The trade surplus of U.S. chemicals will expand to $2.4 billion in 2013 and to $3.3 billion in 2014, according to projections in the 2012 Year-End Situation and Outlook report from the American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com). “Renewed competitiveness from shale gas (and the resulting disconnect between U.S. natural gas prices and global oil prices) will boost U.S. exports in the years ahead,” the report explains.
The ACC end-of-year report says that exports of chemicals from the U.S. will grow 4.7% to $199.7 billion in 2013, and by 6.6% ($212.8 billion) in 2014, while imports of chemicals will grow at smaller rates (4.1% in 2013 and 6.2% in 2014). Digging deeper, trade deficits will persist for pharmaceuticals and agricultural chemicals, but will be “offset by large (and growing) surpluses in basic and specialty chemicals,” ACC says.
Shale gas drives investment
The production of natural gas from shale deposits continues to play a key role in the landscape of the chemical industry in the U.S. The ACC report makes a host of other projections for the coming years, including increased capital spending by the U.S. chemical industry, which is driven by the increased U.S. competitiveness due to shale gas. “Indeed, over 50 new chemical production projects (valued at over $40 billion altogether) have been announced, and the dynamics for sustained capital investment are in place,” the report comments, adding that strong gains in capital spending by chemical producers in the U.S. are expected in the next several years, and capital spending by the chemical industry could reach $64.5 billion by 2017.
The ACC also projects solid increases in research and development spending by U.S. chemical producers. R&D spending “likely rose 3.5% to $58.1 billion in 2012,” the report says. Looking ahead, ACC projects that R&D spending will increase 4.0% in 2013 to $60.4 billion and will reach $63.1 billion in 2014.
Macroeconomic picture
Although the favorable oil-to-gas price ratio bodes well for chemical production in the U.S., the wider economic picture shows some negative areas. Europe slipped into economic recession during 2012, and manufacturing in China slowed significantly. “Global economic prospects will be characterized by a two-speed world in which the developed nations (constrained by debt, adverse demographic factors and tighter fiscal policies) grow slowly while the emerging markets offer more dynamic prospects, as a result of industrialization and rising consumer-driven economies,” the ACC report says.