U.S. chemical production sagged on a monthly basis in April as
weak manufacturing activity crimped demand for chemicals,
according to the latest monthly report from the American
Chemistry Council (ACC). The Washington-based chemical industry
trade group recently said that the U.S. Chemical Production
Regional Index (CPRI) fell 0.1% in April, following a revised
0.5% decline a month ago.
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.
Output from the U.S. manufacturing sector, the largest consumer
of chemical products, edged up 1% in April. Within this sector,
output rose in several key chemistry end-user markets including
rubber products, motor vehicles, machinery, fabricated metal
products, plastics products, semiconductors and computers.
The manufacturing sector serves as a barometer to gauge the
overall health of the U.S. economy and is a major driver for the
chemical industry which touches around 96% of manufactured goods.
However, weak manufacturing activity during recent months led to
softer demand for chemicals.
The ACC noted that chemical output was mixed across the segments
in April. Production gains across adhesives, coatings,
chlor-alkali, consumer products, other specialties and synthetic
rubber were neutralized by declines in organic chemicals,
pesticides, pharmaceuticals, industrial gases, manmade fibers,
plastic resins, fertilizers, and synthetic dyes and pigments.
Overall chemical production nudged up 0.5% in April when compared
on a year over year basis. On a region-by-region basis,
production rose across Gulf Coast, Ohio Valley, and Southeast
regions. Production for the first four months of 2013, when
compared with the year-ago data, were up 0.6%.
Monthly reading showed that chemical production improved across
Ohio Valley and Northeast in April. On a monthly comparison
basis, chemical production in the Gulf Coast region, where key
building block materials are produced, fell 0.4% in April. The
Ohio Valley and Northeast region logged gains of 0.2% and 0.1%,
respectively. Midwest, Mid-Atlantic and Southeast regions
registered a 0.1% decline each while production was flat 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.
Last year, a tough economic backdrop in Europe, uncertainties
surrounding the U.S. fiscal cliff, manufacturing slowdown and
sluggish activity in China weighed on the companies in the
chemical space including majors such as
However, the industry is expected to fare relatively better
this year, aided by the gradual healing in the U.S. economy,
hopes of a rebound in Chinese demand and the signs of a revival
in the U.S. housing market.
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