Advertisement

If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.

ENJOY UNLIMITED ACCES TO C&EN

Economy

US chemical industry to return to growth in 2021

A broad-based recovery is expected to boost both consumer and industrial spending

by Melody M. Bomgardner
December 10, 2020

This photo shows a worker in a hard hat installing plumbing in a house under construction.
Credit: Shutterstock
New housing construction helped boost demand for plastics during the economic slowdown.

The chemical industry is already in recovery mode from an unusually deep—but short—recession caused by the COVID-19 pandemic, according to a new analysis by the American Chemistry Council (ACC), the US chemical industry’s main trade association.

Forecast

US chemical output should rebound in 2021.

-3.6%

Drop in US chemical production in 2020


3.9%

Expected increase in US chemical production in 2021

Source: American Chemistry Council.

The crisis certainly left a bruise. The ACC estimates that US chemical output fell 3.6% in 2020 after a 0.1% dip in 2019. The swing for specialty chemicals was much wider; the segment sank 10.8% this year compared to last year’s 2.5% growth. And there were layoffs: the chemical workforce shrank by 14,000 jobs.

Now, as the year winds down, the economic gears are turning again, and the chemical industry is starting to rebound. The ACC estimates that the US economy will grow 3.7% in 2021 and that chemical production will rise a similar 3.9%. Most industries that buy chemicals will ramp up production in 2021, though not all will make up the ground lost in 2020.

Many chemical businesses faced a dire situation in April and May when COVID-19 forced customers to shut their manufacturing lines. Demand for materials used in automaking, like synthetic rubber, fell off a cliff. Composites used in airplanes suffered a similar fate. Even companies selling into usually stable consumer markets like food, personal care, and cleaning products saw their businesses shrink.

In contrast to other US industries, however, chemicals took a moderate hit, says Kevin Swift, the ACC’s chief economist. And compared to other chemical-producing regions, the US didn’t get too roughed up. “I’d characterize the US as the best-looking horse in the glue factory,” he says. Sales of plastics held up well thanks to demand for personal protective equipment, a rise in new home construction, and consumer spending on appliances and home improvement products. Demand for chemicals used in electronics remained strong.

Those trends will continue in 2021, and growth will spread to other industries including car manufacturing, as vaccines for COVID-19 are rolled out. That will help specialty chemical volumes rise 2.4%. Demand for basic chemicals will jump 5.0%, thanks in large part to the cost advantage US manufacturers enjoy from the country’s low-priced natural gas.

Swift says chemical firms can also look forward to less trade friction under the incoming Biden administration. “There will definitely be a different tone on trade with our major trading partners,” he says.

Advertisement

Article:

This article has been sent to the following recipient:

0 /1 FREE ARTICLES LEFT THIS MONTH Remaining
Chemistry matters. Join us to get the news you need.