The COVID-19 pandemic has pushed the US and world economies into the worst recession in decades, and the US chemical industry will see a sharp decline before rebounding next year, according to the an updated outlook from the American Chemistry Council (ACC).
US chemical production this year will see its sharpest decline in ages.
Predicted 2020 decline
Predicted 2021 increase
The trade association’s baseline prediction is for a 9.3% decline in US chemical production volume this year. Its pessimistic outlook, in which COVID-19 cases start spiking again, is for a 14.7% production decline, and its optimistic scenario, where the economy benefits from a V-shaped recovery, is for a 7.0% decline.
The US industry, the ACC predicts, will cut about 20,000 jobs this year, a decline of 3.6%. Capital spending, as companies tighten their belts and delay projects, will decline about 17.6%, to $29 billion.
This is a far cry from the ACC’s prediction in December that US production will increase by 0.4% this year. “COVID-19 has obviously changed that,” says Martha Moore, senior director of policy analysis and economics. “It has spread to every corner. And the government-imposed lockdowns have caused just this collapse in economic activity. It’s the deepest recession we have seen since the 1930s.”
The ACC expects global economic activity to decline 4.6% in 2020 and then surge 5.3% in 2021, assuming the world gets over the pandemic. The US will see a 6.0% economic decline this year, followed by 4.6% growth next year. “We think that a recovery is already underway, that activity has bottomed out,” Moore says.
The hardest-hit sector downstream from the chemical industry has been automotive. The ACC expects US vehicle sales this year to decline 22% to 13.1 million. Oil field chemicals have been hit by a 60–70% decline in drilling activity, adds Kevin Swift, ACC’s chief economist. But “there were some bright spots,” he notes, such as polypropylene used to make fibers for masks and polyethylene used in packaging.
For 2021, ACC expects a 12.3% increase in US chemical production. But Swift warns that the recovery may be uneven. “It may take until 2022 or 2023 for some of these segments to get back to their pre-COVID levels."