US chemical council lowers production outlook for 2009

27 February 2009 22:36  [Source: ICIS news]

HOUSTON (ICIS news)--The American Chemistry Council predicted on Friday that US chemical production will fall 5.7% in 2009, a 4.2 point drop from the decline of 1.5% projected by the group in December.

The ACC said it typically issues a long-term outlook mid-year and at the conclusion of each year. But the council said that deteriorating economic conditions since the year-end outlook eleased in December compelled it to release an interim update, with a decline in almost all numbers.

Basic chemicals and some specialty segments are expected to face the most volatile change, the ACC said. Bulk petrochemicals and organics are projected to fall by 14.4% this year, while plastic resins and man-made fibres are each expected to post an 11% decline.

On a regional basis, chemical production in the US Gulf coast region is expected to take the largest hit, with an 11.8% decline projected for 2009.

Producers on the US west coast should be most recession-proof, with only a 2.7% decline projected.

The weak global economy is also expected to slow US chemical exports and recovery, the group said.

But on a longer-term basis, the recently-passed US stimulus bill should bring stability in the second half of 2009 and spark growth in the following two years, said Kevin Swift, chief economist of the ACC.

“A sharp decline in the first quarter will be followed by a moderate decline in the second quarter before the economy returns to a more stable footing later in the year,” Swift said.

“The massive stimulus being injected into the US and other world economies will foster demand and a virtuous cycle of recovery will engage.”

All chemistry segments are projected to see 2010 production growth except for man-made fibres, which are predicted to decline by 0.2% before showing 0.7% growth in 2011.

On a broader basis, the report expects a 2.1% reduction in GDP in 2009 before increasing by 2.0% in 2010 and 2.8% in 2011.

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By: Ben DuBose
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