US specialty chemical makers expect rebound this year

12 April 2010 20:46  [Source: ICIS news]

WASHINGTON (ICIS news)--The global recession caused a significant decline in sales and new business leads among US specialty and batch chemicals manufacturers, a key survey indicated on Monday, but producers are confident of a rebound by year end.

The Society of Chemical Manufacturers & Affiliates (SOCMA) said that its annual business outlook survey of its some 300 member firms shows that two-thirds of them experienced sales declines of 5% or more in 2009, with 25% reporting drops of 20% or more.

And, for the first time since the outlook survey began measuring sales leads in 2003, the specialty chemical manufacturers reported a significant decline last year in new business.

However, SOCMA said its member companies - specialty, batch and custom producers - report “high optimism” that business is improving and that sales will advance by the end of 2010.

According to survey results, 90% of responding firms expect sales gains by year end.

Among those anticipating a sales turnaround this year, more than half (53%) expect gains of 5% to 10%, and more than a third (37%) are confident of sales advances of 20% to 30%.

Those trading improvements will be driven by expected gains in the US and global economies, according to the survey.

SOCMA said its member firms now see the state of the US and world economies as the major driving forces for their business, a departure from previous years when prices for oil and natural gas were prime movers for trade.

Survey respondents reported that while their planned spending on research and development (R&D) would be lower than in earlier years, it has not been significantly impacted.

SOCMA said that 82% of responding firms planned to spend at least 2% of sales revenue on R&D through this year. That is down from the 88% who expected to make R&D investments of 2% or more in last year’s outlook survey.

But at the higher end of the spectrum - those spending as much as 10%, 15% or more of sales revenue on research and development - fully 40% of responding firms expect to make those higher levels of new product investment, the same as last year.

Also in anticipation of improved demand and sales, an increased percentage of specialty producers said they expect to make capital investments through this year.

Among the responding firms, 74% said they are very likely to make capital investments or have actual plans for such spending this year. That compares favourably with the 67% of respondents who had such expectations or plans in last year’s survey.

The complete survey results are available from SOCMA.

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