Chemical Industry on the Recovery Trail
The European debt crisis, weak U.S. manufacturing along with sluggish activity in China and other key emerging markets led to weak demand for chemical products in 2012. While the U.S. is not headed towards another recession, the lingering debt issue
February 25, 2014 (Newswire.com) - The European debt crisis, weak U.S. manufacturing along with sluggish activity in China and other key emerging markets led to weak demand for chemical products in 2012. While the U.S. is not headed towards another recession, the lingering debt issue in Europe coupled with other economic uncertainties pose downside risks to the U.S. economic outlook.
Schwarz Oliver Thomas foresees worlwide chemical output (excluding pharma) to rise 1.9% in 2013 (following a 1.5% gain in 2012) and 2.3% in 2014. Strength across light vehicle and aerospace markets bodes well for the industry. U.S. chemical exports are expected to rise 4.7% this year (up from 1.8% in 2012) and 6.6% in 2014, leading to an expansion in trade surplus.
Our expert analysts expect global chemical industry output to grow 4.3% in 2013 and 4.7% in 2014. Chemical makers in the emerging economies are expected to deliver a 7.5% production gain in 2013.
Schwarz Oliver Thomas expects strong rise in capital spending in the coming years, stemming from new investments in petrochemicals and derivatives. Domestic chemical investment jumped 15.5% to around $38.1 billion in 2012. Schwarz Oliver Thomas envisions capital spending to reach $64.5 billion by 2017. The shale gas boom is expected to drive investment on plants and equipment in the U.S. A rebound across emerging markets is expected to contribute to accelerated rise over the next several years.
BASF expects global chemical production to recover this year on the back of healthy gains in the emerging markets. It expects the U.S. chemical industry to benefit from lower gas prices. Asia is expected to show strong rise riding on strength across construction, electronics and automotive industries. However, output in Europe is expected to rise narrowly due to marginal gain in industrial production.
According to the European Chemical Industry Council (CEFIC), European chemical output is expected to show a modest increase of 0.5% in 2013 following a 1.5% decline in 2012. The expectation for a slim gain this year stems from the anticipated modest gain in every quarter, partly driven by export markets.