U.S. chemical output barely rose on a monthly basis in
October, according to the latest monthly report from the American
Chemistry Council (ACC). The Washington-based chemical industry
trade group said on Wednesday that the U.S. Chemical Production
Regional Index (CPRI) inched up 0.2% in October, following an
upwardly revised 0.3% gain in September. The weak manufacturing
sector, the largest consumer of chemical products, is keeping a
lid on production growth.
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The U.S. CPRI, which was created by Moore Economics to track
chemical production in seven regions nationwide, is comparable to
Federal Reserve's industrial production index for chemicals. The
CPRI is measured using a three-month moving average.
The ACC noted that chemical production improved across all
regions barring West Coast, Mid-Atlantic and Northeast on a
monthly comparison basis in October.
Output from the U.S. manufacturing sector nudged down 0.5% in
October after declining 0.2% a month ago. Within this sector,
output rose in several key chemistry end-user markets including
appliances, aerospace and structural panels.
The manufacturing sector serves as a barometer to gauge the
overall health of the U.S. economy and has a major influence on
the chemical industry which touches around 96% of manufactured
goods. Lower investment given the ongoing uncertainty surrounding
the looming fiscal cliff led to the weakness in manufacturing.
The ACC said that output rose across many segments such as
organic chemicals, plastic resins, consumer products, coatings,
adhesives, and other specialty chemicals. This was, however,
neutralized by declines in pesticides, fertilizers, manmade
fibers, synthetic rubber industrial gases and pharmaceuticals.
October reading showed that overall chemical production fell 0.2%
when compared on a year-over-year basis. On a region-by-region
basis, production rose across the Gulf Coast and Ohio Valley
areas while the Midwest, Mid-Atlantic, Southeast, Northeast and
West Coast regions saw declines. On a year-to-date basis
(production for the first nine months of 2012 compared with the
year-ago data), production edged up 0.1%.
On a monthly comparison basis, chemical production in the Gulf
Coast region, where key building block materials are produced,
inched higher 0.5% in October. The Midwest and Ohio Valley
regions witnessed a 0.1% and 0.6% increase, respectively. Output
slipped in the Mid-Atlantic (down 0.1%), Northeast (0.1%) and
West Coast (0.2%) regions. Production crept up 1% in the
The chemical industry, which is among the biggest industries in
the U.S., is cyclical by nature and heavily linked to the overall
condition of the U.S. economy. The roughly $760 billion industry
has been consistently leading the U.S. economy's business cycle
due to its early position in the supply chain.
A challenging economic backdrop in Europe continues to weigh on
the companies in the chemical space including majors such as
EI DuPont de Nemours & Co
The Dow Chemical Company
Eastman Chemical Co.
). Moreover, weakness across some key end-markets including
construction and electronics remains the major impediments to