U.S. chemical production ticked up on a monthly basis in April with gains recorded across all seven regions, according to the latest monthly report from the American Chemistry Council (ACC).
The Washington, DC-based chemical industry trade group noted that the U.S. Chemical Production Regional Index (CPRI) edged up 0.6% in April, following a 0.2% increase a month ago.
Created by Moore Economics to track chemical production in seven regions nationwide, the U.S. CPRI is comparable to Federal Reserve’s industrial production index for chemicals. The CPRI is measured using a three-month moving average.
The April reading showed a rebound in chemical output in the Gulf Coast where key building block materials are produced. Production from this region rose 0.6% on a monthly comparison basis in the reported month compared with a 0.5% fall a month ago. Output rose 0.5% across Midwest, Mid-Atlantic, Northeast and West Coast. Production went up 0.7% in Ohio Valley while Southeast recorded the biggest gain of 0.8%.
Output from the U.S. manufacturing sector, the biggest consumer of chemical products, was up 0.6% in the reported month on a three-month moving average basis, an improvement from a revised 0.4% gain in March. Within this sector, gains were registered in several chemistry end-user markets including aerospace, appliances, motor vehicles, construction supplies, machinery, fabricated metal products, semiconductors, plastic products, rubber products, textile products and furniture.
The manufacturing sector serves as a barometer to gauge the overall health of the U.S. economy and is a major driver for the chemical industry which touches around 96% of manufactured goods.
According to the ACC, chemical production was mixed across the segments in April. Gains across chlor-alkali and other inorganic chemicals, synthetic dyes and pigments, industrial gases, consumer products, adhesives, organic chemicals, pharmaceuticals and coatings were partly masked by declines in plastic resins, pesticides, fertilizers and manmade fibers.
Overall chemical production moved up 2% year over year in the reported month after a revised gain of 1.4% in March with gains witnessed across all regions.
The roughly $770 billion U.S. chemical industry is cyclical by nature and heavily linked to the overall condition of the nation’s economy. It has been consistently leading the U.S. economy’s business cycle due to its early position in the supply chain.
Chemical makers including majors such as DuPont , Dow Chemical , Eastman Chemical (EMN - Free Report) and Celanese (CE - Free Report) had a tough 2013 as a weak European economy, effects of sequestration in the U.S. along with certain industry-specific challenges squelched a meaningful upturn in chemical demand for the most part of the year.
While a still-challenging economic backdrop in Europe remains a roadblock, the chemical industry is expected to fare relatively better in 2014, aided by a shale gas boom in the U.S., healthy Chinese demand and significant capital investment.
The ACC envisions domestic chemical output to rise 2.5% in 2014 and further improve to a 3.5% gain next year, supported by strong agricultural market fundamentals, healthy demand from light vehicles market and a recovery in the housing market. On the global front, the trade group sees production to move up 3.8% in 2014 and 4.1% in 2015 with healthy gains expected across North America and emerging markets.