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US Chemical Output Up in July on Continued Post-Storm Rebound
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U.S. chemical production expanded for the third straight month in July on gains in all chemical producing regions, according to the latest monthly report from the American Chemistry Council (“ACC”).
The Washington, DC-based chemical industry trade group said that the U.S. Chemical Production Regional Index ("CPRI") rose 1.1% in July on a monthly comparison basis, following a 3.5% growth a month ago and a 5.5% rebound in May. The U.S. CPRI, which is measured using a three-month moving average, was created to track chemical production in seven regions nationwide.
Per the ACC, activities for the U.S. manufacturing sector rose in July with output increasing 0.7% on a three-month moving average basis. Gains in output were witnessed in aerospace, motor vehicles and parts, machinery, computers, semiconductors, iron and steel products, foundries, refining, oil and gas extraction, plastic products, furniture, rubber products, tires, printing and apparel.
The manufacturing sector serves as a barometer to gauge the overall health of the U.S. economy and has a major influence on the chemical industry. The sector is a major driver for the chemical industry which touches around 96% of manufactured goods. Manufacturing activity is also a key indicator for chemical production and demand.
Broad-Based Rise in Regional Production
The July reading showed higher production on a monthly comparison basis across all regions, reflecting sustained demand for chemical products.
After a positive start to 2021, the devastating winter storm in the U.S. Gulf Coast squeezed capacity and hurt U.S. chemical production starting February. The storm curbed chemical production in the U.S. Gulf Coast and other parts of the country due to raw material and supply chain disruptions. Chemical output started to rise from May on the restoration of capacity.
Meanwhile, Gulf Coast — the epicenter of the U.S. specialty chemicals and petrochemicals industry — witnessed a 0.9% rise in output in July, per the ACC. Output across Midwest and Southeast rose 1.3% and 0.9%, respectively, in July. Production also went up 0.8% in Ohio Valley. Output rose 1.1% in Mid-Atlantic while Northeast recorded a 1.2% gain. West Coast saw a 1.4% rise in output in July.
Chemical production was mixed by segments in July. Higher production was witnessed in organic chemicals, fertilizers, adhesives, coatings, chlor-alkali, crop protection chemicals, synthetic rubber, other specialty chemicals and miscellaneous inorganic chemicals, offset by softness in manufactured fibers and consumer products.
U.S. Chemicals Looking Up From Pandemic-Led Downturn
A strong revival in demand across major end-use industries such as automotive, construction and electronics has put the wind back in the sails of the U.S. chemical industry. The U.S. chemical industry reeled under the effects of a significant downturn in demand during the first half of 2020 as lockdowns and travel restrictions amid the pandemic brought economic activities to a near-standstill.
However, demand for chemicals started to recover from the third quarter last year with a rebound in business activities from the coronavirus-induced slowdown as major parts of the United States reopened following the loosening of restrictions. The upturn in demand is being driven by an upswing in manufacturing and industrial activities.
A recovery in construction and automotive markets is driving demand for chemicals. The U.S. automotive industry has witnessed a speedy recovery on the back of a strong rebound in customer demand for new vehicles. Despite the semiconductor crunch, chemical makers saw higher demand from the automotive market in the June quarter.
The construction sector has also recovered on the restart of projects that were stalled earlier partly due to supply chain disruptions. Residential construction is picking up, supported by lower interest rates. An upturn in these major markets is likely to drive demand for chemicals through the balance of 2021.
The ACC envisions U.S. chemical production volumes to rise this year on a recovery in end-use markets and export customers from the virus-led slowdown. The trade group sees domestic chemical production volumes to bounce back to a 1.4% growth this year after slipping 3.6% in 2020. Basic chemicals volumes are also forecast to rise 0.5% in 2021. Moreover, specialty chemicals volumes are projected to expand 3.8% this year.
Olin has an expected earnings growth rate of 590.4% for the current year. The Zacks Consensus Estimate for current-year earnings has also been revised 21.2% upward over the last 60 days.
Chemours has expected earnings growth rate of 86.4% for the current year. The consensus estimate for the current year has also been revised 18.3% upward over the last 60 days.
AdvanSix has expected earnings growth rate of 160.4% for the current year. The Zacks Consensus Estimate for the current year has been revised 34.7% upward over the last 60 days.
Avient has expected earnings growth rate of 75.1% for the current year. The consensus estimate for the current year also has been revised 6.7% upward over the last 60 days.
Westlake has expected earnings growth rate of 436.2% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 10.9% upward over the last 60 days.
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US Chemical Output Up in July on Continued Post-Storm Rebound
U.S. chemical production expanded for the third straight month in July on gains in all chemical producing regions, according to the latest monthly report from the American Chemistry Council (“ACC”).
