IN MANY WAYS, 2006 brought a continuation of the growth in the chemical industry that began in earnest in 2004 and extended into 2005. Around the world, major chemical companies last year saw continued growth based on good economics.
The cost-price squeeze that was prevalent for so long seems to have abated. Although all costs, and in particular raw material costs, were still high, they had decreased somewhat and companies were, by and large, able to keep their product prices at reasonable growth levels.
The increase in prices led to higher shipment values, producing greater sales values despite slow growth in production and volumes for some products. Keeping employment in check in strategic areas also helped. For instance, in the U.S., chemical employment fell, but worldwide, U.S. companies generally added employees.
The European chemical industry provided a pleasant surprise in 2006. Demand, including export demand, which grew between 6.6% and 15.3%, was strong for European chemicals. Thus, sales growth was good at European chemical companies. This growth translated into higher earnings at most firms, and a few that had been in the red in 2005 realized significant profits in 2006.
The strong growth in the value of exports was not confined to Europe. Other regions also saw their export values grow, sometimes significantly. In North America, U.S. chemical exports rose 12.6%, and in Canada, exports rose 7.7%, with exports to the U.S., its major customer, rising 6.3%.
In Japan, exports of chemicals increased 8.9%; in South Korea, exports jumped 14.6%; and in China, exports increased 18.5% over 2005.