How to spot a chemical industry bubble

A chemical industry has a bubble in its bottom line.

The industry’s valuation has soared to an all-time high and its stock price is now well above $30 billion.

A new study suggests the market for chemicals may be headed for a bubble. 

Chemical companies are still a relatively new business, but they’ve been a staple of the US economy for a few decades.

They’ve been part of the fabric of the economy since the early days of the automobile, and the industry has been booming in recent years. 

The first chemicals used in mass production were the explosive gases that were used to make the explosive devices used to blow up the World Trade Center in New York City in 1993. 

These explosive gases were produced in industrial facilities across the US and abroad, and were used in a wide variety of products including explosives, pesticides, plastics, plastics composites, and pharmaceuticals. 

But the explosion of the chemicals industry in the late 1990s and early 2000s sparked a rapid rise in the value of the chemical industry, which surged by more than $100 billion, from $6.6 billion in 2002 to $31.9 billion in 2012. 

A report from consultancy firm J.D. Power and Associates estimated the value rose to $39.7 billion in 2016, up more than 60% from just a decade earlier. 

However, the report noted that there are still some companies that are “off the radar” due to their “very small scale and high-risk nature.” 

Chemicals industry companies are now being valued at more than triple their current market value, up from a peak of $9.6 million in 2007, according to J.P. Morgan analyst Paul Ash. 

Ash added that the “bubble” has already begun to burst. 

“The explosion of a large chemical company has a number of important implications for the US industrial and commercial sector, as well as the wider economy, and for the future of American manufacturing,” Ash wrote in a report. 

Despite a “trend” towards companies going public in recent months, Ash noted that the market is still “very volatile.” 

“Companies like ConocoPhillips, for example, have already reported an operating loss in the third quarter,” Ash added. 

At the end of the third month of the fiscal year, the Dow Jones Industrial Average was up 1.5%. 

The value of chemical companies is now $41.9 trillion, up nearly $15 trillion from $16.4 trillion in 2012, according to the Chemistry Research Association of America. 

Last year, Chemical Industries Association of North America (CIAA) found that there were 4,800 chemicals companies, and another 8,200 chemical companies that operate independently or as joint ventures. 

Over the past three years, the number of companies with an IPO has more than tripled, from more than 3,300 in 2014 to more than 16,000 in 2017. 

This growth has led to concerns about the ability of chemical manufacturers to keep up with the demand for their products. 

Some have warned that if prices for chemicals continue to rise, they may be forced to exit the market, potentially leaving a glut in the market. 

Earlier this year, US Senator Ron Wyden criticized the government for failing to address the chemical bubble.

“The U.S. chemical industry is in a bubble and a bubble of a magnitude that we’ve never seen before, and it is the largest bubble we’ve seen,” Wyden said at a congressional hearing in June. 

According to the Chemical Industry Association of the United States, the value-added chemicals market grew from $5.3 billion in 2010 to $17.9.3. 

 In the first quarter of 2018, the chemical sector added $1.1 trillion to the overall economy. 

CIGNA is an independent trade association representing chemical manufacturers. 

Follow all of the latest industry news at the Chemically Industries Association of America Facebook page. 

Image credit: Kerry Bunch via Flickr