INSIGHT: Modest US chemical trade growth rebound seen in 2013

29 December 2011 14:21  [Source: ICIS news]

By Brian Ford

HOUSTON (ICIS)--Impacted by the still-struggling global economic recovery, the trade forecast presented by the American Chemistry Council (ACC) shows a muted rate of expansion in 2012, with a moderate increase in 2013.

By the end of 2011, US chemical exports will be up by 10.5% at $189.2bn (€145.7bn) from 2010 and imports will be up 15.5% to $192.4bn, according to the ACC’s Year-End 2011 Review and Outlook. The numbers compare with an increase of 17.7% in exports from 2009 to 2010 and an increase of 14.3% in imports.

“Thus, the [US] trade balance, which had shifted to a surplus position in 2010, will return to a deficit of $3.2bn in 2011,” according to the report. “Trade deficits will be centred in pharmaceuticals and agricultural chemicals which are partially offset by large surpluses in basic and specialty chemicals.”

In 2012, “trade in chemicals will continue to expand at even more moderate rates as the global manufacturing sector remains muted,” the ACC forecasts.

US exports for 2012 are expected to grow by 6.1% to $200.7bn, while imports will increase 4.8% to $201.6bn. The chemical trade deficit is likely to narrow to $900m.

Trade growth is expected to pick up somewhat in 2013, according to the ACC, with exports expanding by 6.7% to $214.1bn and imports increasing by 6.2% to $214.2bn, for a relatively narrow US chemical trade deficit of $100m.

Fuelled by growth in basic chemicals (which in turn would be fuelled by cheaper ethane feedstock from shale gas), the US will shift back to a chemical trade surplus of $3.1bn in 2014, the forecast says, with exports reaching $230.3bn and imports at $227.2bn.

The forecast shows a basic chemicals trade surplus (which does not include pharmaceuticals, specialties, agricultural chemicals and others) of $35.2bn in 2011, which would grow to $43.3bn in 2014.

“With the dollar expected to remain relatively low and the continuation of a high oil-to-natural gas price ratio, US petrochemicals competitiveness will continue to be favourable,” according to the ACC.

“New investments to take advantage of this competitive position will begin to supply export markets in the coming years,” the report says. “The large surpluses in basic chemicals will continue to expand as will surpluses in specialties and consumer chemistry.”

New free trade pacts with South Korea, Colombia and Panama could also aid US chemical trade exports.

The Society of Chemical Manufacturers and Affiliates (SOCMA) says the agreements will reduce or eliminate hundreds of millions of dollars each year in tariffs imposed on US chemical exports.

“Additionally, chemical companies that currently don’t conduct business with these three countries will now be encouraged to do so,” says SOCMA CEO Lawrence Sloan.

“Notably, many small- and medium-sized chemical manufacturers will benefit," Sloan says. "For example, more than 73% of US chemical exports to Korea in 2008 were from small and medium-sized chemical companies, representing $1.2bn in sales.”

Like all forecasts, the ACC predictions could be knocked askew by a number of factors, including volatile energy costs and, of course, the global economy.

“A recession in the United States and concomitant falling industrial activity would dampen domestic demand further and lastly, a weak world economy would adversely affect exports,” the report cautions.

($1 = €0.77)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy


By: Brian Ford
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