If 2014 could be summed up in one word for American chemical manufacturers, it would beβmomentum.
According to American Chemistry Councilβs βYear-End 2014 Chemical Industry Situation and Outlook,β chemistry output expanded in the last year, despite weakness in key markets and adverse winter weather.
The big surprise this year, explains Dr. Thomas Kevin Swift, chief economist and managing director of ACC, is the impact of recessions in countries such as Japan, EU nations and Brazil.
According to the report, βBasic chemicals (inorganic chemicals, petrochemicals, plastic resins, synthetic rubber and man-made fibers)β¦were the hardest hit by economic slowdown in other nations, despite improving demand from important customer markets such as light vehicles and housing.β
βThe other surprise is the collapse of oil prices,β Swift says.
Thatβs one of the key trends nudging the U.S. chemistry industry upwardβdespite global downturnsβboth by decreasing the feedstock costs for manufacturers and improving consumer confidence.
The numbers behind other indicators also paint a rosy picture.
Employment in the chemical industry is expected to have grown 1.2 percent in 2014, completely reversing a downward fall in jobs from previous years.
Capital spending has also surged.
βOver 215 new chemical production projects (valued at over $135 billion) have been announced through early-December,β the report states.
Key end-use marketsβsuch as vehicles and housingβfor chemical manufacturers are breaking out of their slump, though some segments remain below pre-recession levels.
Looking Ahead
Will chemical manufacturers keep the big moβ next year and beyond? On the whole, the ACC report predicts that the future will indeed be bright.
βU.S. chemical output is expected to rise 3.7 percent in 2015 and 3.9 in 2016,β the report states, adding that the U.S. chemical industry will grow faster than the overall U.S. economy.
Swiftβs biggest concern?
βThe state of the global industry when you get away from North America, the U.K. and a few other nations,β he says. βChina worries me because if you look at the statistics, itβs hard to take comfort in themβ¦and gauge whatβs going on there,β he explains.
Despite those trouble spots, growth in several sectorsβsuch as inorganic chemicals, organic chemistry, plastic resins, agriculture chemicals and synthetic rubber, along with pharmaceuticals towards the end of the decadeβcoupled with lower oil prices on home soil will keep chemical manufactures well into the black.
βAs the surge of shale-driven chemical capacity starts to come online in 2017 and beyond, growth will accelerate, especially along the Gulf Coast,β the report says.
By 2019, ACC predicts that American chemistry revenues will exceed $1 trillion. By then the U.S. chemical industry will also post record trade surpluses.
Purchase the ACCβs full report with more details on the impact of oil prices, trade, R&D and more here.