U.S. chemical output nudged down on a monthly basis in October
as gain in the Gulf Coast region was offset by declines in other
areas, according to the latest monthly report from the American
Chemistry Council (ACC). The Washington-based chemical industry
trade group said that the U.S. Chemical Production Regional Index
(CPRI) fell 0.2% in October, following a revised 0.3% fall a
month ago, with pace of decline moderating across all seven
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 0.4% in October. Within this
sector, output rose in several key chemistry end-user markets
including appliances, motor vehicles, construction materials,
machinery, fabricated metal products, computers, semiconductors,
plastic products, apparel and furniture.
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.
Notwithstanding the partial U.S. government shutdown,
manufacturing output increased at its fastest clip during the
reported month since Feb 2013.
The ACC noted that chemical output was mixed across the segments
in October. Production gains across fertilizers, organic
chemicals, chlor-alkali and synthetic rubber were neutralized by
declines in inorganic chemicals, pharmaceuticals, manmade fibers,
industrial gases, coatings, acids, consumer products and plastic
On a monthly comparison basis, October reading showed that
chemical production in the Gulf Coast region, where key building
block materials are produced, inched up 0.4%. Output fell 0.1%
across Midwest and Ohio Valley while Southeast logged a 0.2%
decline. Production edged down 0.3% across Mid-Atlantic,
Northeast and West Coast regions.
Overall chemical production moved up 1.5% in the reported month
when compared on a year over year basis, following a 1.7% gain a
month ago. On a region-by-region basis, production rose across
all regions year over year. Production for the first ten months
of 2013, when compared with the year-ago data, was up 1.2%.
The roughly $770 billion chemical industry is cyclical by nature
and heavily linked to the overall condition of the U.S. economy.
It has been consistently leading the U.S. economy's business
cycle due to its early position in the supply chain.
Last year, Europe's debt predicament, weak U.S. manufacturing
along with sluggish activity in China and other key emerging
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 expected to fare relatively
better this year and the next. Strength across agriculture,
automotive and aerospace and a recovery in the housing market
augur well for the industry.
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