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2012: Is it over yet?

01.01.2013  |  Romanow, Stephany,  Hydrocarbon Processing Staff, Houston, TX

Keywords: [petrochemicals] [chemicals] [economics] [refining] [natural gas] [crude oil]

According to a year-end report from the American Chemistry Council (ACC), the global economy is still stumbling three years after the “great recession of 2008.” The Euro area is challenged to move beyond recession conditions. China’s thriving economic expansion slowed in 2012 from the double-digit expansion of earlier years. The final thought on 2012 economic news can be summarized as confidence eroding. Global manufacturing entered a soft period in the 2012 summer; Europe and East Asia were the most affected regions.

Looking for positive news has been a challenge in 2012

In the US, recovery in the manufacturing industry struggled against waves of uncertainty, such as the results of the fall elections, the failing consensus in the US Congress over raising the debt ceiling, future tax reforms and the looming fiscal cliff discussion during December.

Uncertainty throughout 2012 has been unhealthy for the US and global economies. Manufacturing and HPI companies are fearful of possible government regulations. In response, these companies cut back business investments and delayed workforce expansion.

What next?

Global HPI leaders are divided on how to prepare for the future. As shown in Table 1, the global chemical industry has collectively made an improvement from dismal 2009 numbers. But, this recovery will be uneven beyond 2012. According to ACC, global economic condition will be characterized by a two-speed world: Developed nations (the US, Canada, Western Europe and Japan) will be further challenged by debt, adverse demographic factors and tighter fiscal policies; economic growth will be slow. Conversely, developing nations (India, Brazil, Eastern/Central Europe, Russia, China, East Asia, Africa and the Middle East) will experience more dynamic conditions. All are based on continued industrialization and consumer-driven economics. The Asian-Pacific nations, excluding Japan, will experience strong growth in 2013 and into the future.

 


Global business of chemistry

According to ACC’s findings, the global chemistry business paralleled other manufacturing sections in 2012. Growth was stalled in Europe due to continued uncertainty over debt from several EU member countries and concerns about the value of the euro. China, likewise, experienced a downturn in its chemical industry, as Europe is a major customer of Chinese chemical products and finished goods. The North American market is expected to be flat in 2013. However, new shale gas supplies have kept natural gas prices very low in the US, and this trend is expected to continue. Accordingly, lower-cost feedstock and fuels (energy) will support increased chemical/petrochemical production in the US and Canada. (For more information, visit www.americanchemistry.com.) HP



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