US Chemical Production Expected to Decline 0.4% in 2024, Grow 1.9% in 2025

The American Chemistry Council (ACC) recently released a report predicting that US chemical production will decline by 0.4% in 2024, but will see a moderate recovery in 2025, with an expected growth of 1.9%.

Earlier this year, ACC had forecasted that the US chemical industry would achieve recovery in 2024, with an anticipated production growth of 1.5%. However, ACC pointed out that the decline in US chemical production in 2024 is primarily concentrated in the specialty chemicals and basic chemicals sectors, which are expected to decline by 3.2% and 1.5%, respectively. In contrast, consumer chemicals are expected to perform strongly, with a projected year-on-year growth of 5%, while agricultural chemicals are expected to grow by 1.2%. Among specialty chemicals, demand for chemicals related to coatings and automobiles is particularly weak.

According to the Specialty Chemicals Update Program (SCUP) report by S&P Global Commodity Insights, the global specialty chemicals market is expected to continue growing at a 3% compound annual growth rate (CAGR) from 2024 to 2029. Geographically, the focus of the global specialty chemicals industry is gradually shifting towards Asia, where the share of the specialty chemicals market exceeded half of the global market in 2023.

Globally, ACC expects that chemical production will grow by 3.5% in 2024, with the Asia-Pacific region showing the largest increase at 4.8%; meanwhile, Europe’s chemical production is expected to grow by 1.9% after a significant decline in 2023. By 2025, global chemical production is projected to grow by 3.1%, with all regions expected to see growth.

ACC also predicts that global economic growth will be 2.8% in 2024; industrial production is expected to grow by 1.3%, increasing to 2.6% in 2025; and global trade volume is expected to grow by 2.5%, increasing to 3.2% in 2025. With the lagged effects of the Federal Reserve's interest rate cuts becoming apparent, it is anticipated that US chemical demand will see a true recovery by the second half of 2025.

In summary, ACC indicates that the weak demand for chemicals, particularly in specialty and basic chemicals, will persist in 2024. However, it is expected that sales across all segments of chemicals will grow by 2025. The US has a strong energy fundamentals, with the advantages of ethane remaining, and the return of US manufacturing along with the expansion of manufacturing capacity in Mexico is expected to drive demand for US chemicals in the coming years.