U.S. Chemical Industry Today: The List of Major Growth DriversNov 28th, 2017
The chemical industry is setting out on a flat path. The upside in the industry is expected to continue sustainably across many related sectors and market outlets. A short-term stagnation caused by a weak demand among agricultural market participants, sluggishness of Chinese economy and some global industry headwinds is over and there are a number of factors that bring optimism for the short and long run.
Let’s discover what has supported the chemical industry in the final accounting.
The U.S. shale gas revolution
The shale boom has drawn huge chemical investments to set up plants and crackers for cost-efficient production of propylene and ethylene. Billions of dollars pumped in the industry will boost the capacity and increase exports in the coming years.
Commercial and housing sector as the main chemical end-market has resumed its natural course and is predicted to grow in the current and next year. Demand in the U.S. construction is driven by low inventory of many buildings, growing income, solid job market and post-hurricane rebuilding activities. Long-term non-residential projects are invigorating the construction sector as that means big investments from both the government and the individuals.
Within the last two years, the car industry has been experiencing an exceptionally high demand that boosted the sales. Cheap oil, low-interest rates and favourable pricing have facilitated the auto sector to thrive in the Asian and European markets that betoken well for the global chemical industry advancement.
Energy space recovery
Crude oil prices are rising due to the OPEC cut agreement that enabled the U.S. and other global producers slow the production and thus let the prices recover from their historic minimum. The upturn of the energy sector will support chemical demand growth as oil and chemical prices virtually go in tandem.
Companies that strive to high operational scale are seeking synergy opportunities. The focus on mergers and acquisition suggests the product diversity and growth. Billion dollars mergers are more frequent in today’s chemical market, the bright illustration is mega M&As of The Dow Chemical, DuPont, China National Chemical Corporation, Monsanto Company, Bayer and other chemical giants.
Chemical stocks including Air Products and Chemicals, Westlake Chemical Corp., Kraton Corp., Celanese Corp. and others have gained from 47% to 89% over a current year and their expected earnings keep growing considerably.
This data fuels confidence among the national chemical producers and shows that many of them are ready to enter high-growth markets. All the above-mentioned drivers establish a favourable business scenario for the U.S. chemical industry.