The chemical industry can expect to enjoy strong growth this year and into 2018, according to the American Chemistry Council.
Despite a contraction this year, U.S. chemical production (excluding pharmaceuticals) is seen realizing overall growth of 1.6% in 2016, followed by 3.6% growth this year, and 4.8% in 2018.
ACC Chief Economist Kevin Swift says, “The competitive advantage the U.S. still maintains, driven by access to affordable and abundant supplies of natural gas, continues to offset significant headwinds, including an overall drop in business investment, a rebalancing in the oil and gas sector, soft export markets and a high dollar.”
Production grew in every major chemical producing region in 2016. Over the next five years, the most growth will occur in the Gulf Coast, followed by the Ohio Valley and Southeast, Swift says.
“In the long-term, the U.S. chemical industry will grow faster than the overall economy, and by 2020, U.S. chemical industry sales are expected to exceed $1 trillion,” he concludes.
The ACC Chemical Activity Barometer, considered a leading economic indicator, ended the year on a strong note, posting a monthly gain of 0.3% in December and a year-over-year gain of 4.4%, measured on a three-month moving average.
The CAB consists of four primary components, each made up of a variety of indicators: production; equity prices; product prices; and inventories and other indicators.
This represents a significant improvement over the first half of the year, and a pace not seen since September 2010, the council notes.
“Housing starts were at a nine-year high,” Swift points out. “The foundation remains strong. Overall trends in construction-related resins, pigments, and related performance chemistry were positive and suggest further gains in housing next year.”
ACC notes other indicators, including equity prices, product prices and inventory, also were positive.