28 September 2010 22:22 [Source: ICIS news]
HOUSTON (ICIS)--The year-over-year growth in US chemical demand should slow in 2011 and 2012 amid economic turmoil, the American Chemistry Council (ACC) said on Tuesday.
“With strong headwinds facing the US economy, domestic demand is expected to weaken, and thus demand for chemicals is also expected to ease in the coming years,” the ACC said in its third-quarter 2010 outlook.
“The boost from inventory restocking has played out and underlying demand remains weak,” the group added.
After falling by 4.5% in 2009 amid the recession, US chemical output should rise by 4.1% in 2010 before slowing to growth rates of 3.6% in 2011 and 3.3% in 2012, according to the ACC.
By segment, the 2010 growth has been led by agricultural chemicals and bulk petrochemicals, which are projected to expand by 10.4% and 9.0%, respectively, this year.
However, the year-over-year growth rates for both should fall significantly in the following two years, according to the ACC.
Agricultural chemicals output should increase by just 1.7% and 1.5% in 2011 and 2012, while bulk petrochemicals and organics should expand by 4.2% and 2.5% in those two years.
The opposite trend is occurring in pharmaceuticals, according to the group, where reduced US consumer spending has limited 2010 consumption for the sector.
Pharmaceuticals output should rise just 1.8% in 2010, the ACC said, before recovering to 3.9% growth in 2011 and 4.1% in 2012.
Likewise, specialty chemicals production is also lagging in 2010, the group said. However, like pharmaceuticals, specialty chemicals should expand by 4.0% in 2011 and 4.2% in 2012 as the recovery in end-use markets, such as housing, accelerates.
Overall, the US chemical industry is continuing to expand, the ACC said, but at a more moderate pace than earlier in the recovery.
Chemical inventories are more balanced and a new inventory cycle is emerging, according to the group. The ACC noted that US chemical exports were strengthening, and had turned the trade balance in chemicals positive for the first time since 2002.
The US projected output growth trailed expectations for overall global production, which is expected to rise by 8.9% in 2010, 5.6% in 2011 and 5.1% in 2012, the ACC said.
The ACC credited much of the global strength to robust growth in emerging markets, but noted that there were signs that such growth was moderating.
By country, China had the brightest outlook for chemical output. It was the only nation projected by the ACC to have double-digit percentage growth for each year through 2014.
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