This year's round of second quarter results from the US chemical industry signals a much needed improvement on last year's performance.
This year’s round of second quarter results from the US chemical industry signals a much needed improvement on last year’s performance, says Kevin Swift, chief economist at the American Chemistry Council, which represents the country’s leading chemical companies.
’Things are definitely improving here in the States,’ Swift told Chemistry World. Q2 results in 2003 were disappointing, but a damaging fall in operating rates had begun to turn round last June, leading to the promising figures released this summer by companies such as DuPont and Dow Chemical.
’A year ago all anybody talked about was the hollowing out of manufacturing, but this is bottoming out,’ added Swift. Production has rebounded significantly, partially thanks to the depreciating dollar.
Europe is still lagging, though. In the long term, says Swift, chemical industry growth across western Europe is likely to be hampered by competitiveness issues associated with REACH (See Chemistry World, June 2004, p11) and structural considerations, such as high labour costs and over-regulation. He predicts an average growth rate of only two per cent per year during 2004-14 compared with an estimated 3.5 per cent per year over the same period in the US.
The biggest threat to US and European dominance remains countries in the Asia-Pacific region. The Chinese chemical industry has enjoyed 15 per cent growth for a number of years. ’Anyone of us in the rest of the world would kill for that,’ said Swift.
The greatest risk for the industry worldwide remains oil prices. This is less of a problem in the US, where natural gas is often used, but even natural gas prices are climbing - up 18 per cent from the already high levels of 2003.
The American Chemical Council predicts that overall capital spending by the US chemical industry (excluding pharmaceuticals) in 2005 will increase five per cent, reaching $15.18 bn (?8.6 bn), a level still below actual spending in 2001.