Growth of world chemicals industry expected to slow next year

After healthy growth in the first half of this year, the world chemical industry faltered, hurt by high oil prices and the consequent rise in energy and feedstock costs. The slowdown is likely to continue, resulting in slower-but still positive-growth next year, according to the current (Dec. 11) issue of Chemical & Engineering News, the weekly newsmagazine of the American Chemical Society, the world's largest scientific society.

In this year's annual "World Chemical Outlook" section, the magazine makes some predictions about what 2001 may have in store for the chemical industry. Specifically:

• Slow growth, with possibly a recession in the overall economy of the United States, will hinder growth in the chemical industry.
• High oil prices threaten already fragile economies in Asia and the Pacific. A U.S. recession would be an additional threat, since many Asian and Pacific countries export goods to the United States. On the bright side, rising U.S. and European demand for cheap medicines bodes well for growing pharmaceutical ingredient industry in China and India..
• With output high and exports bolstered by a weak euro, the European chemical industry is set to outperform the world this year. But the weak euro has made Europe more vulnerable to high oil prices than the United States. Next year, the euro is expected to rise relative to the dollar, putting exports at a disadvantage even as it reduces the burden of high oil prices.
• In Latin America, all eyes are on the upcoming ethylene cracker auction in Brazil, which dominates the region with more than half of all chemical sales. If the plant is snapped up by a multinational, it would signal the beginning of an erosion of local family control of the Brazilian chemical industry.
• In Canada, where shipments of chemicals and chemical products are set to rise by 9 percent this year, the world's largest ethylene cracker (opened last October in Alberta) is expected to spur the petrochemical and plastics manufacturing that already constitutes 75 percent of the country's chemical output.

According to the magazine, the multinational Organization for Economic Cooperation & Development projects chemical industry output in 2001 to grow by 2 percent in the United States, 3.6 percent in Europe, and 2.5 percent in Japan.

Although final figures for 2000 aren't yet available, the organization expects U.S. growth for the year to be 3 percent, Europe to be 4.5 percent, and Japan to be 2 percent.