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At this time last year, C&EN predicted that 2006 would be a year of growth around the world—and that is essentially what it proved to be.

In the U.S., the volatility of raw material and energy costs proved challenging for companies, especially those in the basic chemical sectors. Still, chemical industry fundamentals improved: Production grew and selling prices increased rapidly.

The Canadian chemical industry followed a pattern similar to that of the U.S., but plant closures lowered performance from what it could have been. There are few actual data for Latin America, but anecdotally, the chemical industry there seems to be doing well, as evidenced by a flurry of new projects and only a few cancellations.

Outside the Americas, the chemical industry in Europe finally escaped the malaise that has weighed it down in recent years and enjoyed above-average growth. In the Asia-Pacific region, China maintained its high-flying status and even Japan managed to show relatively good profit growth, despite declines, sometimes substantial, in the output of many chemicals.

For this year, companies in most regions are predicting continued growth, but it is generally a cautious prediction. The caution comes from the belief among producers that even though oil and natural gas prices have come off their peaks, these costs will continue to be volatile. Plus, demand may slow in some regions.

In Europe, for instance, 2006 chemical production grew about 2.5%, above the average for the past few years, but producers are expecting a slower 2.2% expansion in 2007. The same holds true for most chemicals in the U.S. For the entire industry, production is expected to grow 3.2% this year after a 2.1% rise in 2006. But the 2007 figure includes a 5.0% projection for pharmaceutical industry growth after an estimated 1.1% decline last year. Excluding pharmaceuticals, the estimate for the rest of the U.S. chemical industry is 1.9% growth in 2007, down from 4.5% last year.

As for the Asian chemical industry, which has enjoyed several years of rapid expansion, worries are emerging that the prosperity will not last. Although no concrete problems loom, companies have the nagging fear that the region is due for one of the crises that seem to hit it every few years. Only China sailed unscathed through the several crises that affected other Asian countries between 1997 and 2003.

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