US chemical sector poised for dynamic expansion as investment increases
12/17/2013 12:00:00 AM
Favorable oil-to-gas price ratios driven by the production of natural gas from shale continue to drive a renewed US competitiveness that is boosting exports and driving greater domestic investment, economic growth and job creation within the business of chemistry.
This is according to the Year End 2013 Chemical Industry Situation and Outlook, published recently by the American Chemistry Council (ACC) trade group.
Likewise, supported by activity within the domestic chemicals sector, the ACC says the US economy is likely to see continued, though moderated growth in 2014, according to ACC's monthly Chemical Activity Barometer (CAB), released Tuesday.
The Chemical Activity Barometer is an established leading economic indicator, shown to lead US business cycles by an average of eight months at cycle peaks, and four months at cycle troughs.
The barometer ticked up to 93.9, a 0.1% increase over November on a three-month moving average (3MMA) basis. This marks the eighth consecutive monthly gain for the CAB, which remains up 2.8% over a year ago.
"American chemistry is back in the game," said Dr. Kevin Swift, ACC's chief economist. "After a decade of lost competitiveness, American chemistry is reemerging as a growth industry. We're seeing growing end-use markets; strengthening employment; surging exports; and an influx of tremendous capital investment. Put simply, the US is now the most attractive place in the world to invest in chemical manufacturing."
Swift and the ACC pointed to several key points to illustrate the turnaround in the industry:
- Over the next five years, US production is expected to grow by almost 25%, pushing industry shipments to $1 trillion by 2018;
- For the first time since 1999, the US chemical industry is seeing job growth;
- Shale gas and the surge in natural gas liquids supply has helped move the US from being a high-cost producer of key petrochemicals and resins to among the lowest cost producers; globally. As a result, exports are surging. The industry has gone from a chemicals trade deficit to a surplus, this year expected to be about $2.8 billion, and by 2018 reaching nearly $30 billion, from almost $300 billion in total exports;
- Capital investment is exploding. Beginning in 2010, as chemical manufacturers began recovering from the Great Recession there has been double digit growth in capital spending -- including equipment upgrades and efficiency investments. Over the next five years we are likely to see more than $60 billion in domestic investment.
To read the ACC's full year-end outlook, please click here.
Comments