Strong U.S. chemicals outlook, plastic resins expected to grow 6%

According to the American Chemistry Council's (ACC) 2021 Year-End Chemical Industry Situation and Outlook, the U.
S.
chemical industry's production will grow 4.
3% next year as the post-COVID-19 recovery continues and supply constraints and severe storm impacts ease.

.
"While risks to the global economy remain, the U.
S.
chemical industry remains in a strong position heading into 2022,
" said ACC chief economist and outlook author Martha Moore
.

ACC expects U.
S.
chemical production to end 2021 with a relatively modest 1.
4% increase, as winter storms in Texas in February, hurricanes affecting Louisiana in August and other supply chain challenges limited output
.
“While chemical inventories remain tight across many product categories, the situation has improved heading into the fourth quarter of 2021,
” said Martha Moore.
“Demand for specialty chemicals has risen across virtually every function and market segment as Demand has improved across multiple end markets
.
Despite the post-lockdown rebound, many chemical end markets continue to struggle in 2021 as widespread supply chain disruptions hamper production growth in many industries
.
”

Conditions improved

Looking ahead, the outlook is positive, Moore added: "Supply chain bottlenecks appear to be easing, and momentum is picking up as manufacturers resume work and rebuild inventories
.
"

U.
S.
chemical production is expected to grow 4.
3% in 2022, with basic chemicals expected to grow 5.
1% and plastic resins projected to grow 6%, driven by supply recovery and some new capacity
.
Specialty products will grow 4.
1%, and agrochemicals will grow 2.
7% next year
.
ACC expects overall growth in U.
S.
chemical production to slow to 2.
1% in 2023 and 2.
4% in 2024
.

Continued growth in the global economy underpins the growth of chemicals
.
"One thing to note is that the forecast reflects the Omicron outbreak that the world has seen before, but we should see a global recovery in 2022,
" said Martha Moore.
"This is not just in the U.
S.
, but the world.
, because industrial activity and trade have picked up
.
There are supply bottlenecks along the way, which are constraining industrial output
.
”

After industrial production contracted 7.
2 percent last year, demand for goods rebounded sharply in the U.
S.
and abroad, setting the stage for a broad expansion in 2021, Martha Moore said
.
"In fact, 17 of the 18 chemical consumer end markets tracked by the ACC will see growth in 2021, with some growing by more than 10 percent
," said Martha Moore
.
Oil and gas extraction was the only sector to decline this year
.
However, in addition to weather-related disruptions along the U.
S.
Gulf Coast, challenges to global supply chains have dented expansion
.
Despite these restrictions, U.
S.
industrial production rebounded 5.
5% in 2021 and is expected to increase by 4.
0% in 2022
.

Growth prospects are supported by growth in the auto and housing markets
.
Global auto production has fallen sharply in 2020, with lockdowns causing cancellations of orders along supply lines
.
Once production resumes, assembly slows as semiconductor manufacturers cannot keep up with demand
.
U.
S.
auto sales rose to 15.
3 million in 2021, compared with 17 million in 2019, 14.
5 million in 2020, and 16 million in 2022
.

Meanwhile, housing starts have risen during the pandemic as families are fragmented due to historically low mortgage rates and remote work and learning
.
Housing starts in 2021 rose to 1.
58 million, the highest number since 2006
.
Although in addition to affordability challenges, constraints in building materials, land use and labor will curb growth in the short term
.
Housing starts will ease to 1.
56 million in 2022 and 2023
.

ACC expects global GDP to grow by 5.
7% in 2021 and 4.
4% in 2022
.
U.
S.
GDP grew by 5.
6% during 2021, reversing a 3.
4% decline in 2020, and will grow by 4.
2% in 2022
.
After contracting 7.
2% in 2020, U.
S.
industrial production will grow 5.
5% in 2021 and 4.
0% in 2022
.

After a sharp economic decline in 2020, U.
S.
chemical exports rebounded strongly in 2021 as major economies reopened
.
Exports rose to $151 billion in 2021, up 21 percent, while imports rose to $127 billion, resulting in a trade surplus of $24 billion, down from $28.
6 billion in 2020
.
In 2022, exports will increase by 7.
3% to $162 billion, while imports will increase by 7.
1% to $136 billion, resulting in a trade surplus of $26 billion
.
According to the outlook, U.
S.
exports will reach $182 billion by 2025
.

After a 2.
7% decline in 2020, U.
S.
chemical employment is projected to recover 0.
5% in 2021 and 1.
9% in 2022
.
After a 17.
6% decline in 2020, capital spending rebounded 14.
1% in 2021 to $31.
2 billion, but slowed to 4.
5% earnings in 2022
.

Global growth continues

The outlook for global chemical production also looks strong
.
"Growth in chemical production will continue to be above global trends in 2022, at 3.
8%, before slowing to a rate of 3.
2% in 2023," Martha Moore said.
Chemical production
this year will be at an aggregate level, ACC said.
rebounded 5.
8%
.
Asia Pacific was the strongest, with output rising 8.
2%
.
Western Europe has fared well this year and is expected to grow by 5.
3%, while Latin America's chemical production is expected to rise by 4.
9%
.