US Chemical Output Rises for 10th Straight Month

28.11.2014 -

US chemical production rose in October for the 10th straight month in October, and the American Chemistry Council (ACC) said growth was seen across all regions. The further uptick, the industry association said, "provides further evidence that the industry has sailed out of troubled waters and remains very much on the road to recovery in the second half."

The Chemical Production Regional Index (CPRI), which tracks output in seven regions nationwide, added 0.6% in October after a 0.6% gain a month earlier. Output increased in all seven regions with Ohio Valley showing the highest gain of 0.7%.

On the petrochemicals-heavy Gulf Coast, production rose 0.6% on a monthly comparison basis. The Midwest and Southeast saw a gain of 0.5%, while the Mid-Atlantic, Northeast and West Coast regions saw a 0.3% gain.

Output from the US manufacturing sector, the largest consumer of chemical products, was essentially flat in October following eight consecutive months of gains, impacted by a slowdown in automotive production, which is usually a growth major driver for the chemical industry.

Within manufacturing, production rose in several chemistry end-user markets including aerospace, construction materials, machinery, computers and electronics, plastic products, rubber products, paper, structural panels and apparel.

As in September, movements in chemical production were again mixed across industry segments. Gains in organic and inorganic chemicals, synthetic dyes and pigments, industrial gases, consumer products, pesticides, coatings, adhesives and pharmaceuticals were partly masked by declines in chlor-alkali, plastic resins, fertilizers and manmade fibers.  
On the whole, production was up 3.5% year on year in October, with all regions scoring gains.
The chemical industry is finally pulling its way out of its 2013 slump.
With the US economic recovery gathering momentum, ACA said the first three quarters of 2014 showed "encouraging demand trends " and continued recovery across end-use markets such as commercial construction and electronics.
While some industry-specific challenges and slow economic recovery in Europe remain roadblocks, the industry is expected to continue its rebound through the balance of 2014, propelled by cost benefits emerging from the trend to shale gas-derived feedstock, strength across agriculture and automotive markets, and significant shale-linked capital investment.

The shale boom is expected to drive investment on plants and equipment in the US. Major chemical producers such as BASF, Dow Chemical, DuPont, ExxonMobil Chemical and LyondellBasell Industries are ramping up investment in shale gas-linked projects to take advantage of abundant natural gas supplies. These are expected to boost capacity and exports over the next several years.

ACC forecasts that US chemical production will move up 2.5% in 2014 and see  a 3.5% gain in 2015, backed by strong agricultural market fundamentals, healthy demand from light vehicles market and a recovery in the housing market.

The association envisions strong capital spending increases in the coming years, stemming from new investments in petrochemicals and derivatives. Strength across agriculture and automotive markets in North America and healthy demand in emerging geographies will provide tailwinds, ACC said.