Industry overview:
The specialty chemical industry is a matured and competitive sector. It is also very
diversified in products that serve agriculture, electronics, construction, consumer goods,
and pharmaceuticals. Within this industry there has been a conscious shift to more efficient
and eco-friendly products and services to eliminate greenhouse gases and such.
Many of the inputs in this industry along with Ashland Inc. depend on natural gasses,
petrochemicals, and other commodities prices. The prices of these inputs can be extremely
volatile at times creating income fluctuations. Currently, we are experiencing a shale boom
which has made the US the lowest-cost chemical producer outside the Middle East and has
triggered a wave of investment on the part of the world’s leading chemical manufacturers.
According to IHS, US based chemical manufacturers will boost output capacity by 30% in
the next decade lead by ethylene and methanol producers in the Gulf Coast.
U.S. chemical companies put a great deal of focus on emerging markets because of their
huge market potential as they industrialize. Major growth areas for the specialty chemicals
industry are in emerging regions, primarily China and other parts of Asia, where average
annual volume growth rates of 8.4% and 4.7%, respectively, are forecast through 2017.
Risk Factors:
Ashland Inc. is sensitive to the global economy and financial condition as well as the other
companies in the industry. Another notable risk factor that will certainly be worth keeping
an eye on is the ability for future success by executing management strategy to optimize
their business portfolio and goals while managing its somewhat sizeable amount of debt
