World Chemical Outlook | Chemical & Engineering News
Volume 90 Issue 2 | p. 11
Issue Date: January 9, 2012 | Web Date: January 12, 2012

Cover Stories: World Chemical Outlook 2012

World Chemical Outlook

Department: Business
Keywords: economy, industry, outlook
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Chemical industry executives entered 2011 with the knowledge that it would not be as strong as 2010, a year of brisk rebound from the Great Recession. That turned out to be the case, and now 2012 looks to be even weaker than 2011.

Going into 2011, trade association economists anticipated that chemical output growth would be 2.7% in the U.S. and 2.5% in Europe. In the end, the U.S. chemical industry logged a respectable 3.8% expansion, but Europe staggered in at only 2.0% growth.

The outlook for this year in the two mature economies is not pretty, as companies must confront sluggish local economies, reduced government spending, and cooling demand in Asian export markets. The American Chemistry Council (ACC) expects a 1.6% expansion in U.S. chemical output; the European Chemical Industry Council projects 1.5% European growth.

These lackluster dynamics are showing up in markets for paints, commodity chemicals, and many specialty chemicals. Construction chemical executives, for example, anticipate almost no growth for their products in the U.S. and Northern Europe this year and even a slight contraction in Southern Europe, where the most debt-laden countries are.

U.S. petrochemical executives can take comfort in the silver lining of low natural gas prices. Although demand for their core product, ethylene, is expected to rise less than 1% this year, companies are investing heavily in new plants on the conviction that U.S. products will be highly competitive globally when business improves.

And certain markets continue to do well. Agricultural chemicals should reap a good 2012 as farmers enjoying high crop prices do what they can to ensure large harvests. Pharmaceutical chemical companies anticipate high-single-digit growth based on better prospects in the drug development pipeline.

As usual, chemical demand in Asia and Latin America will outpace that in the U.S. and Europe, but even these regions are slowing. Notably, economic growth in important countries such as Brazil, Argentina, and China is expected to slip this year, although not to the anemic levels of the West.

T. Kevin Swift, chief economist at ACC, reported recently that “a global soft patch has emerged and has been centered in manufacturing.” With assessments like that, 2012 is likely to be a year for the chemical industry to endure rather than enjoy.

World Chemical Outlook was compiled by Assistant Managing Editor Michael McCoy, Senior Correspondent Marc S. Reisch, and Senior Editors Melody M. Bomgardner, Rick Mullin, and Alexander H. Tullo in New Jersey; Senior Correspondent Jean-François Tremblay in Hong Kong; and Senior Correspondent Ann M. Thayer in Houston.

 
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ISSN 0009-2347
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Comments
Dr. Prabhakar Reddy Polepally (January 10, 2012 9:44 AM)
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