Table of Contents

Basic Materials Sector

Updated on December 19, 2024 , 2023 views

What is the Basic Materials Sector?

The basic materials sector is that category of stocks for enterprises that are involved with Raw Materials. This particular sector is about those enterprises engaged in mining, metal refining, chemical and forestry items. The basic materials sector is involved with the production of raw materials that are further employed as a means to produce or be used as other goods.

Enterprises in this sector supply raw material for construction. They thrive in a strong Economy. Oil, stone, gold are all examples of basic materials. Other common materials in the sector are mined items like metal, ore, paper, lumber, etc. Even containers and other packaging are considered as basic material whether they are made of glass or cardboard.

Basic Materials Sector - Overview

It is important to understand that not all companies involved with the use of this material are qualified to be included in this sector. A metal mining company can be considered as basic materials processor, but a jeweller working with mined metal is not included here. The jeweller is not a user of the basic material.

Similarly, all chemicals don’t qualify as basic materials. However, certain sources of energy like oil, coal qualify as basic materials in their natural state. Even items like gasoline are qualified to be called as basic materials. According to a report, more than 200 Mutual Funds, Index Funds, ETFs all fall under the basic materials sector.

Basic materials also fall under the demand and supply chain. They have demand and supply just like any other consumer goods. The relation between both is closely knit. If the demand for the consumer goods that involve heavy use of the raw materials falls, the demand for the raw materials falls too.

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Sub-Sectors of Basic Materials

The basic materials sub-sector list is categorised in the following way-

Construction Materials
Metals and Mining
Chemicals
Paper and Forest Products
Packaging and Containers
Construction Materials

Construction Materials

Sub-Sector	Description
Construction Materials	Companies that produce basic construction materials, such as sand, clay, gypsum (used in plaster and chalk), lime, cement, concrete and bricks. This excludes companies that make home improvement products, such as power tools.

Metals and Mining

Sub-Sector	Description
Aluminium	Companies that produce aluminium. This includes companies that mine or process aluminium ore (also called "bauxite") and companies that recycle aluminium to make other products. This excludes companies that produce aluminium products for construction and/or home building.
Diversified Metals & Mining	Companies that mine or process a wide Range of metals and minerals and are not classified in the other sub-industries. This includes companies that mine non-ferrous metals, salt and phosphate. Non-ferrous means a metal does not contain a high amount of iron. Non-ferrous metals include copper, lead, nickel, titanium and zinc. Phosphates are used in a wide variety of products, such as fertilizers or cleaning products.
Gold	Companies that produce gold and gold products.
Precious Metals & Minerals	Companies that mine precious metals and minerals, including platinum and gemstones. It excludes gold and silver.

Chemicals

Sub-Sector	Description
Commodity Chemicals	Companies that produce basic chemicals, including plastics, synthetic fibres (such as rayon, nylon, or polyester), films, paints and pigments, explosives and petrochemicals (chemicals that come from petroleum). This excludes companies that produce fertilizers and agricultural chemicals, gases or speciality chemicals.
Fertilizers & Agricultural Chemicals	Companies that produce fertilizers, pesticides, potash (a chemical used in fertilizers) or any other agricultural chemicals.
Industrial Gases	Companies that produce industrial gases, such as nitrogen, hydrogen and helium, for use by other companies and industries.
Speciality Chemicals	Companies that produce specialized chemicals, such as additives, polymers, adhesives/glues, sealants, special paints and pigments and coatings, used to manufacture a wide variety of products.

Paper and Forest Products

Sub-Sector	Description
Forest Products	Companies that produce timber and other wood products, including lumber.
Paper Products	Companies that produce any type of paper. This excludes companies that produce paper packaging (such as cardboard); these companies classified in the Containers and Packaging Industry above.

Containers and Packaging

Sub-Sector	Description
Metal & Glass Containers	Companies that make metal, glass or plastic containers. This also includes corks and caps.
Paper Packaging	Companies that make paper/cardboard containers and packaging.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.