U.S. Chemical Industry Riding Wave of Growth
Chemical production volumes continued to improve in 2017, with significant gains expected in 2018 and 2019.
Increased output and accelerating growth rates that surpass the previous 20-yr average will help cement the business of American chemistry as a $1 trillion industry within the next five years, according to a recent report from the American Chemistry Council (ACC). Chemical production volumes continued to improve in 2017, with significant gains expected in 2018 and 2019.
“American chemistry is riding a synchronized global upswing,” said Kevin Swift, chief economist of ACC and lead author of the report. “Manufacturing has turned a corner, business investment is on the rise, and domestic oil and gas production is on the rebound. It all sets the stage for tremendous momentum, expansion, and capital investment.”
U.S. chemical manufacturers reportedly remain advantaged with access to cheaper and more abundant feedstocks and energy, helping push the number of announced chemical production projects to nearly 320 with a cumulative vale of over $185 billion. Nearly 60% of the chemical industry investment announced since 2010 has been completed or is under construction. As these investments have come online, chemical production volumes have continued to increase. Excluding pharmaceuticals, production volume for 2017 is expected to be up 8%, increasing to 3.7% in 2018, and 3.9% in 2019 before easing to 3% in 2020.
Stronger export markets and gains in investment spending continue to boost demand in key end-use markets including light vehicles and housing, according to the report. Though production has eased from last year’s robust pace and light vehicle sales are expected to retreat slightly, the outlook is for sales to progress at a solid, though slower, pace over the next several years. Housing activity improved to 1.20 million starts in 2017 and is predicted to rise to 1.29 million in 2018 as the level of activity gradually returns to its long-term underlying demand pace of 1.5 million units per year by 2022.
The report also noted that in addition to end-use markets, improved export markets will also drive strong gains in U.S. chemistry. Basic chemicals production is expected to be flat in 2017, before growing by 4.7% in 2018, and 5.2% in 2019 as new capacity comes online. Major export markets such as Latin American and Asia are expected to play a large role in expanding production.
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