The inventories-to-sales ratio for chemical products fell to a record low in January, suggesting increased production could follow, according to data compiled and analyzed by the American Chemistry Council (ACC).
Sales of chemical products at the wholesale level rose 3.6% in January to $8.0 billion. The increase follows a 6% gain in wholesale chemical sales in December 2009, the latest edition of ACC’s Weekly Chemistry and Economic Trends states. Compared to the same time last year, wholesale-level sales of chemical products are up 14.9%.
At the same time, wholesale chemical inventories rose only slightly in January, following a 0.9% decline in January. The result of these fluctuations is a record low inventories-to-sales ratio for chemicals of 0.96 in January. It is the lowest level since 1988, ACC says. A year ago, the ratio was 1.25. The low ratio could suggest increased production as firms seek to replenish inventories.
ACC analysis also indicates "continued improving activity" in railcar loadings. Despite a decline in railcar loadings this week, the level has risen in seven of the last 13 weeks, and is up 13.6% from last year, ACC says, when using a 13-week moving average.
ACC also reports that production of polyvinyl chloride (PVC) resins rose to 1.087 billion pounds in January, a year-to-year increase of 17.6%. Production of polypropylene resins rose to 1.34 billion lb in December, but levels were lower than the same time the previous year, using a 3-month moving average.
Market capitalization of U.S. basic and specialty chemical companies rose by 1.1% this week to close at $545.3 billion on Thursday, ACC reported. The S&P 500 index was up 2.4% this week.
In other data compiled by ACC, the Organization for Economic Cooperation and Development (OECD) released its composite leading indicator (CLI) for January, and the data signal an improvement in economic activity for the G7 countries, ACC says, "although only marginally more so than the assessment for December."
Retail sales rose by 0.3% in February, a better-than-expected gain that follows a 0.1% rise in January. Historically, ACC says, there is a correlation between retail sales and the consumption of polyethylene resins used in packaging.