The global outlook for chemicals this year is mixed, as the U.S. and E.U. face sluggish local economies and debt constraints while output from emerging markets is expected to increase more rapidly, according to forecasts.
The United States chemicals industry will experience more moderate production increases in 2012 after a strong post-recession recovery, according to the American Chemistry Council (ACC).
Most major end-use markets for chemicals have recovered in the U.S., helping to maintain the $720 billion industry's contribution to 26 percent of U.S. gross domestic product (GDP), the ACC says.
In its year-end situation report
, the ACC forecasts gradual improvement through 2012, before a stronger recovery takes hold in 2013. U.S. chemical output is expected to increase 3.8 percent in 2011 before slowing to 1.6 percent this year and rising to 2.1 percent in 2013.
"The outlook for chemicals points to modest growth over the next several years and depends on strengthening domestic demand and an improvement in exports abroad," the ACC said in an announcement of the report
. "Exports were up nearly 11 percent to $189 billion in 2011 and are expected to exceed $230 billion in 2014."
A boom in oil and gas is creating both demand-side (e.g., pipe mills and oilfield machinery) and supply-side (e.g., chemicals, fertilizers and direct iron reduction) opportunities, and the ACC says this is likely to continue. There is also strength in light vehicles and aircraft, and industries involved with business investment (e.g., iron and steel, foundries, computers, etc.) are still strong.
Yet growth lags in a number of industries, including textiles, paper and printing, offsetting demand from the oil and gas industry.
"For the first time, America's economic outlook indicates a two-speed manufacturing recovery," ACC President and CEO Cal Dooley said in a statement. "Most major end-use markets for chemistry in the United States have recovered, though growth has slowed for overall U.S. manufacturing."
While ACC economists don't believe the U.S. is headed for another recession, the European debt situation along with other economic factors could pose significant risks for continued recovery in the U.S. and, of course, the European Union.
Total growth in European chemicals output is expected to be weaker than previously forecast in 2011 and 2012, due to heightened uncertainty and inventory trimming. Following a strong demand recovery with double-digit growth in 2010, much of 2011's rise in chemicals output took place in the first quarter. Since then, production has been relatively flat.
"These lackluster dynamics are showing up in markets for paints, commodity chemicals, and many specialty chemicals," Chemical & Engineering News
says. "Construction chemical executives, for example, anticipate almost no growth for their products in the U.S. and Northern Europe this year and even a slight contraction in Southern Europe, where the most debt-laden countries are."
Nevertheless, the European Chemical Industry Council
(ECIC) believes chemical industry growth will resume in 2012, strengthening slowly through the year. The industry group projects 2 percent year-over-year growth last year and 1.5 percent expansion this year.
While developed nations, constrained by debt and tighter fiscal policies, are likely to expand chemical production at a moderate pace, output from emerging markets is forecast to increase more rapidly.
"Asia and other emerging markets will continue to lead the world in volume gains, with China and India showing the most significant increases," IndustryWeek
reports on the ACC findings. "Chemical manufacturers in emerging markets are expected to show 5.4 percent production increases in 2011, 6.2 percent in 2012 and 7.5 percent in 2013."
"Notably," Chemical & Engineering News explains, "economic growth in important countries such as Brazil, Argentina and China is expected to slip this year, although not to the anemic levels of the West."
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