In its annual forecast, cited in the C&EN news story, the American Chemistry Council, which represents large chemical manufacturers, predicts a second-half recovery for industrial activity globally and is somewhat optimistic about 2003 for the chemical industry. There should be 3.5 percent growth in physical chemical volume this year, well above Gross Domestic Product growth, providing a 4.3 percent hike in the value of shipments to $483.5 billion, says Kevin Swift, ACC senior director for policy, economics and risk analysis. This compares to modest growth of only 2.0 percent in 2002.
According to the ACC study, basic chemical shipments are expected to grow 3.8 percent in 2003 to $166.8 billion. The fertilizer industry will head the basics segment with a 5.0 percent increase, followed by a 4.8 percent hike in petrochemicals and intermediates and a 4.3 percent increase in inorganic chemicals.
Despite recovery predictions, a potential war with Iraq and strikes that have crippled the oil industry in Venezuela could have a major impact on higher feedstock and energy costs, C&EN cautions.
Indications of a brighter outlook for the U.S. industry have been slow to develop. Even before the recession officially began in March 2001, cutting profits, workforces and stock prices, the industry was having difficulty. And last year, despite a good third quarter, total chemical production was up just about 2.0 percent over 2001, according to revised government data. Average prices, meanwhile, increased by only 0.3 percent. For the basic chemical category, production growth was greater, averaging a 7.0 percent rise, but this was offset by a 0.5 percent decline in prices.
The result has been poor-to-mediocre financial performance among U.S. chemical companies for much of 2002 with the exception of that third quarter. C&EN's regular sample of 25 chemical companies for that period showed a 43.0 percent increase in earnings. A large part of the hike is attributed to DuPont's whopping 213 percent earnings increase. Without this hike, the other 24 companies had an aggregate earnings increase of 12.8 percent.
The biggest victim in 2002 was the chemical trade surplus, which turned into a deficit for the first time since World War I. The 2002 deficit is expected to be $4.2 billion, or about twice the amount predicted and this trend is going to get much worse, says Martha Gilchrist Moore, senior economist with the ACC. According to ACC's 2003 outlook, a fall in the value of the dollar will improve U.S. export potential, but imports will continue to increase, although at a slower pace than last year.
In addition to issuing its predictions for the chemical industry in the United States, C&EN looks ahead in the new year to these other parts of the globe:
Chemical & Engineering News