Gradual improvement in outlook for US chemicals manufacturing sector

The outlook for the US chemicals manufacturing sector is improving gradually and global production is set to increase in the coming year, thanks in part to dramatic growth in export markets for the products of chemistry, according to a report released by the American Chemistry Council (ACC). For 2010, US chemistry exports will be up by 17%, shifting the trade balance for the industry from a US$0.1 bln deficit to a US$3.7 bln surplus, its best performance in ten years. The growth in export markets also has partially offset soft domestic demand for the products of chemistry. “A stronger outlook for U.S. chemical manufacturers means they can continue to drive innovation and economic growth, protect hundreds of thousands of good American jobs and compete in a growing global marketplace,” said ACC President and CEO Cal Dooley. “To maintain this momentum, we need sound economic, energy and environmental policies that will encourage the growth of America’s manufacturing sector and foster technological advances while also protecting human health and the environment.” Domestically, chemical production volumes have increased across all regions of the United States in 2010 following steep declines in 2008 and 2009. The largest gains have occurred in the Gulf Coast and Ohio Valley regions, boosted by export demand for basic chemicals and plastics. Output is expected to grow moderately in all regions in 2011 and continue to improve through 2012. The US$674 bln American chemistry enterprise accounts for more than 10 percent of U.S. exports and provides approximately 780,000 jobs in the United States. Growth in export markets is driven by several factors, including favorable energy costs, resulting from developments in extracting natural gas from shale; and growth in emerging markets, where recovery, and now expansion, has been strongest. US natural gas markets have seen a dynamic shift over the past five years as a result of increased capacity to extract natural gas from organic shale deposits. Reserves have risen by one-third, resulting in lower prices and greater availability of ethane, a feedstock material derived from natural gas that is the basis for hundreds of manufactured products. This low price for natural gas compared to oil has enabled U.S. chemicals manufacturers to become more competitive than producers in much of the rest of the world. “Shale gas extraction has been a ‘game changer’ for America’s chemical manufacturers, enabling us to remain highly competitive in a global market,” Dooley said. “We want to ensure that the appropriate regulatory policies are in place to capitalize on this energy source, while ensuring protection of our water supplies and the environment.” Growth in emerging markets, most notably in China, India, and Brazil, is increasing demand for chemistry feedstock materials. Production of chemistry products in emerging economies increased by 12.2% in 2010, and further gains are expected. During 2011, as emerging nations continue to present good growth prospects, trade in chemicals will continue to expand. Despite the recovery, jobs in the US chemistry industry are not expected to increase in the coming year. Since the beginning of the recession, the chemistry industry has lost more than 80,000 jobs, and chemical industry employment will continue to decline slightly as productivity gains outpace production growth. However, average hourly wages for chemistry industry employees rose 4.3% in 2010 and are expected to advance even further in 2011 and 2012. “Innovations and technological developments are the key components to maintaining and building the U.S. chemical manufacturing base, along with the high-skill, high-paying jobs that are crucial to helping rebuild the economy,” Dooley said. Throughout 2010, companies have continued to focus on improving efficiencies, product innovations, and increased research and development, according to the report. At the end of 2010, the stage is set for improving operating rates and profit margins, which could lead to moderate increases in new plant and equipment investment in the United States.
  More News  Post Your Comment

Previous News

Next News

{{comment.Name}} made a post.




There are no comments to display. Be the first one to comment!


Name Required.


Email Id Required.

Email Id Not Valid.


Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.

Message Required.

Click to Change image  Refresh Captcha