Adhesives Magazine

Editor&#8217;s Memo<br>Predicted Growth in Chemicals Supported by Adhesives

April 17, 2003
This year’s Material Handbook has been updated and expanded with 75 new categories and their definitions, and a large increase in supplier listings.

A substantial amount of space in this issue is devoted to the second annual edition of our Materials Handbook. This year’s handbook has been updated and expanded with 75 new categories and their definitions, and a large increase in supplier listings. While there may be several reasons for the increased size of the handbook, certainly a recent report on the positive outlook for chemicals in 2003 plays a role.

According to a recent analysis by Consulting Resources Corp. (CRC), Lexington, Mass., a leading consulting firm specializing in the chemical process industries, sales in the U.S. chemical industry will grow by as much as $9 billion in 2003.

Robust housing and auto industries have propped up certain specialty chemicals, such as those used to manufacture adhesives and coatings, as well as a number of commodities. In fact, this has been the first recession in at least half a century that has not been coupled with a drop in housing starts, according to the CRC analysis.

“By the second half of 2003, the uncertain near-term outlook for the U.S. chemical industry will be very clearly positive,” says Roger Shamel, CRC’s president, “with several segments leading the pack.” Basic organics, as well as plastics that rely on a recovery in business spending, will also show marked improvement in 2003, averaging at least a three-percent increase in sales for the year, the company says.

“Despite the somewhat mixed message now being heard, we expect the U.S. chemical industry to reward patient investors with at least a two-percent growth in sales by the end of 2003,” Shamel concludes.

The increased revenues in chemical sales may be due in part to increased prices since the overall costs of raw materials have been steadily rising as shown in our price tables (see Company News) and e-mail newsletter, ASI E-News. However, increases in sales may not be all profit taking for materials manufacturers.

The price of natural gas has almost tripled compared to what it was a year ago. The higher costs are being passed along to chemical manufacturers as higher feedstock prices from their petrochemical suppliers. The higher energy costs also increase chemical production costs.

To help offset losses in margins, raw materials suppliers have taken steps to reduce fixed costs and debt. When this isn’t enough, the companies find that they need to increase prices.

Materials suppliers who serve our industry are taking the necessary steps to work with manufacturers and formulators of adhesives products through this interim period for everyone’s mutual benefit.

For more information:

Consulting Resources Corporation is an international management-consulting firm that provides professional advisory and strategic services to executives concerned with change and opportunity. Further information may be obtained by contacting Consulting Resources Corp., Six Northbrook Park, Lexington, MA 02420; phone 781-863-1222 or e-mail crc@consultingresources.net.

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