A chemical industry trade group estimates that U.S. chemical production increased in 2016 and will accelerate over the next two years.
The American Chemistry Council’s year-end outlook projected that chemical output grew by 1.6 percent last year despite contraction in the industry.
ACC officials added that although the industry dealt with "significant headwinds," including a decline in business investment, sluggish exports and a strong dollar, abundant natural gas supplies helped maintain the nation's competitive advantage.
Shale gas contributed to gains in the agricultural chemicals, coatings and specialty materials segments, along with bulk petrochemicals, organic chemicals and plastic resins.
Strong labor markets and consumer confidence, along with expansion in key markets — namely auto production and housing — also fueled industry growth.
“American chemistry is on the move,” ACC chief economist Kevin Swift said in a statement.
The analysis said that production increased in each of the nation's major chemical manufacturing regions, and that improved export markets and overall manufacturing would increase demand for basic and specialty chemicals alike in coming years.
The ACC projected overall growth of 3.6 percent this year and 4.8 percent in 2018. By 2020, the chemical industry is expected to exceed $1 trillion in sales.
The Gulf Coast region — home to many of the nation's refineries — will see the fastest growth, followed by the shale gas-rich Ohio Valley as well as the Southeast region.
New capital investment, and subsequent capacity increases, are particularly expected to help basic chemical production volume grow by 4.2 percent this year and 6 percent in each of the following two years.
The group said that 275 capital projects were announced between 2010 and December 2016, with nearly half under construction or completed.
“The United States remains the place for chemical companies to invest,” Swift said.
