U.S. chemical output ticked up on a monthly basis in February
as a decline in the Gulf Coast was neutralized by higher
production in other areas, according to the latest monthly report
from the American Chemistry Council (ACC).
The Washington, DC-based chemical industry trade group said that
the U.S. Chemical Production Regional Index (CPRI) went up 0.3%
in February with gains witnessed across six out of seven regions.
This represents an improvement over flat production in January
which was affected by tough winter weather.
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, was flat in the reported month as bad
weather and distribution disruptions thwarted manufacturing
activities. Within this sector, gains were witnessed in several
chemistry end-user markets including aerospace, machinery,
computers, plastic and rubber products, paper and printing.
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.
The ACC noted that chemical production was mixed across the
segments in February. Rise across chlor-alkali, industrial gases,
dyes and pigments, acids, consumer products, coatings, adhesives,
pesticides and pharmaceuticals and other specialties were capped
by declines in organic chemicals, fertilizers, plastic resins,
synthetic rubber and manmade fibers.
Overall chemical production moved up 0.4% year over year in the
reported month. On a region-by-region basis, gains were witnessed
across Midwest, Ohio Valley, Southeast and West Coast regions.
February reading showed that chemical output in the Gulf Coast,
where key building block materials are produced, fell 0.2% on a
monthly comparison basis. Output rose 0.5% across Mid-Atlantic,
Northeast and West Coast. Production went up 0.3% in Midwest and
Southeast while Ohio Valley saw a 0.2% gain.
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 muffled a meaningful upturn in chemical demand for the
most part of the year.
While recovery in the European chemical industry continues at a
sluggish pace, the global chemical industry is expected to fare
relatively better in 2014, aided by healthy Chinese demand,
significant capital investment and a shale gas boom in the U.S.
Chemical makers are ratcheting up investment on shale gas-linked
projects to take advantage of ample natural gas supplies which is
expected to boost capacity and export over the next several
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
backed by strength in the agricultural space, healthy demand from
light vehicles market and a gradually convalescing housing
market. On the global front, 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.
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