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Economy

US chemical output set to rise in 2019

But trade conflicts and slowing foreign demand could moderate the industry’s prospects

by Marc S. Reisch
December 16, 2018 | APPEARED IN VOLUME 96, ISSUE 49

The US will benefit from strong job growth, moderate inflation, and a good investment climate in 2019, according to the American Chemistry Council (ACC), the US chemical industry’s major trade association. Even though it is concerned about rising interest rates and the impact of tariffs, the ACC predicts that US chemical output will rise 3.6% in 2019 following a 3.1% increase this year.

Forecast

US chemical production will rise again in 2019
 
Source:American Chemistry Council.

“Expansion across a broad band of industrial sectors is supporting American economic growth this year,” says Kevin Swift, the ACC’s chief economist. He predicts that next year, US industrial activity will continue to expand but that an economic slowdown that is now underway in overseas markets, coupled with rising trade tensions, presents “a risk of economic disruption.”

On the plus side for US chemical producers are surging domestic energy supplies and increased availability of ethane, a key raw material obtained from natural gas. Because of the shale-gas revolution, chemical makers have committed $202 billion since 2010 for 333 new chemical plants, 40% of which are still in the planning stage, notes Martha Moore, the trade group’s economic and policy director.

As that production capacity comes on line, US exports will surge, Moore predicts. Assuming no major trade disruptions, the US will post a chemical-trade surplus of $39 billion in 2018 and $69 billion by 2023, she says.

Outside the US, predictions are less optimistic. The European Chemical Industry Council anticipates 0.5% production growth in 2019 following a 0.5% decline this year. The group cautions that trade tensions among the US, China, and Europe, plus uncertainty about the UK’s approaching Brexit from the European Union, could dampen the expected uptick.

In Germany, Europe’s largest chemical maker, production is likely to rise 1.5% in 2019, according to the German Chemical Industry Association. Production this year is on track to increase 2.5%.

The German association’s forecast includes pharmaceuticals, which are set to rise 11.5% this year. Excluding pharma, Germany’s chemical production will slip 1.5% this year.

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