U.S. chemical industry output will continue to grow in 2019 despite a challenging global economy, according to the American Chemistry Council’s (ACC) “Mid-Year 2019 Chemical Industry Situation and Outlook.” Growth in key domestic end-use markets and a sustained competitive advantage tied to surging supplies of natural gas and NGLs from shale activity are spurring new capital investment in American chemistry. Solid production gains are anticipated as new capacity comes online.

With slowing growth prospects across much of the globe and rising trade tensions, chemical exports are not performing as well as expected a year ago. Manufacturing also appears to be slowing. On the plus side, chemical inventories are in a more balanced position, housing is expected to ease slightly before continuing its slow recovery, and the automotive sector will stay at relatively elevated levels. Both are important end-use markets for chemistry.

“During 2019, performance among individual chemical segments will be mixed,” the report states. “Output gains will be strongest in organic chemicals, inorganic chemicals and other specialty chemicals. Production of agricultural chemicals and consumer products will fall slightly before recovering in 2020.”

Rising business investment will continue to drive U.S. GDP growth, though at slower rates than the previous two years. Growth in consumer spending, while moderating, is also making a positive contribution. GDP is projected to rise by 2.5% in 2019, 1.9% in 2020, and 1.8% in 2021. The chemical industry will be source of strength, with growth of 2.5% in 2019 and 3 % in 2020. In fact, chemical industry growth will exceed that of the U.S. economy through 2024.

“The United States remains an attractive destination for chemical industry investment,” the report notes. “Since 2010, petrochemical producers have announced significant expansions of capacity in the U.S., reversing a decades-long decline.”

To date, 334 chemical and plastics projects cumulatively valued at $204 billion have been announced, with 53% of the investment completed or underway and 40% in the planning phase. America’s plentiful and affordable supplies of natural gas and NGLs (a key feedstock for chemical makers in the U.S.) are driving the new investment. Further gains in capital spending are anticipated, increasing by 5.4% this year and 4.9% in 2020. Capital spending will reach $43 billion by 2024.

The U.S. chemical industry trade surplus continues to grow, but potential expansion is limited by reduced external demand due to slower global growth and rising trade barriers. The U.S. chemical industry will post a $37 billion trade surplus in chemicals this year, as exports rise 5.9% to $149 billion and imports rise 2.4% to $112 billion. Two-way trade between the U.S. and its foreign partners will reach $260 billion in 2019, a 4.4% expansion over last year, though trade growth has slowed considerably.

Additional details are available at www.americanchemistry.com.