“Following two years of weak growth in 2019 and 2020 due to trade tensions and COVID-19 pandemic, the table was set for strong gains in 2021, with the sharp rebound in end-use consuming sectors. After falling sharply in 2020, US chemical trade exports are rebounding strongly in 2021 this year as import demand in partner economies improves as major economies reopen,” says Martha Gilchrist Moore, Chief Economist and Managing Director for Economics and Statistics, American Chemistry Council.

Moore spoke during an online talk show 'Economic Outlook-Talks by Thought Leaders' organized by Chemical Marketing & Economics (CME)-STEM.

Sharing her insights on the major economic and end-use market trends that will shape the North American chemical industry, Moore said, “Substantial disruptions occurred in 2021 first when winter storm Uri knocked out production for months in the heart of the chemical industry, then when Hurricane Ida struck at the end of August. As a result of production outages and ongoing supply chain challenges, chemical production rose 1.4% in 2021.”

Sharing her outlook, Moore said, “Looking ahead to 2022, inventories remain relatively across several segments, strong demand from key end-use markets, and improving transportation flows later in the year should be tailwinds to growth of 4.3% in 2022. Energy fundamentals continue to favor US production. Capital spending continues to expand, though with a pivot toward carbon management and advanced recycling. Chemical exports are expected to set new records and trade surplus in chemicals to expand to US $31 billion by 2025.”

“US chemical shipments to Canada, Mexico, Europe and all other destinations continue to recover as global industrial production improves across many end-use markets. US chemical exports were expected to rebound to US $151 billion in 2021, a record high and further expand to $162 billion in 2022. US chemical imports will rebound strongly to US $135 billion in 2021. Imports will continue to expand in 2022, growing 13.7%. The US chemical industry will maintain its net exporter position, supporting total US goods exports. The trade surplus in chemical eases to $24 billion in 2021 before growing throughout the forecast horizon,” added Moore.

Moore believes that the specialty chemicals will witness good growth in the current fiscal year.

She says, “As end use markets collapsed due to the pandemic, specialty chemical production was off 15% in 2020. Rebounding growth in 2021 was tempered by winter storms and supply chain challenges in many end-use markets i.e., autos. For 2021, coatings are expected to be up by 1.5% before growing 4.5% in 2022. Other specialty chemicals are expected to grow by 4.2% in 2021 before growing by 4.1% in 2022.”

Moore is highly optimistic about the competitiveness of natural gas based petrochemicals.

“Naptha is a petroleum product whose price is closely tied to oil. Ethane is a natural gas liquid co-produced with natural gas production. Its price is correlated with natural gas prices. Because competing producers in Europe and Asia generally use naphtha feedstocks and North American producers generally use ethane and other NGL feedstocks, we look to the relative price of oil to natural gas as a proxy measure for US based petrochemicals competitiveness. As a rough rule of thumb, when the oil-to natural gas price ratio is above seven, US petrochemicals are relatively advantaged. When the ratio is below seven, US petrochemicals are less advantaged,” commented Moore.

As per Moore, the industry forecasts for 2022 anticipate significant growth in chemical production and shipments, which heightens the urgency for untangling ongoing supply chain issues. U.S. chemical manufacturers have been reporting supply chain problems that had a detrimental impact on their operations.

“According to survey results released by ACC, the impacts of supply chain disruptions and transportation constraints for many companies are wide-ranging. Almost all companies (98%) reported modifying operations because of supply chain/transportation issues. Two-thirds reported lost production and nearly all reported shipping delays (94%), shortages of raw materials (94%), and increased transportation costs (93%). Over the last year, more than one-third of companies experienced or declared force majeure because of supply chain/freight transportation issues. Over the same period, nearly all (93%) companies reported additional costs into the several millions of dollars. Estimates ranged from US $100,000 to US $250 million, with more than a third of companies reporting costs higher than US $20 million,” concludes Moore.