The future of chemical products is bright

Many of the major end-use markets in the United States - especially those related to exports and commercial investment - have recovered. However, other stocks are still below the peak level in 2007. As the largest consumer of chemical products, China's manufacturing growth slowed in 2012 after growth in mid-2009 to 2011.

The double speed manufacturing industry that emerged in 2011 is still continuing. Oil and gas, light vehicles and aircraft, as well as steel, remain strong.

Light vehicles are an important market for chemical products (nearly $3650 per vehicle) and production continues to increase. Light vehicle sales in the United States are expected to rise in 2013 and 2014, as pent up demand, improved employment (and income) prospects and better credit channels have contributed to growth. Housing, another major consumer group of chemicals (more than $15000 per start), shows very encouraging signs that this may be the main economic news for 2012. In 2013 and 2014, the real estate market will start to be active. Some local markets have been in short supply and prices across the country have begun to rise. Moreover, demographic factors are again becoming drivers. The activity will still be far below the 2005 peak of 2.7 million, but according to demographic and replacement demand, long-term potential demand of 1.5 million vehicles per year will be close by the mid-10 years.

Overall, the volatile recovery in manufacturing has curbed domestic demand for chemicals, while the recession in Europe and weakness in other regions have hampered exports. Overall, inventory in the supply chain is only slightly unbalanced and no significant adjustment is expected unless there is a serious recession.

The weakness in exports to Europe and China has been partially offset by growth in other regions. At the same time, imports fell as industrial demand weakened. In 2012, China's exports increased by 1.8% to $100.2 billion, while imports fell 0.8% to US $189.5 billion. Therefore, the chemical industry in the United States has experienced a moderate trade surplus, which is a welcome reversal compared with the trade deficit in 2011.

This year, the US chemical Commission (ACC) expects that trade in chemical products will continue to grow at a moderate rate as global manufacturing activities remain fragile. Exports will grow by 4.7% to US $1997billion in 2013, and 6.6% in 2014 to $21.8 billion. Imports will increase by 4.1% to $197.3 in 2013 and 6.2% to $2096 billion in 2014. As a result, the chemical trade surplus will expand to $2.4 billion in 2013 and $3.3 billion in 2014（ All the sums in the table, including the 2014 surplus, reflect the value of import and export before rounding.)

New competitiveness, driven by shale gas (and the resulting disconnection from us gas prices and global oil prices), has driven new investments - more than 50 projects we have announced over the past two years represent total capex of more than $40billion - which will boost exports in the coming years. The large excess of basic chemical products will continue to expand, and the surplus of special products and consumer goods will continue to expand. These gains will exceed the continuing trade deficit in offsetting the drug and agricultural chemicals and lead to an increasing trade surplus.

It is generally believed that the chemical production in the United States will increase in 2013. In 2013, the production of chemicals (excluding drugs) will increase by 1.9%, and in 2014, it will increase by 2.3%. With the recovery of export market, the plastic resin market is expected to grow strongly. The demand for end-use markets, especially light vehicles and housing, will drive the production of special chemical products. Consumer products grew strongly last year, with a slowdown in 2013 and 2014. After a weak 2012, demand for agricultural chemicals will recover. In the long run, the growth rate of the chemical industry in the United States will exceed the growth rate of the overall economy in the United States. The pharmaceutical industry will eventually become a growth area.

While most industries look good year-on-year growth in the coming years, they must take into account the background of the extraordinary sharp decline in 2008 and 2009. Economic activity may take years to recover from these sharp declines and exceed past peaks. Another factor is that these forecasts reflect consensus; The model of mainstream predictors is demand driven to a large extent. Significant investment in shale gas is a supply response and heralds a higher growth outlook, which we will discuss later. As a result, the market's general expectations may be too low.

The industry is sensitive to some risks. In this regard, high and volatile energy costs are the most important, and potential adverse regulatory and other policy initiatives are also the most important. Washington's fiscal spat could curb domestic industrial activity, while the weaker world economy will have a negative impact on exports.