They changed order, but the top three companies in Chemical & Engineering News’s rankings of the global Top 50 companies remain, for the third year running, Dow Chemical, BASF, and DuPont. The members of this “super league” show sales of almost a full third more than those of the next largest producers.

Making up numbers four, five, and six are Bayer, Total, and ExxonMobil, all with chemical sales of at least $20 billion in 2003, the year on which this year’s survey is based. It is in the remainder of the top 10, however, that perhaps the most startling position shift has occurred, as Japan’s Mitsubishi Chemical bounded up to number nine, to follow petrochemical giants BP and Shell and bump specialties producer Degussa down one space, to number 10.

Sales of the Top 50 companies worldwide show a striking increase of 15% over the previous year. The threshold for making the ranking, accordingly, is $3.8 billion, up significantly from the cut-off in last year’s listing of $3.1 billion.

IF ONLY profitability would keep pace—but that is not what is happening to the industry. In fact, the aggregate profit margin in this year’s survey—chemical operating profits as a percentage of chemical sales—slipped for the sixth year in a row, to a record low of 5.5%.

That level means that the profit margin for the Top 50 is now less than half the margin that the industry enjoyed in 1997. And not even the recognition that 1997 was an unsustainably “frothy” year can bring much comfort to an industry desperately trying to maintain selling prices and contain costs.

Also continuing is the inexorable reshaping of the worldwide chemical industry into what is indeed a global marketplace with global production.

Thirteen companies from the U.S. made this year’s ranking, down two from the year before. Aggregate sales of the U.S. companies in the ranking, $145.5 billion, are up 9.6% over the previous year. But the U.S. share of the global total is down 5.3%, to 30.8%. On the 2002 list, the U.S. share was 32.5%, and it was 33.4% in 2001.

Europe is home to 21 companies in the ranking, the same number as on the 2003 list. Aggregate sales of those companies, $210.9 billion, are up 11.9% over the previous year and account for 44.6% of the global total. That is slightly down from the 46.1% share of total sales that European companies accounted for in the 2003 ranking and their 48.3% sales share in 2002.

By contrast, the share accounted for by Japanese producers increased from 12.6% in the 2002 ranking, to 13.0% in 2003, to 14.2% this year. Aggregate sales of Japanese companies in this year’s ranking are $67.2 billion, up 26.3% over the previous year, in part reflecting an increase in companies represented from eight to nine.

However, the largest increase—a 45% change—comes from the all-encompassing region of “everywhere else.” Only six companies from outside the three major regions appeared in the 2003 ranking; that total increased by one this year. The combined sales of the seven now on the list are $49.3 billion, accounting for 10.4% of the global total. The share was 8.3% in the 2003 survey and only 5.7% in 2002. Countries represented in this segment are Canada, China, India, Saudi Arabia, South Africa, Taiwan, and—the latest to join the Top 50—South Korea.

LG Chem and Japan’s Hitachi Chemical are the two newcomers to this year’s ranking. Dropped off the list are Honeywell, which reported chemical sales of $3.2 billion, and Monsanto, with chemical sales of $2.9 billion.

Most of the major changes in position reflect a currency exchange bonus when C&EN converts from stronger national currencies to U.S. dollars for this survey. Ironically, the currency effect that boosts non-U.S. companies’ ranking in C&EN’s Top 50 is the bane of their bookkeeping: When companies convert sales dominated by U.S. dollars to their local currencies for financial reporting, those figures take a hit.

High prices for hydrocarbons are benefiting the petrochemical arms of oil and gas producers around the world. This benefit was noted, for example, at ExxonMobil in C&EN’s earlier listing of the Top 50 U.S. chemical producers (C&EN, May 17, page 25). A similar boost comes at the European oil companies BP, Total, and Shell. On the other hand, ENI’s chemical operation is showing only modest growth.

But the rise in sales, as with the aggregate of the Global Top 50, is not accompanied by an increase in profitability for the petrochemicals sector. Shell, in the throes of restructuring, showed an operating loss of $209 million in 2003. Eni’s chemical operations showed a loss of $199 million—an improvement over the loss of $338 million taken in 2002 but nonetheless disheartening for a chemical business that has been bouncing back and forth from profit to loss ever since C&EN began charting the Top 50 in 1990.

In fact, this year’s list shows a depressing six minus signs in the operating profit column. The largest operating loss—$1.5 billion—was taken by Bayer, which has restructured its operations in order to spin off its chemical business as the new entity Lanxess on July 1. And Rhodia’s loss is the legacy of an ambitious late-1990s expansion program that went sour; the company expects to turn a profit only in 2006 as it works through a series of restructurings and divestitures.

This year’s Top 50 is relatively unaffected by divestitures, which have shaped the list over the past several years as companies such as Roche, Aventis, and Henkel have sold their chemical businesses and dropped off. Any impact from this year’s decisions regarding mergers, acquisitions, and divestitures will not be seen until next year’s rankings, if then. For example, even DuPont’s recently completed sale of its $6 billion-per-year fibers business to Koch Industries would not take the firm out of the “super league” in this year’s rankings.

BP and Bayer have said they will divest their chemical operations, but there is little likelihood of that happening in time to affect next year’s ranking. It also remains to be seen where Degussa will end up in the rankings—RAG recently acquired the majority ownership of Degussa, and it is uncertain if it intends to consolidate Degussa’s results with those of its existing chemical operations. Perhaps only Lyondell Chemical’s pending acquisition of Millennium Chemicals will yield a dramatic jump into superstar status.