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The Outlook For The Global Chemical Industry In 2022 Is Cautiously Optimistic

ECHEMI 2022-01-27

Industry analysts said that the outlook for the global chemical industry in 2022 is cautiously optimistic, but it faces greater pressure from the situation, such as rising energy and raw material costs, other inflationary pressures, supply chain disruptions, and the continuation of the epidemic.


The growth rate of the chemical industry will slow down

According to Martha Moore, chief economist at the American Chemistry Council (ACC), global chemical industry production will grow by 3.8% in 2022 and slow to 3.2% in 2023. According to the American Chemistry Council, global chemical industry production will increase by 5.8% in 2021, with the fastest growth rate in Asia Pacific at 8.2%, North America at 1.8%, Latin America at 2.7%, Western Europe at 1.8%, Eastern Europe at 5.9%, Africa and The Middle East grew 2.5%. Looking ahead to 2022, production growth in the chemical industry will slow in most regions, but there will also be accelerated production growth in some regions, including North America will reach 4.5%, Africa and the Middle East will accelerate to 3.3%, and Latin America will slow to 2.4% %, Western Europe will slow to 1.6%, Eastern Europe will slow to 3.6%, and Asia Pacific will slow to 4.3%.

The output growth of the chemical industry is mainly supported by the continued growth of the global economy. Moore said, "Although the emergence of the Ormicon strain has brought uncertainty to the development of the global economy and chemical industry in 2022, we still believe that the global economy and chemical industry will continue to recover in 2022. In 2022, the US chemical industry will continue to recover. Industry output will increase by 4.3% as the post-pandemic recovery continues and the impact of supply chain disruptions and extreme weather eases. While risks to the global economy remain, the U.S. chemical industry enters with a strong showing 2022. Supply chain bottlenecks are easing and demand growth momentum is building as manufacturing activity recovers and inventories rebuild.”

The American Chemistry Council predicts that production growth in all sub-sectors of the global chemical industry in 2022 will be lower than in 2021, with agrochemicals slowing from 3% in 2021 to 2.3% in 2022, and consumer chemicals from 2.3% in 2022. 3.4% to 3%, basic chemicals to 4% from 6.1%, inorganic chemicals to 3.9% from 6.6%, bulk petrochemicals and organic chemicals to 3.8% from 5.8% , plastic resins will slow to 4.3% from 6%, synthetic rubber will slow to 6.3% from 7.6%, and specialty chemicals will slow to 4% from 5.2%.

The European Chemical Industry Council (CEFIC) said that after a strong growth of 5% in 2021, chemical industry output in the EU-27 will slow to 2.5% in 2022. The sharp rise in energy prices and the continuation of supply chain disruptions have brought significant downside risks to the recent economic and chemical industry development.

The Association of the German Chemical Industry (VCI) forecasts that in 2022 production of chemicals (excluding pharmaceuticals) in Germany will increase by 1.5%, producer prices will rise by 3.5%, and sales revenue will increase by more than 5%, of which domestic sales revenue will increase by 5.5% , foreign sales revenue will increase by 5%. "Although 2022 faces different challenges, most companies will achieve performance growth, both domestically and overseas," said Evonik Kuhlmann, chairman of the German Chemical Industry Association.


Economic recovery slows

Energy consultancy Aisin Huamai predicts that global gross domestic product (GDP) will grow by 4.3% in 2022, higher than the historical average, but behind the 5.6% in 2021, of which North American GDP growth will increase from 5.6% in 2021. % slowed to 4.1% in 2022, Latin America from 6.4% to 2.4%, Western Europe from 5.3% to 3.7%, Eastern Europe and Central Asia from 4% to 3.5%, Middle East and North Africa From 4% to 5.2%, Asia Pacific will slow to 4.9% from 5.9%.

Aisin Huamai also predicts that global industrial output value will grow by 4.2% in 2022, significantly lower than 7% in 2021, of which the growth rate of industrial output value in North America will slow from 5.6% in 2021 to 4.4% in 2022, and Latin America will slow down to 4.4% in 2022. Slowing from 7.4% to 1.4%, Western Europe from 6.8% to 2.8%, Eastern Europe and Central Asia from 4.9% to 3.5%, Middle East and North Africa from 2.1% to 5.9%, Asia Pacific from 8.6% % slowed to 5.2%.

Aisin Huamai said that China will still maintain strong economic growth prospects in 2022. After achieving GDP growth of 8.1% in 2021, China's GDP will grow by 5.5% in 2022. China's industrial output will grow by a further 5.6% in 2022 after an 8.5% increase in 2021. Although the Chinese economy will show weak growth at the end of 2021, the government has adjusted its policies in a timely manner, and the Chinese economy will stabilize.

Sarah Johnson, executive director of global economics at Essen Huamai, said, “In 2022, businesses will face multiple challenges to the global economy. These include virus variants, fiscal policy moving from stimulus to restraint, rising interest rates and tighter credit conditions, and the transition from hydrocarbons to hydrocarbons. Compounding the difficult transition to renewable energy. During these transitions, global growth is likely to slow in 2022 as some major economies approach or reach full employment. In addition, geopolitical conflicts will continue to pose risks to the economic outlook ".


Inflationary pressure should not be underestimated

Despite the risks, the outlook for the global chemical industry is optimistic. In November 2021, the global chemical industry purchasing managers' index (PMI) was 52.2, and the future PMI index is expected to be 65.3, which is a bullish signal and means that the chemical industry production will increase in the coming year. However, some indicators remained weak, such as the supplier delivery time index at 36.2 and the finished goods inventory index at 48. In addition, the price pressure is relatively large. The input price index in November 2021 is 73.4 and the output price index is 63.7. The input cost growth rate in November 2021 is the highest value since July 2008, mainly due to transportation, energy and The impact of rising labor costs.

Dow Chemical issued a warning in December 2021 that due to the dual impact of rising raw material prices and falling polyethylene prices, the company's earnings in the fourth quarter of 2021 will be lower than expected.

Global energy and raw material prices are expected to remain high in 2022 due to reduced investment and economic recovery.

In 2022, U.S. crude oil production growth should help ease oil supply constraints. Global liquid fuel production will increase by 5.5 million barrels per day in 2022, exceeding expectations for demand growth of 4 million barrels per day, according to Essin Huamai estimates.

In 2022, the average price of Brent crude oil is expected to be $75/barrel, before falling back to $72/barrel in 2023. In 2021, the Henry Center gas price in the United States will reach $3.85/MMBtu, nearly doubling compared to 2020, but it has shown signs of falling back in late 2021 and early 2022. Aisin Huamai predicts that the gas price in Henry Center in the United States will be US$3.16/million British thermal units in 2022, and will further fall to US$3/million British thermal units in 2023.

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