The business of making chemicals is a $797 billion industry. It’s one of the U.S.A.’s most important manufacturing industries, since it contributes over 14.0% of all exports and 15.0% of the world’s chemicals. The American Chemistry Council (ACC) predicts the U.S. chemical industry will grow faster than the overall economy. However, this growth may be tempered by disruptions in international trade and export policy.
The ACC published its Year End 2016 Chemical Industry Situation and Outlook on December 8, 2016. The report included a summary of changes within the chemical industry as well as predictions for 2017 through 2022.
Projections for the next five years are positive, according to the report. ACC chief economist Kevin Swift said, “The competitive advantage the U.S. still maintains, driven by access to affordable and abundant supplies of natural gas, continues to offset significant headwinds, including an overall drop in business investment, a rebalancing in the oil and gas sector, soft export markets, and a high dollar.”
Brief Review of 2016 Chemical Industry Progress
Last year, production grew in every major chemical-producing region. Additionally, agricultural chemicals, coatings, bulk petrochemicals, organics, and plastic resins led output gains. These were all areas that regained their competitiveness due to an uptick in shale gas production.
Chemical Industry Outlook for 2017
In 2017, advances in manufacturing and exports are expected to drive the demand for basic or “commodity” chemicals. These include polymers, bulk petrochemicals and intermediates, derivatives and basic industrials, inorganic chemicals, and fertilizers. Improvements in manufacturing technology are also anticipated to support growth in the specialty chemical market segments.
Excluding pharmaceuticals, U.S. chemical production is expected to grow 3.6%. Production volume for commodity chemicals, specifically, will grow to 4.2% as new production capacity comes on-line. In the specialties segment, production is expected to grow to 3.0%.
Predictions for 2017 Through 2022:
- The specialties segment is expected to continue to grow beyond 2017 as the recovering oil and gas sector spurs greater demand. (Natural gas is an important raw material in many chemical process.)
- Between now and 2022, the most dynamic regions for industry growth are expected to be the Gulf Coast, Ohio Valley, and Southeast regions.
- U.S. chemical production (excluding pharmaceuticals) is expected to grow 4.8% in 2018.
- Basic chemical production volume will exceed 6.0% in 2018 and 2019.
- By 2020, industry sales are projected to exceed $1 trillion.
By 2021, capital spending will likely reach $70 billion, thus we anticipate four consecutive years of industry and job growth.