The Washington, DC-based chemical industry trade group said that the U.S. Chemical Production Regional Index ("CPRI") rose 1.1% in July on a monthly comparison basis, following a 3.5% growth a month ago and a 5.5% rebound in May. The U.S. CPRI, which is measured using a three-month moving average, was created to track chemical production in seven regions nationwide.
Per the ACC, activities for the U.S. manufacturing sector rose in July with output increasing 0.7% on a three-month moving average basis. Gains in output were witnessed in aerospace, motor vehicles and parts, machinery, computers, semiconductors, iron and steel products, foundries, refining, oil and gas extraction, plastic products, furniture, rubber products, tires, printing and apparel.
The manufacturing sector serves as a barometer to gauge the overall health of the U.S. economy and has a major influence on the chemical industry. The sector is a major driver for the chemical industry which touches around 96% of manufactured goods. Manufacturing activity is also a key indicator for chemical production and demand.
Broad-Based Rise in Regional Production
The July reading showed higher production on a monthly comparison basis across all regions, reflecting sustained demand for chemical products.
After a positive start to 2021, the devastating winter storm in the U.S. Gulf Coast squeezed capacity and hurt U.S. chemical production starting February. The storm curbed chemical production in the U.S. Gulf Coast and other parts of the country due to raw material and supply chain disruptions. Chemical output started to rise from May on the restoration of capacity.
Meanwhile, Gulf Coast — the epicenter of the U.S. specialty chemicals and petrochemicals industry — witnessed a 0.9% rise in output in July, per the ACC. Output across Midwest and Southeast rose 1.3% and 0.9%, respectively, in July. Production also went up 0.8% in Ohio Valley. Output rose 1.1% in Mid-Atlantic while Northeast recorded a 1.2% gain. West Coast saw a 1.4% rise in output in July.
Chemical production was mixed by segments in July. Higher production was witnessed in organic chemicals, fertilizers, adhesives, coatings, chlor-alkali, crop protection chemicals, synthetic rubber, other specialty chemicals and miscellaneous inorganic chemicals, offset by softness in manufactured fibers and consumer products.
U.S. Chemicals Looking Up From Pandemic-Led Downturn
A strong revival in demand across major end-use industries such as automotive, construction and electronics has put the wind back in the sails of the U.S. chemical industry. The U.S. chemical industry reeled under the effects of a significant downturn in demand during the first half of 2020 as lockdowns and travel restrictions amid the pandemic brought economic activities to a near-standstill.
However, demand for chemicals started to recover from the third quarter last year with a rebound in business activities from the coronavirus-induced slowdown as major parts of the United States reopened following the loosening of restrictions. The upturn in demand is being driven by an upswing in manufacturing and industrial activities.
A recovery in construction and automotive markets is driving demand for chemicals. The U.S. automotive industry has witnessed a speedy recovery on the back of a strong rebound in customer demand for new vehicles. Despite the semiconductor crunch, chemical makers saw higher demand from the automotive market in the June quarter.
The construction sector has also recovered on the restart of projects that were stalled earlier partly due to supply chain disruptions. Residential construction is picking up, supported by lower interest rates. An upturn in these major markets is likely to drive demand for chemicals through the balance of 2021.
The ACC envisions U.S. chemical production volumes to rise this year on a recovery in end-use markets and export customers from the virus-led slowdown. The trade group sees domestic chemical production volumes to bounce back to a 1.4% growth this year after slipping 3.6% in 2020. Basic chemicals volumes are also forecast to rise 0.5% in 2021. Moreover, specialty chemicals volumes are projected to expand 3.8% this year.
Chemical Stocks Worth Considering
A few stocks currently worth considering in the chemical space are Olin Corporation (OLN - Free Report) , The Chemours Company (CC - Free Report) , AdvanSix Inc. (ASIX - Free Report) , Avient Corporation (AVNT - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Olin has an expected earnings growth rate of 590.4% for the current year. The Zacks Consensus Estimate for current-year earnings has also been revised 21.2% upward over the last 60 days.
Chemours has expected earnings growth rate of 86.4% for the current year. The consensus estimate for the current year has also been revised 18.3% upward over the last 60 days.
AdvanSix has expected earnings growth rate of 160.4% for the current year. The Zacks Consensus Estimate for the current year has been revised 34.7% upward over the last 60 days.
Avient has expected earnings growth rate of 75.1% for the current year. The consensus estimate for the current year also has been revised 6.7% upward over the last 60 days.
Westlake has expected earnings growth rate of 436.2% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 10.9% upward over the last 60 days.