Issue Date: January 13, 2014
World Chemical Outlook 2014
Chemical company managers spent the past three years battling slow growth in many of the world’s important economies. The recession of 2007–09 brought the industry to its knees, and it’s been a dispiriting recovery since then.
But the economies of many countries are finally starting to shift into second gear. The result is that the outlook for the chemistry enterprise in the year ahead is more positive than it has been in some time.
Managers are particularly optimistic in the U.S., where low-priced natural gas extracted from shale deposits is trimming production costs and spurring a plant building boom the likes of which hasn’t been seen in decades. At 2.5%, the forecast for chemical production growth published by the American Chemistry Council, a trade group, is by no means stellar. But the figure is above the 1.6% expansion posted in 2013, and the expectation is for even better growth in the years ahead.
In Asia, forecasts for 2014 economic growth in key countries don’t vary much from the healthy figures posted in 2013. But profit margins for important building block chemicals should improve, thanks to good demand and a reduction in overcapacity.
Even European executives are getting over the pessimism that for several years has enveloped their region. Growth figures for the industry there finally turned positive in the middle of 2013 after numerous down quarters, according to CEFIC, Europe’s main chemical industry trade group. CEFIC hasn’t come out with a forecast for 2014, but the industry association for Germany, Europe’s leading chemical producer, expects a 1.5% increase in production this year, compared with a mere 0.5% rise in 2013.
Companies that serve the housing, auto, and energy markets are especially bullish about 2014. In the U.S., increased energy production will fuel demand for chemicals used in oil drilling and refining. And construction projects in the U.S., China, and Russia will spur demand for paints and polymers.
Executives in the fine chemicals sector, who monitor their drug industry customers more closely than the general economy, are optimistic about 2014. Scientific instrumentation manufacturers, on the other hand, are focusing on acquisitions and corporate reorganizations in the face of lackluster markets. And the biobased chemicals sector will be shifting this year from an industry of expectations to one that is actually manufacturing products.
World Chemical Outlook was compiled by Assistant Managing Editor Michael McCoy, Senior Correspondents Marc S. Reisch and Alexander H. Tullo, and Senior Editor Rick Mullin in New York City; Senior Editor Melody M. Bomgardner in Washington, D.C.; Senior Editor Lisa M. Jarvis in Chicago; Senior Correspondent Jean-François Tremblay in Hong Kong; Senior Correspondent Ann M. Thayer in Houston; and Senior Editor Alex Scott in London.
- Chemical & Engineering News
- ISSN 0009-2347
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