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News Extra: Chemicals industry sees global growth in 2014 and beyond

30 April 2014

The American Chemistry Council (ACC) is forecasting solid growth across the world chemicals sector in 2014. “With improving economic prospects, headline growth for chemicals globally will improve to 3.8% in 2014,” said Thomas Kevin Swift, ACC chief economist and managing director. The final figure for 2013 is expected to be 2.4%.

The Council sees headline global petrochemicals growth of 4.1% in 2014 and 4.5 percent in 2015, up from 2.1% last year, said Thomas Kevin Swift, its chief economist and managing director.

The strongest growth will continue to be in the developing nations of Asia, the Middle East, and Latin America, Swift said. “Due to competitive advantages from shale gas, growth will be strong in North America as well. Western Europe and Japan will lag. With strengthening production volumes, global capacity utilisation will improve in the years to come.”

US chemical production is expected to rise 2.5% in 2014 and 3.5% in 2015, according to the ACC. Production is forecast to grow strongly through the second half of the decade, as the $100 billion in new chemical investment announced since 2010 comes online, with sector growth of over 4% a year.

The total value of shipments is expected to advance at a slightly stronger pace than production, with shipments values set to exceed US$1 trillion in 2018, up from $789 billion in 2013, ACC said.

Chemical production in China will increase 8.5% in 2015 compared with 8.8% in 2014 and 8.5% in 2013, ACC said. Overall chemical production in Asia/Pacific will increase 6.5% in 2014, the organisation said.

Meanwhile, in the Middle East, the petrochemicals boom continues. According to the Gulf Petrochemicals and Chemicals Association, Gulf Cooperation Council countries’ petrochemicals output last year reached $97.3 billion, growing by 19% a year over the last five years.

The Indian Chemical Council said that demand for chemical products continues to rise in India. The country’s chemical industry sales are estimated to reach $115–120 billion in 2014, ICC said.

In Europe, the European Chemicals Association CEFIC expects the EU chemical industry’s recovery to continue in 2014 but, like the overall economy, at a modest pace. CEFIC predicts a return to annual output growth with the sector’s production of chemicals likely to increase 1.5% in 2014. EU chemicals output contracted by 1% in 2013.

In 2014, Europe’s chemical producers will face increasing competition from imports originating in from US producers benefiting from cheap energy and feedstock.

Competition is expected to be most intense in the petrochemical sector, and the future of some of Europe’s petrochemical production plants, based on relatively expensive naphtha feedstock, is under threat, with several naphtha crackers in the European Union during 2013.
CEFIC nevertheless predicts a 2% rise in output by the EU petrochemical sector in 2014, and a 2% rise in the production of specialty chemicals.

In the UK, an April 2014 survey from the Chemical Industries Association (CIA) showed optimism remained high. In the survey of business prospects, 55% of companies expected sales to increase, with only 6% predicting a decline, almost 90% said R&D would hold steady or increase, and in terms of  capital investment, 40% intended to increase spending, 45% to maintain levels, and only 15% said they would decrease spending.

On planned investment, 39% said it was for capacity expansion, 16% for improving raw material and energy efficiency, 13% to raise environmental standards, and 32% for general maintenance and refurbishment.

CIA Chief Executive Steve Elliott said “This latest survey shows that business leaders across our sector are optimistic in what remains a very challenging trading environment. The cost and security of energy have been major barriers to the companies in our sector, but I hope and believe we have turned the corner and as UK chemical investment comes on stream we can again show the world what we can do”.

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