USA: Market Scenario U.S. Chemical Industry Output Weakens: ACC
The American Chemistry Council’s (ACC) ‘Mid-Year Outlook’ report has stated that the U.S. chemical industry output is declining and that the sector is expected to have a potential rebound in 2021.
Washington/USA – Key U.S. chemical industry metrics will be lower this year, according to the American Chemistry Council’s (ACC) Mid-Year 2020 Chemical Industry Situation and Outlook. Production volumes, shipments and capital spending will fall due to economic and business disruption caused by Covid-19. A rebound in 2021 is projected, although significant uncertainty remains.
ACC’s Outlook begins with a review of the global economy. Data suggest that the global recession may have bottomed out, yet the 2020 outlook is one of the poorest in decades. Global GDP will contract 4.6 per cent in 2020 before expanding 5.3 per cent in 2021. Global industrial production will contract 3.8 per cent in 2020 before increasing by 5.3 per cent in 2021.
In the United States, GDP will shrink by 6.0 per cent in 2020 before expanding by 4.1 per cent in 2021, according to ACC projections. Consumer spending will fall 6.4 per cent in 2020, then rise 4.6 per cent in 2021. Business investment will fall 9.9 per cent in 2020 and expand by 2.7 per cent in 2021. Unemployment will fall steadily, easing below five per cent by 2023. Trends in the U.S. economy can be viewed in ACC’s Chemical Activity Barometer.
“U.S. industrial activity started the year on a weak note even before Covid-19-related supply disruptions emerged in February,” said Kevin Swift, chief economist at ACC. “After suffering the sharpest pullback on record in April, many industrial sectors are showing signs of recovery. Industrial production is set to fall 10.5 per cent in 2020 before increasing by 3.1 per cent in 2021.”
Vehicle sales will decline from 16.9 million last year to 13.1 million in 2020, then improve to 14.9 million in 2021, according to ACC. Housing starts will tumble to 1.19 million in 2020, then increase to a 1.24 million pace in 2021. Partially offsetting weakness in these markets is strengthening demand for chemistry used in products used to fight Covid-19. For example, the chemistry industry provides synthetic materials for PPE, ingredients for cleaners and disinfectants, and plastics used in ventilators and IV bags.
“As key end-use and export markets struggle, U.S. chemical volumes will contract as well,” said Martha Moore, senior director of policy analysis and economics at ACC. “Chemical volumes will fall 9.3 per cent this year, while shipments will decline by 13.5 per cent. In 2021, volumes will rebound 12.3 per cent and shipments will increase by 14.5 per cent. Capital spending will fall 17.6 per cent to 29.0 billion dollars in 2020, then increase by 15.7 per cent to 33.5 billion dollars in 2021.”
After seven consecutive years of gains, U.S. chemical industry employment is set to fall by nearly 20,000, or 3.6 per cent, in 2020. As demand for chemistry strengthens in 2021 and 2022, employment will start to recover, but won’t reach pre-Covid level until 2024. The chemical industry remains a major employer, paying its workers on average more than 87,000 dollars in 2019. These jobs and the wages they pay support local communities around the country.
Total U.S. chemicals trade will fall by 16.4 per cent in 2020, to 199 billion dollars. U.S. chemical exports will decline sharply, falling by 14.5 per cent in 2020 before rising 10.9 per cent in 2021. Full recovery to pre-Covid levels is not expected until 2022. U.S. chemical imports will fall 19.1 per cent in 2020, then grow by 11.9 per cent in 2021. Full recovery is expected in late 2022 or 2023. The industry will maintain its net exporter position: By 2025, net exports of chemicals will reach 37 billion dollars.
To view the Mid-Year 2020 Situation & Outlook, please visit https://www.process-worldwide.com/redirect/943025/aHR0cDovL3d3dy5hbWVyaWNhbmNoZW1pc3RyeS5jb20vTWlkLVllYXJfU2l0dWF0aW9uX091dGxvb2tfSnVuZTIwMjAv/43ff49dbb9b6d5700827491de207d9951be395a5048070893c24025f/article/