The chemical industry started the year on a positive note following a bumpy 2013. With the U.S. economy getting its groove back, the first two quarters of 2014 showed encouraging demand trends for chemicals and continued recovery across end-use markets such as commercial construction and electronics after being in a rut for the most part of 2013.
The chemical industry also saw a pick-up in consolidation activities so far this year. Although some industry-specific challenges and slow economic recovery in Europe remain roadblocks, the industry is expected to continue to recuperate through the balance of 2014, backed by cost benefits from a shale gas boom in the U.S. and significant capital investment.
Chemical makers are ramping up investment on shale gas-linked projects to take advantage of abundant natural gas supplies which is expected to beef up capacity and export in 2014 and beyond.
Strength across agriculture and automotive markets in North America and healthy demand in emerging geographies represent tailwinds for the industry. A gradually convalescing housing market also augur well for recovery prospects this year and the next.
The Industry in a Nutshell
Chemicals are used to make consumer goods and are also used in the agriculture, manufacturing, construction and service industries. In fact, the chemical industry — a roughly $5 trillion global business – itself consumes 26% of its own output. Major industrial consumers include rubber and plastic, textiles, apparel, petroleum refining, pulp, paper and primary metals.
The chemical industry is among the biggest industries in the U.S., a more than $800 billion enterprise. It is cyclical by nature and heavily linked to the overall condition of the U.S. and world economies. The chemical industry touches 96% of manufactured goods, making the manufacturing industry the biggest consumer of chemical products.
The U.S. chemical industry represents more than 15% of the global chemical output and constitutes roughly 12% of the nation's exports. Roughly 6 million additional jobs are backed by the purchasing activity of the chemical industry. The U.S. chemical industry supports around 25% of the nation's gross domestic product (GDP).