After a decade of lost competitiveness, US chemistry is 'back in the game'

By Michelle Yeomans

- Last updated on GMT

Related tags Investment Chemical industry U.s.

After a decade of lost competitiveness, US chemistry is 'back in the game'
According to the American Chemistry Council, natural gas from shale is continuing to drive greater domestic investment and economic growth within the US segments working with chemistry.

Over the next five years production is expected to grow by almost 25%, pushing industry shipments to $1 trillion by 2018 and for the first time since 1999, the chemical segment is seeing job growth.

The ACC's monthly Chemical Activity Barometer (CAB) also reveals renewed competitiveness to have been boosted as well as favorable oil-to-gas price ratios as a result of the substance.

Likewise, supported by activity within the domestic chemicals sector, the U.S. economy is likely to continue, though moderated growth in 2014.

It's these very findings Dr. Kevin Swift, ACC's chief economist says, that are the big indicator that American chemistry is back in the game.

"We're seeing growing end-use markets; strengthening employment; surging exports; and an influx of tremendous capital investment. Put simply, the U.S. is now the most attractive place in the world to invest in chemical manufacturing​," he states.

Back in business

Shale gas and the surge in natural gas liquids supply has helped move the U.S. from being a high-cost producer of key petrochemicals and resins to among the lowest cost producers; globally. As a result, exports are surging.

The industry has gone from a chemicals trade deficit to a surplus, this year expected to be about $2.8 billion, and by 2018 reaching nearly $30 billion, from almost $300 billion in total exports.

The economist also notes that capital investment is exploding and that as chemical manufacturers began recovering from the Great Recession in 2010, there has been double digit growth in equipment upgrades and efficiency investments.

"Over the next five years we are likely to see more than $60 billion in domestic​," says Swift.

The Chemical Activity Barometer is an established leading economic indicator, shown to lead U.S. business cycles by an average of eight months at cycle peaks, and four months at cycle troughs.

The barometer ticked up to 93.9, a 0.1% increase over November on a three-month moving average (3MMA) basis. This marks the eighth consecutive monthly gain for the CAB, which remains up 2.8% over a year ago.

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