World Chemical Outlook

This year should be one of expansion for the chemical industry in most parts of the world as production and demand increase, bringing shut-down plants back on-line and increases in capital spending. Most of the spending on plants and equipment, however, will be directed toward bringing production units up-to-date and making them more efficient.

In the U.S., sales should continue to grow and year-to-year increases in earnings should prevail, although it will still take some time before earnings at chemical companies return to prerecessionary levels. The high cost of natural gas may continue to have a negative effect on earnings growth, and industry observers believe there will be some moderation of the chemical trade deficit as the value of the dollar declines.

Canada followed the U.S. example in 2003, with declines in basic chemical production being more than offset by higher prices. This pattern drove the value of shipments upward. This year, Canadian chemical producers are hoping that real growth for industry will return to historic levels.

Latin America is expecting a pickup as gross domestic product expands in most chemical-producing countries, which will

bring the chemical industries in those countries along with it.

In the Asia-Pacific region, many of the national chemical industries exceeded expectations in 2003, and analysts and other industry observers expect growth in those countries to accelerate in 2004.

Europe, however, seems to be lagging behind other parts of the world in chemical industry improvement, with executives in some countries seeing few signs of an upturn and in others, only modest increases.