U.S. chemical production expanded at a slower pace in 2019 due to trade challenges and slower growth in several key end-use markets for chemistry, according to the American Chemistry Council's (ACC) Year-End 2019 Chemical Industry Situation and Outlook. Weakness in global manufacturing and uncertainty in trade policy will further moderate U.S. chemicals output growth in 2020. On the other hand, output from new capacity linked to the shale gas advantage will provide tailwinds, according to the ACC.
"Due to slowing growth prospects across much of the globe and rising trade tensions, exports of chemicals and some chemistry-containing goods fell this year," says Kevin Swift, ACC chief economist and Outlook co-author. Total U.S. chemicals trade is projected to contract by 3% to $242 billion in 2019, then recover by 1% in 2020. Exports will fall 2.5% to $137 billion in 2019 before expanding by 1.1% to $138 billion in 2020. U.S. chemicals imports will fall 3.9% in 2019, to $105 billion.
Industrial output decelerated sharply to a 0.9% gain in 2019 as trade tensions disrupted supply chains, energy investment eased and slower growth in key trading-partner economies negatively affected demand for U.S. exports. Industrial output is expected to decelerate further in 2020 before strengthening in 2021, with growth of 0.5% and 1.4%, respectively. Growth in key end-use industries will be mixed for 2020, with the largest gains in construction materials, oil and gas extraction, refining, semiconductors and aerospace.
U.S.-based chemical manufacturing has a competitive advantage in global markets due to abundant and affordable supplies of energy and feedstock. Since 2010, the industry has announced 340 projects cumulatively valued at $204 billion. Total chemical production volume (excluding pharmaceuticals) rose 0.6% in 2019 and is expected to grow by 0.4% in 2020 before strengthening to a 2.3% gain in 2021. Basic chemicals production is projected to increase by 0.7% in 2020 and 3.1% in 2021.
"American chemistry is expanding as shale-advantaged investments come online and additional capacity additions are planned," says Martha Moore, senior director of policy analysis and economics at ACC and co-author of the Outlook. "The industry added high-paying American jobs for the seventh consecutive year. Continuing a tradition of innovation, companies remain dedicated to providing the essential materials for a growing population and finding sustainable solutions for the future."
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