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Public release date: 17-Dec-2001
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Contact: Beverly Hassell
b_hassell@acs.org
202-872-4065
American Chemical Society
World chemical industry struggled in 2001; some areas expected to recover in 2002
The U.S. chemical industry posted slow growth in 2001, plagued by weakness in the overall U.S. economy. But U.S. troubles spelled opportunity for foreign chemical industries, as the strong dollar and less-competitive chemical products made the United States an attractive destination for exports from foreign countries, according to “World Chemical Outlook,” a report in the current (December 17) issue of Chemical & Engineering News. C&EN is the weekly newsmagazine of the American Chemical Society, the world’s largest scientific society.
Highlights of the report include:
The U.S. chemical industry is expected to post a trade surplus for the year. This surplus will be a shadow of what it was in 2000, though, as exports are predicted to rise just 1 percent and imports to increase 7 percent. And the 2001 surplus of $1.4 billion is just 7 percent of the record $20.5 billion set just a few years ago in 1997. Experts predict that the trade balance will slide into deficit next year.
Earnings for all chemicals increased by about 3 percent this year, but essentially all of that increase will be in pharmaceuticals, which are expected to improve 22 percent. Next year, earnings should grow by 9 percent.
Employment in the U.S. chemical sector fell by 16,000 workers between January and November of 2001. After starting the year with 1,039,000 total employees, the chemical industry had 1,023,000 in November, the lowest level of chemical industry employment since 1987. Experts predict an average of just 1,025,000 employees in 2002 as downsizing and outsourcing continue.
Canada, which sends 80 percent of its exports to the United States, will show a decline in chemical activity this year. This decline will slow petrochemical investment in much of the country, and recovery probably will not begin until sometime in third-quarter 2002.
The outlook for the Latin American chemical industry remains positive, despite Argentina’s economic woes, which threaten to ripple out across the region. The petrochemicals industry continues to take steps towards becoming a major global exporter, and Brazil has several projects in the works that are expected to become profitable.
Europe is suffering from both the U.S. and Japanese recessions, and the chemical industry is no exception. Production growth of the chemical industry in the European Union will slow to 1.1 percent this year from 4.6 percent in 2000. Next year, however, EU chemical industry output growth is expected to recover somewhat, reaching 1.8 percent.
Pharmaceuticals and consumer-related markets in Europe have weathered the worldwide economic slowdown better than industrial segments of the chemical industry. In fact, the European Union’s growth in chemicals this year is due almost completely to its sizable pharmaceutical operations, a situation that is expected to continue into 2002.
The short-term market outlook for the chemical industry in the Asia-Pacific region is generally poor, with the petrochemical industry likely to suffer the most. Production of chemicals is down across the board in Japan but in China, the world’s largest importer of polyolefins and a major importer of other chemicals, the economy continues to grow. Economists are most worried about the ripple effects of any economic disruption in Japan, although U.S. economic troubles have also hurt the region.