Study: US chemical exports linked to shale gas to double by 2030

America’s shale gas revolution could lead to dramatic growth in US chemical exports over the next 15 years, according to a new report from Nexant and sponsored by the American Chemistry Council (ACC). 

Gross exports of chemical products, including plastics, linked to plentiful and affordable natural gas are projected to double, from $60 billion in 2014 to $123 billion by 2030. 

The US trade surplus for the selected chemicals is projected to increase from $19.5 billion to $48.3 billion over the same period, with China, Mexico and other Americas remaining the leading net export destinations.

The report, “Fueling Export Growth: US Net Export Trade Forecast for Key Chemistries to 2030,” provides estimates of annual US net trade volumes for 66 chemicals derived from unconventional oil, natural gas and gas liquids; their expected destinations (countries and/or regions); and their potential trade value. 

ACC and Nexant focused on the trade outlook for products that are expected to see the greatest trade increases as a result of US chemical production gains from 2010 to 2030. 

While energy markets are dynamic, the conclusions of the report point to a long-term competitive advantage for US manufacturers on shale gas-advantaged chemicals. It’s a follow-up to 2013’s “Keys to Export Growth for the Chemical Sector,” which identified several policy and regulatory changes that could facilitate billions of dollars in new export growth for the industry.

“Boosting exports is one of the surest paths to a stronger economy and new jobs,” said ACC chief executive Cal Dooley. “Even with the recent drop in oil prices, US chemical manufacturers enjoy a distinct competitive advantage in global markets, which will help them ‘grow the pie’ for other sectors of the American economy.” 

Chemical companies have begun or are planning 223 shale-related projects to date, the ACC said, including eight announced in December, representing a cumulative investment of $137 billion. Fully 60% is foreign direct investment.

“Free-market access to advantaged feedstocks and US infrastructure are two key reasons more than half of the announced chemical industry investments are coming from outside the US,” said ACC chief economist Kevin Swift. “Few places can offer investors the trio of lower-cost feedstock, reliable infrastructure and a regulatory environment that is moving toward supporting rather than hindering competitive success.”

The new data foretells an even brighter outlook for American manufacturing pending the outcomes of US free trade negotiations that could eliminate trade barriers and expand access to overseas markets. Historic movement toward greater free trade is expected to continue in leading export destinations, which could enable the US to share its shale gas bounty with the world, while cutting down on costs through the reduction or elimination of tariffs and the promotion of greater regulatory coherence.

“Given that net exports of plastics are expected to swell to more than $21 billion in the next fifteen years, reducing or eliminating protective tariffs could have a large impact on the overall growth of U.S. net exports,” said Greg Skelton, the ACC's senior director of regulatory and technical affairs. “By solidifying an ambitious free trade agreement with the EU, we estimate 6.5% duties on linear low-density polyethylene (LLDPE) to Europe could be eliminated by 2017.”

Japan’s inclusion in the Trans-Pacific Partnership (TPP) as a free trade partner also would help eliminate duties on polyethylene, which currently stand at 6.5% for trade between the US and Japan. Were China eventually to join the TPP or negotiate a separate free trade agreement with the US, chemical manufacturers could potentially eliminate an additional 6.5% in Chinese polyethylene tariffs.

Report Key Findings

  • Gross exports of chemicals could double from $60 billion in 2014 to $123 billion, while net exports are projected to grow from $19.5 billion in 2014 to $48 billion in 2030.

  • On a commodity basis, the biggest driver of the improving US trade surplus will be plastics (reaching $21.5 billion of net exports by 2030, an increase of $15 billion) and specialties (reaching $20.5 billion, an increase of $9.3 billion), with moderate growth in intermediates (reaching $9.15 billion, an increase of $3.1 billion).

  • Regionally, chemicals and plastics will see a significant rise in exports to destinations like China (reaching $11.7 billion by 2030, an increase of $8.7 billion); other Americas (reaching $10.9 billion, an increase of $8.6 billion); Mexico (reaching $13.8 billion, an increase of $5.4 billion); and Europe (reaching $5.4 billion, an increase of $2.6 billion).

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