The U.S. chemical industry ended last year on a positive note
and is poised for a brighter 2014. The nation's chemical output
rose on a monthly basis in December on the heels of gains across
Gulf Coast and Ohio Valley regions, according to the latest
monthly report from the American Chemistry Council
The Washington-based chemical industry trade group said that
the U.S. Chemical Production Regional Index (CPRI) moved up 0.8%
in December, following a 0.3% gain a month ago, with production
rising across all seven regions. Production for full-year 2013,
when compared with the year-ago data, went up 1.2%.
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 biggest
consumer of chemical products, edged up 0.6% in December. Within
this sector, output rose in several key chemistry end-user
markets including appliances, motor vehicles, construction
materials, fabricated metal products, computers, semiconductors,
plastic products, structural panels, printing, apparel and
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
The ACC noted that chemical output was mixed across the
segments in December. Production gains across chlor-alkali,
industrial gases, adhesives, coatings, synthetic rubber, consumer
products, organic chemicals, plastic resins, pesticides, manmade
fibers and other specialties were neutralized by declines in
inorganic chemicals, acids, fertilizers and pharmaceuticals.
Overall chemical production moved up 1.4% in the reported
month when compared on a year over year basis, following a 1.5%
gain a month ago. On a region-by-region basis, production rose
across all regions year over year.
On a monthly comparison basis, December reading showed that
chemical production in the Gulf Coast region, where key building
block materials are produced, went up 1.4%. Output rose 0.8%
across Midwest and Southeast. Ohio Valley raked in the biggest
monthly gain of 1.5%. Production inched up 0.4% in Mid-Atlantic
and West Coast regions while Northeast registered a 0.5% rise.
The roughly $770 billion U.S. chemical industry is cyclical by
nature and heavily linked to the overall condition of the
nation's economy. It has been consistently leading the U.S.
economy's business cycle due to its early position in the supply
Last year, Europe's debt predicament, effects of sequestration
along with weakness across some key end-use markets weighed on
companies in the chemical space including majors such as
While lingering crisis in Europe coupled with other
industry-specific challenges continues to pose downside risks,
the global chemical industry is poised for a recovery this year,
aided by healthy Chinese demand, significant capital investment
and a shale gas boom in the U.S.
The ACC envisions U.S. chemical production to rise 2.5% in
2014 and further improve to a 3.5% gain next year. Strong
agricultural market fundamentals, healthy demand from light
vehicles market, and a gradual revival in the housing market
augur well for the industry.
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