/import banks sought independent market advice.

Solution: IHS Consulting provided independent forecasts of selected markets and the project’s competitive position in each. We tested the JV’s business plans and modeled its financial performance.

Results: The project is proceeding with a phased investment plan.

Case Study #10
Bankruptcy Support for Creditors

Challenge: Shortly after a major merger, a large publicly owned company declared bankruptcy. The creditors, who held $3 billion in unsecured debt, contracted IHS Chemical consulting for support throughout the company’s complex and protracted bankruptcy proceedings.

Solution: IHS Consulting analyzed pre-merger performance expectations of the financing and merging entities and testing the company portfolio for valuation. We also advised on the development of legal strategies and provided deposition support and expert testimony.

Results: The creditors were successful in recovering $450 million of the unsecured debt.

Case Study #11
Transformation Options for Failing Businesses

Challenge: A major Chinese state owned enterprise (SOE) with a broad portfolio identified 10 failing operating units, three of which were already in bankruptcy. The SOE requested IHS Consulting to identify transformation options, and to develop implementation plans.

Solution: IHS Consulting performed extensive market and technology due diligence of the operating units and identified several business improvement options for each site. These included significant feedstock changes with associated cost reductions, major reinvestment and the adaptive reuse for brown field sites.

Results: The client plans to execute the recommended options and has appointed dedicated transformation managers to guide the process.