Volume 90 Issue 52 | p. 7 | News of The Week
Issue Date: December 24, 2012

Uptick Expected In U.S., European Chemical Output In 2013

Economy: After stumbling in 2012, chemical producers look to a tepid recovery
Department: Business
Keywords: Europe, economy, chemical output, forecast
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Chemical output is expected to increase slightly in 2013.a Predicted. SOURCES: American Chemistry Council, European Chemical Industry Council, German Chemical Industry Association
A bar graph shows that chemical output is expected to increase slightly in 2013.
 
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Chemical output is expected to increase slightly in 2013.a Predicted. SOURCES: American Chemistry Council, European Chemical Industry Council, German Chemical Industry Association

Three major chemical industry associations say chemical production in the U.S. and Europe will increase modestly in 2013 following lackluster output in 2012.

“The economic recovery has been painfully slow,” says T. Kevin Swift, chief economist of the American Chemistry Council. He is predicting that output by the $760 billion-per-year U.S. chemical industry will rise just 1.9% in 2013 compared with his estimate of a 1.5% increase in production in 2012.

Hindering chemical industry customers’ confidence in the U.S. are concerns over the ­fiscal cliff—the automatic federal government budget cuts and tax hikes set for 2013 if legislators can’t negotiate an agreement. As a result, Swift says, ­businesses have pared back on hiring and delayed investment decisions.

A bright spot for U.S. chemical producers is exports aided by low natural gas prices. Exports rose 1.8% to $191 billion in 2012, turning last year’s trade deficit into a modest surplus. Swift predicts exports will grow 4.7% in 2013. For the future, he emphasizes that the U.S. advantage in natural gas from shale will not only drive chemical exports; it will also reinvigorate U.S. manufacturing.

Reflecting a stagnant European economy, the European Chemical Industry Council says chemical output there slipped 2.0% in 2012. Government austerity programs and high levels of sovereign debt led to an uptick in unemployment and squashed domestic demand, the European group says. It forecasts only 0.5% growth in 2013.

“The European Union chemicals sector faces increasing uncertainty as the domestic market continues to struggle and overseas competition remains relentless,” observes Kurt Bock, chairman of BASF and head of the European industry group.

But just as their U.S. counterparts see a bright spot in exports, so do European chemical makers. The group predicts strong exports to the developing economies of Brazil, Russia, India, and China in 2013. The association does expect to be at a competitive disadvantage to U.S. chemical makers that will benefit from low-cost gas.

German chemical output fell 3.0% in 2012, according to the German Chemical Industry Association. The group expects production in Germany to rise 1.0% in 2013, slightly faster than for European chemical makers as a whole.

Karl-Ludwig Kley, president of the German association and chairman of Merck KGaA, says the slow-growing global economy, the recession in Southern Europe, and the European debt crisis were “a bit too much at one time.” But, he adds, “we did really well outside of Europe.” German chemical exports rose 5.0% in 2012.

 
Chemical & Engineering News
ISSN 0009-2347
Copyright © American Chemical Society

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