World Chemical Outlook

When we took a look at the future of the chemical industry at this time last year, we were optimistic that 2005 would be a year of growth in most major chemical-producing regions of the world. And when the final accounting is in, the predictions made last year will be proven true in most cases.

For 2006, C&EN sees another year of growth. Many economists and analysts are saying that the first half of the year will be kind to the chemical industry around the world, with some slowdown after June.

In the U.S. in 2005, the story was two industry-damaging hurricanes, rapidly advancing costs, and slower production increases made up for by large price increases for most chemicals-especially organics. For 2006, the industry should see more of the same, hopefully without major storms, but price increases may moderate.

Canada in 2005 was much like the U.S., but without hurricanes. Production was fairly lackluster, but price increases drove the value of shipments higher. Canadian producers are saying that the high cost of natural gas is undermining the global competitiveness of the industry.

Latin America began 2005 looking to increase plant capacity significantly. Now, some plants have been canceled.

Growth in Europe has been slow, but 2006 will see some pickup in production. The big question, however, is how various bodies within the European Union will reconcile the versions of the new chemicals policy known as REACH, which is slated to be implemented in 2007.

Asia-Pacific will see major producer China having a good first half this year, with some slowdown in the second half. And the chemical industry restructuring that has taken place in Japan will continue to provide growth, just as it did in 2005.