Improved outlook for US chemicals
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 from the American Chemistry Council (ACC).
For 2010, US chemistry exports will be up by 17%, shifting the trade balance for the industry from a $0.1 billion deficit to a $3.7 billion surplus, its best performance in 10 years. The growth in export markets also has partially offset soft domestic demand for chemical products.
Domestically, chemical production volumes have increased across all regions of the US 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.
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 US chemicals manufacturers to become more competitive than producers in much of the rest of the world.
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.