Chemical Industry Execs Optimistic on Shale Gas Boom

By Chemical Processing staff

Dec 21, 2012

Chemical industry executives expect shale gas developments to fuel strong growth in the U.S. despite facing economic uncertainty, according to a survey by KPMG LLP, a U.S. audit, tax and advisory services firm.

Many chemical industry executives say that the U.S. fiscal cliff and general economic uncertainty are driving increased focus on operational excellence and a strong balance sheet.
According to the KPMG poll, 41 percent of industry business leaders indicate that in the current macro-economic environment, their biggest concern is the U.S. fiscal cliff. An additional 20 percent point to a slowdown in emerging markets and 19 percent say Eurozone debt issues.

"The threat of the fiscal cliff is an obvious concern, leading many companies to focus on improving business effectiveness and maintaining a strong balance sheet," said Mike Shannon, global chairman of KPMG's Chemicals and Performance Technologies practice. "Companies that are successful in these endeavors can gain a competitive advantage and be better positioned to capitalize if the economic tide turns."

According to nearly one-third of executives surveyed, shale gas developments in the U.S. will drive significant growth in petrochemical and downstream manufacturing. Additionally, 37 percent say U.S. shale exports will force increased competition leading to price and margin erosion in Asia.

To support planned investments in capacity, companies should invest in broadening their supply chain capabilities to ensure that exports get to the high growth markets, said Paul Harnick, chief operating officer of KPMG's Global Chemicals and Performance Technologies practice.

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