Strong gains in capital spending by U.S. chemical manufacturers are expected during the next several years, according to the Mid-Year 2012 Situation and Outlook report from the American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com). Capital spending for U.S. chemistry will reach $35.5 billion in 2012, and will steadily rise to $51.5 billion by 2017, the report anticipates.
The projected capital spending gains are the result of announced new investment in petrochemicals and derivatives arising from shale gas developments, the report says. “The need to add capacity and improve operating efficiencies will play a role as well,” ACC adds.
The gains in capital spending will be somewhat tempered by slower growth in chemical demand. In the U.S., "the recovery of key chemistry end-use markets has been mixed," the report says. Growth of the manufacturing sector, which is the largest consumer of chemical products, was strong early in the year, but has weakened more recently because of a softening U.S. export market and "renewed retrenchment from uncertain households and businesses," the report explains.
Looking ahead globally, chemical output will continue to advance, the report suggests. Expectations for global chemical output are 2.3% growth in 2012, followed by 4.3% growth in 2013 and 4.7% growth in 2014. “Output of chemicals in emerging markets will outpace production in developed countries,” the report states.
Within the chemical industry, the specialty chemical sector, as well as consumer products and agricultural chemicals, will experience the strongest growth in 2012. “As the global manufacturing sector cools, so will demand for basic chemicals,” the report says. However, in the long-term, the report says, “global chemistry growth will average 4.0% per year, a pace exceeding that of the overall global economy.”
Beyond chemistry, the report discusses the intensifying headwinds facing the global economy, including the deepening financial crisis in Europe.