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Michael Rezai, a Senior Consultant at the ChemQuest Group, reports on the current state of the chemical industry in the US and his predictions for the paint and coatings sector for the coming year
Almost every product we use on a daily basis is influenced by the chemical industry. It’s no secret that COVID-19 wreaked havoc on the chemical industry. Chemical demand was shattered throughout end markets. Global supply networks were disrupted. Chemical company stock prices took enormous losses. And the competitive order of chemicals producers shifted almost immediately. Global supply disruptions, rolling COVID-19 restrictions, the February 2021 deep freeze in the United States along with Hurricane Ida in August, as well as container shortages and logistics constraints causing extended lead times, have resulted in basic commodity shortages all the way down the supply chain to finished goods. The chemical industry has been shaken to its core.
In November, US industrial production held steady on the month at +5.3% yr-on-yr. Looking ahead, industrial production in the US is expected to grow slightly yr-on-yr, driven by COVID vaccine tailwinds, pent-up demand and fiscal spending. Also, consumer-related manufacturing, factory parts/machines and energy related spending should also be strong in 2022.
The US economy still has (at least) another pair of challenges in 2022 before returning to a full bill of health – the Omicron variant, and the inflation pressures arising from both supply challenges and exploding global demand. However, fundamentally, many still hold an upbeat view that the US economy will stay strong in the face of these challenges, and we look for abovetrend growth again in the coming year, with lingering strength even out into 2023.
Some encouraging indicators to note:
- US real GDP will likely rebound at a strong pace at the end of 2021 and a solid 3.5% growth in 2022 is expected.
- Many are expecting only a moderate restraint from Omicron, largely due to some new restrictions on travel and some increase in consumer anxiety.
- Economic activity will come from elevated household savings, low interest rates and a sturdy housing market.
- The US infrastructure plan should add 0.1% of GDP and the “Build Back Better”plan could add another 0.6% of GDP.
- Business spending is on the rise, with non-residential investment surpassing pre-pandemic levels.
- The unemployment rate is projected to fall further from 4.2% in November to pre-pandemic levels of 3.5% by late 2022.
Read the full report here: ChemQuest Feb 2022