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December 13, 2013

U.S. chemical sales projected to reach $1 trillion by 2018, ACC says

Scott Jenkins

Revenues from sales of chemicals in the U.S. is projected to top $1 trillion by 2018, according to economic analyses conducted by the American Chemistry Council (Washington, D.C.; and discussed in its Chemical Industry and Outlook report for the end of 2013. 
“The consensus is that U.S. chemical output will improve during 2014 and into 2015,” the report states. Projections for gains in chemical production are 2.5% for 2014 and 3.5% for 2015, after smaller gains (0.1% and 1.6%, respectively) in 2012 and 2013. Strong growth is expected for plastic resins and organic chemicals, ACC says, helped by reviving export markets.
“Looking ahead to 2015 and beyond, significant shale-driven chemical capacity will start to come online and generate faster growth, especially along the Gulf Coast,” ACC says. “By 2018, American chemistry revenues will exceed $1 trillion,” the report adds.
Growth in 2013
During 2013, growth improved across all geographic regions in the U.S., with the highest growth observed in the Ohio Valley region. This reflects “gains in specialties and consumer chemistry produced in that region,” the ACC report notes.
Aside from chemical production, 2013 also saw expansion of employment in the chemical industry, by 1.3%. Continued addition of jobs is expected in the industry through 2018, the report says.
Also, the ratios of inventories to shipments for chemical manufacturers were generally well balanced in 2013. “Effective inventory management since the end of the Great Recession has resulted in fairly well-balanced inventories relative to shipments,” ACC says.
Global chemistry set to expand
The ACC report also examined chemical production globally. Overall worldwide production likely advanced only 2.4% in 2013, held back by recession in Europe and slowdowns in China and other East Asian nations, the ACC report says, a growth rate that is lower than those for 2012 and 2011. However, the ACC analysis predicts that global chemical production growth will improve to 3.8% in 2014 and 4.1% in 2015. 
U.S. is attractive location for capital investment
The opportunities for low-cost feedstock and energy afforded by the availability of shale gas, along with high profit margins and low capital cost portend plant and equipment investment in the U.S. “The United States is being favorably re-evaluated as an investment location,” the ACC report says, and “petrochemical producers are announcing significant expansions of capacity in the U.S., reversing a decade-long decline.”
Through early December 2013, over 135 new chemical production projects, valued at $90 billion, have been announced, according to ACC estimates.
Trade and innovation
Research and development spending by the U.S. chemical industry likely increased 0.5% in 2013, the ACC report says, and further R&D spending increases are projected for the next five years. By 2018, R&D spending will reach $68.7 billion, the ACC report says, compared to $56.6 billion in 2012.  
The trade surplus in chemicals is expected to grow for 2013, ACC says, and trade in chemicals will expand for 2014 and 2015, the report projects.

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