American chemistry will continue to grow this year, according to the American Chemistry Council (ACC). The ACC’s Mid-Year 2016 Chemical Industry Situation and Outlook report shows American chemistry output increased in 2015 and will further expand in 2016. Growth is happening even in the face of some serious economic challenges: weakness in key export markets, a high dollar, ongoing balancing in the oil and gas sector and a major slump in the domestic and global manufacturing sector.
Compared to producers in other parts of the world, American chemical manufacturers are greatly advantaged with access to cheaper and more abundant feedstock and energy and, as a result, there has been significant capital investment in American chemistry, according to the ACC. Although lower costs of inputs may be translating into more muted gains in revenues and shipments, the organization is seeing continued growth in chemical production volumes, particularly in basic chemicals.
Chemical production volumes have continued to improve in 2016 and, except for wholesalers, inventories remain fairly balanced, according to the report. New production will be required to satisfy growing demand in 2016 and 2017. Over the past year, output gains were led by agricultural chemicals, bulk petrochemicals and organics and plastic resins, all areas aided by renewed competitiveness arising from shale gas. Advances in manufacturing and exports during 2017 and beyond will drive demand for basic chemicals, especially those segments in which the United States enjoys a renewed competitive advantage, according to the ACC. Improving manufacturing activity will support growth for most specialty segments.
In the United States, performance in two important end-use markets for the chemical industry—housing and light vehicles—has been solid and a strong pace of sales in both markets will support economic growth this year. Looking ahead into 2017, business investment will recover and the manufacturing renaissance will regain traction, contributing to the building momentum for the American chemical industry, according to the ACC. Eventually, a sustained global expansion will result in growing trade and increased exports of American goods.
Read the entire report here.