U.S. chemical output showed a meager increase on a monthly
basis in March as declines in Gulf Coast and Ohio Valley were
eclipsed by higher production in other regions, according to the
latest monthly report from the American Chemistry Council (ACC).
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The Washington, DC-based chemical industry trade group said that
the U.S. Chemical Production Regional Index (CPRI) inched up 0.2%
in March, following a revised 0.5% increase a month ago, with
gains witnessed across five out of seven regions.
Created by Moore Economics to track chemical production in seven
regions nationwide, the U.S. CPRI 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, ticked up 0.3% in the reported month, an
improvement from a 0.2% gain in February. Within this sector,
gains were witnessed in several chemistry end-user markets
including aerospace, construction supplies, machinery, fabricated
metal products, computers, semiconductors, plastic products 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 goods.
According to the ACC, chemical production was mixed across the
segments in March. Gains across consumer products, industrial
gases, pharmaceuticals, inorganic chemicals, adhesives and
chlor-alkali were capped by declines in organic chemicals,
plastic resins, coatings, pesticides, fertilizers and manmade
Overall chemical production went up 1.3% year over year in the
reported month. On a region-by-region basis, gains were witnessed
across all regions barring Gulf Coast.
March reading showed that chemical output in the Gulf Coast,
where key building block materials are produced, clipped 0.5% on
a monthly comparison basis. Output rose 0.5% across Mid-Atlantic
and West Coast. Production went up 0.2% in Midwest and Southeast
while Ohio Valley saw a 0.3% fall. Output increased 0.4% in the
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
Chemical makers including majors such as
) had a tough 2013 as a weak European economy, effects of
sequestration in the U.S. along with certain industry-specific
challenges led to subdued demand for chemicals for most of the
While a still-challenging economic backdrop in Europe remains a
roadblock, the chemical industry is expected to fare relatively
better in 2014, aided by a shale gas boom in the U.S., healthy
Chinese demand and significant capital investment.
The ACC envisions national chemical output to rise 2.5% in 2014
and further improve to a 3.5% gain next year. Growth will be
supported by strong agricultural market fundamentals, healthy
demand from light vehicles market and a recovery in the housing
market manifested by increase in building permits and a steady
pick-up in home prices.
On the global front, the ACC sees production to move up 3.8% in
2014 and 4.1% in 2015 with healthy gains expected across North
America and emerging markets. It expects strong capital spending
in the coming years, stemming from new investments in
petrochemicals and derivatives.