in this issue
US chemicals production set to accelerate on shale benefit
4:27 PM MST | December 11, 2013 | Robert Westervelt
US chemical makers are firmly “back in the game” thanks to the cost advantage enabled by low-cost shale feedstocks, according to ACC’s year-end review and outlook. US chemical production was up 1.6% in 2013 and is expected to rise 2.5% in 2014 and 3.5% in 2015, says Kevin Swift, ACC chief economist and managing director. “Following a decade of lost competitiveness, American chemistry is reemerging as a growth industry,” Swift says.
US chemicals production will grow strongly through the second half of the decade as the nearly $100 billion in new chemical investment announced since 2010 comes online. “During the second half of the decade, US chemistry growth is expected to expand at a pace over 4%/year on average, a rate that exceeds that of the overall US economy,” Swift says.
The forecast growth rates are the strongest for industry in more than 20 years. “Excluding pharmaceuticals, US [chemical] growth has averaged less 1%/year since the early 1990s,” says Martha Gilchrist Moore, ACC's senior director/policy analysis and economics. “This is going to be a real step-up from that level.” US chemicals production excluding pharmaceuticals was up 3.2% in 2013, and growth is expected to slow to 2.6% in 2014. Slower specialties and agricultural chemicals account for slower growth in 2014 after strong advances in both segments in 2012 and 2013. Basic chemicals are expected to grow 2.4% in 2014, up from 1.2% growth in 2013. Chemicals production growth excluding pharmaceuticals will be 3.5% in 2015, 3.8% in 2016, and 4% in 2019, according to ACC estimates.
US exports will ramp up sharply as production comes online. Exports of chemicals will grow 6.6% in 2014, to $205 billion, and a further 7.6% in 2015. Excluding pharmaceuticals, the surplus in chemicals trade will grow to $67.5 billion by 2018, up from $42.7 billion in 2013, or by 9.6%/year.
The industry’s expansion is also reversing the industry’s falling employment trend. Employment in the chemical industry is expected to have grown by 1.3% in 2013 with continued expansion through 2018, ACC says. This is in contrast to a continuous decline in industry employment between 1999 and 2011.