The U.S. chemical industry will experience a trough in 2023

Martha Gilchrist Moore, chief economist and managing director of economics and statistics at the American Chemistry Council, said: "U.S. chemical exports rebounded to a record $184 billion in 2022 and then fell back to $167 billion in 2023. Despite supply chain constraints, nominal U.S. trade in chemicals rebounded, strong in 2021 and continued to expand in 2022; In 2023, a broad downturn and the high value of the dollar will dampen trade in goods, including chemicals."

Moore commented at the 12th CME STEM 2023 Economic Outlook webinar on January 12, 2023. Moore further added, "Global economic growth is slowing, with growth slowing or declining in Europe, the UK, China, etc. In the US, chemical production was strong in the first half of 2022, driven by replenishment and resilient manufacturing, but less sustainability in the second half of 2022 and 2023. The recovery will continue into 2024 and beyond."

According to Moore, U.S. natural gas-based petrochemicals remain competitive. "Naphtha is a petroleum product and its price is closely related to oil," Moore said. Ethane is a natural gas condensate (NGL), a by-product of natural gas, and its price is related to the price of natural gas. Because competing producers in Europe and Asia typically use naphtha feedstock, while North American producers typically use ethane and other NGL feedstocks, we see the relative price of oil and natural gas as a proxy measure of U.S. petrochemical competitiveness. According to rough experience, when the oil-gas ratio is above 7, Sinopec has a relative advantage. When the ratio is below 7, the advantage of U.S. petrochemicals diminishes."

Regarding U.S. specialty chemicals, Moore said: "Growth in specialty chemicals will rebound in 2022 as U.S. manufacturing and other end-use markets are resilient and replenishment activity. Specialty chemicals sales grew by 9.6% in 2022, followed by slow growth in 2023. This is in line with a modest recovery in the industrial end-use market. In 2022, coatings are expected to grow by 12%, then decline by 1.6% in 2023. Other specialty chemicals grew by 8.5% in 2022 before declining by 1.0% in 2023.