Despite a strong economy, total US chemical production should grow by just 1.4% in 2021, reflecting the disruption caused by winter storms that shut down many of the nation's plants, the American Chemistry Council (ACC) stated.
Production of basic chemicals should grow by 0.5% in 2021, the ACC said in its mid-year situation and outlook report.
The following table shows the ACC's forecast for US chemical production volumes and compares them with previous years. Figures are in percent.
Production volumes for plastic resins could decline in 2021 after rising in 2020 during the pandemic, according to ACC figures.
Because of the winter storm, the ACC pared back its earlier estimates for 2021 production output, said Marth Moore, the ACC's senior director of policy analysis and statistics.
Inventories are lean, and that should encourage production for the rest of the year, Moore said. Output in the second half of the year should be much higher than that during the first half.
Total chemical shipments in the US should reach $525.6bn in 2021, the highest since 2018, when they reached $548.8bn, according to the ACC. In 2022, chemical shipments should reach $568.7bn
US chemical employment should return to pre-pandemic levels in 2023, reaching 544,000 employed.
For the US economy as a whole, the ACC expects GDP will grow by 6.4% in 2021. ACC Chief Economist Kevin Swift said the economy could end up exceeding 7%, given the forecasts for the second quarter.
The following shows the ACC's economic forecasts for the US and the world. Figures are in percentages unless otherwise stated.
The recovery was V-shaped and rapid, Swift said. The recession may have lasted just two months, making it the shortest on record.
The strong recovery in the US is reflected in the labour market. There are about 1.5 jobs opening for every person who is employed, Swift said. "It has never been that high."
Housing starts have started to slow because of problems getting labour, materials and appliances, Swift said. Rising house prices are starting to slow down sales because fewer people can afford them.
Supply-chain constraints are the biggest threat to the economy, he said.
Moore said other threats include the coronavirus and trade tensions.
OIL AND GAS
US petrochemical producers should maintain their cost advantage against much of the world because of their reliance on gas-based feedstock such as ethane, according to the ACC. Ethane prices are correlated with those for natural gas.
By contrast, much of the world relies on naphtha, which has a price that is correlated with oil.
As a rule of thumb, US petrochemical production holds a cost advantage when the price ratio of oil to natural gas exceeds 7, the ACC said.
The ratio should exceed 20 through at least 2024, according to the ACC.
