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Five Predictions for the Chemical Industry in 2013

For 2013, Marsh expects the following trends: global economic uncertainty, limited growth prospect in most developed economies, healthy growth in emerging markets, expansion of shale gas production and increased capital spending, heated discussions expected on chemical reforms.

02/05/2013 · 2 minute read

For 2013, Marsh expects the following trends:

  1. Global economic uncertainty. The lingering European debt crisis, political debate about the US fiscal cliff, and weak manufacturing demand in many developed countries, continue to represent potential headwinds for the industry. Given the industry’s sensitivity to the global economy, any negative development in the macro economy would be reflected in the growth prospects of companies in the sector.

  2. Limited growth prospect in most developed economies. Chemical production in the European Union remains 8% below its pre-recession level, as austerity measures adopted to address the high sovereign debt levels have led to higher unemployment levels and weak demand.

    A recent report from the European Chemistry Council (Cefic) predicts that European chemical output contracted 2% in 2012, and is expected to grow by a modest 0.5% in 2013. By comparison, US chemical output grew by 1.5% in 2012 and is expected to rise to 1.9% in 2013 and 2.3% in 2014.

  3. Healthy growth in emerging markets. Companies will continue to focus on Brazil, Russia, India, and China — countries with higher chemical market growth rates. According to the American Chemistry Council (ACC), chemical manufacturers in the emerging economies have delivered a 6.2% production increase in 2012 and are expected to grow by 7.5% in 2013.

  4. Expansion of shale gas production and increased capital spending. US shale gas is creating a true competitive advantage for the chemical and manufacturing industries and is expected to drive significant capital expenditures in the US. The cost of ethane is now between three and four times cheaper in the US than in Europe.

    The ACC is expecting strong growth in capital spending in the coming years, stemming from new investments in petro-chemicals and derivatives. It estimates capital spending to reach US$35.5 billion in 2012 and steadily advance to US$51.5 billion in 2017.

  5. Heated discussions expected on chemical reforms. Potential reforms include changes to the Toxic Substances Control Act (TSCA) and also Environmental Protection Agency chemical management policy, Chemical Facility Anti-Terrorism Standards (CFATS), and greater disclosure of products used during fracking activities.
Chemical Risk Update, January 2013

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