US Chemical Industry The Hidden Champion of US Re-Industrialisation: Chemicals Outperform Industrial Output
One industry sector is responsible for more than one half of construction spending by manufacturing in the United States: American chemistry is going strong and stronger. Despite uncertainties and contractions, the sector grows steadily. And the best might be yet to come…
Washington D.C./USA – US chemical production (excluding pharmaceuticals) is expected to realize overall growth of 1.6 percent in 2016, recent American Chemistry Council (ACC) figures show. While these figures are significantly bigger than the average industrial growth, the industry is just about to unleash its true performance: The ACC forecast a 3.6 percent growth next year, and 4.8 percent in 2018.
“American chemistry is on the move,” stated Kevin Swift, chief economist of ACC. “The competitive advantage the U.S. still maintains, driven by access to affordable and abundant supplies of natural gas, continues to offset significant headwinds, including an overall drop in business investment, a rebalancing in the oil and gas sector, soft export markets, and a high dollar.”
Key domestic end-use markets including light vehicles and housing continue to expand, consumer spending accelerated, the labor market firmed, and households enjoyed extra savings from lower energy costs, all factors which also contributed to industry expansion.
Agro-Chemicals Lead the Pack
According to a new report, output gains were led by agricultural chemicals, coatings and other specialties, as well as bulk petrochemicals and organics and plastic resins, all areas aided by renewed competitiveness arising from shale gas.
Advances in manufacturing and exports during 2017 and beyond will drive increased demand for basic chemicals and improving manufacturing activity is expected to support growth for most specialty segments.
Production Moves North…
Swift also noted that production grew in every major chemical producing region in the U.S. during 2016. Over the next five years, the most dynamic growth will occur in the Gulf Coast region, followed by the Ohio Valley and Southeast regions. In the long-term, the U.S. chemical industry will grow faster than the overall economy, and by 2020, U.S. chemical industry sales are expected to exceed $1 trillion.
U.S. basic chemicals, while benefiting from the shale gas advantage, were constrained by weakness in manufacturing and export markets. With new capacity coming on stream, production volume growth will grow to 4.2 percent next year and exceed 6.0 percent per year during 2018-19.