Chemical & Engineering News,
December 11, 1995

Copyright © 1995 by the American Chemical Society.

U.S. Experienced Strong Growth This Year, But 1996 Will Be Weaker

Chemical Industry Slowdown May Be 'Pause' Before Growth Resumes in 1996

China Is Becoming Silent Giant Behind Pacific Rim Chemical Fortune

Chemical Demand And Prices Peaked In 1995, But Prospects Remain Positive

Chemical Industry Hurt By Recession: Awaits Petrochemical Privatization

Although 1995 was excellent for the worldwide chemical industry, it may be the last good year in the current recovery. Next year may see the end of massive run-ups in sales, earnings, demand, prices, and exports, if industry analysts are correct.

For instance, in the U.S., sales and earnings skyrocketed in 1995. But chemical industry executives and economists are predicting that slower economic growth in the country will halt growth of the U.S. chemical industry in some areas - for instance, production and pricing - although exports and earnings will continue to grow at a lesser pace.

In Europe, executives say they are at a crossroads. The chemical industry has slowed in 1995 more than anyone expected, and it is now in a position to go either way in 1996. The lackluster performance of the second half of 1995 could continue. However, if pricing improves and exports, especially to Asia, increase, 1996 could see resumption of the growth evident in 1994.

In the Pacific Rim, Japan, despite the poor economic conditions there, is seeing a rebound in the chemical industry, but there is concern over the sustainability of the recovery if the country as a whole remains in the economic doldrums. The consolidation of large chemical producers there is having a positive effect on financial results for Japanese companies.

South Korea, after a moratorium on plant building, is seeing its petrochemical demand approaching its production capacity - a situation that may make petrochemicals tight next year as producers hold off on expansions, probably until 1997.

And in Taiwan, some plants, particularly those for polystyrene and acrylonitrile-butadiene-styrene, are operating at high rates. For other products, the Taiwanese chemical industry is waiting for China to begin importing again now that Taiwanese chemical prices have declined and the Chinese are planning to cut their import duties.

Canada, as usual, is following the U.S. example: a good 1995 with much improved demand and pricing. But as in the U.S., growth prospects are much lower for 1996, according to observers.

Mexico is in a recession, and the chemical industry is somewhat in turmoil. Economic woes and uncertainty over the privatization of the country's petrochemical industry have put the brakes on any industry improvement there. And despite the much ballyhooed prospects arising from the North America Free Trade Agreement, chemical trade among the U.S., Canada, and Mexico has been largely unaffected.

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