The outlook for the chemicals industry

When it comes to the current outlook for the chemicals industry it is definitely a tale of two continents. While the prospects for the chemicals industry look healthy in the USA, at least in the medium term, it is a much more uncertain outlook on the other side of the Atlantic.

Plentiful supplies of shale gas in the US have brought down the cost of raw materials and energy, providing a shot in the arm for shale-related manufacturing projects and encouraging chemicals companies to invest in plants and equipment.

On the back of lower fuel prices, US car sales are on an upward curve, especially the light vehicles market.  Sales are rising globally too, particularly in China (although the slowing Chinese economy may eventually put the brakes on this trend).  This is all good news for the chemicals industry as the automotive sector is a major consumer of chemicals.

Another important end-market for chemicals is construction, which is undergoing a post-recession upturn.  The US housing sector perked up last year, partly due to stabilising mortgage rates and an improving jobs market.

Meanwhile, the profitability of US chemicals companies is being helped by cost-cutting measures such as plant closures and offloading non-core assets.

In Europe, however, chemicals output only rose 0.3% year-on-year in 2014, hindered by a fall in export demand and also lower prices.  Although the European Chemical Industry Council (CEFIC) forecasts a 1% rise in chemicals output this year, economic recovery has some way to go in many European countries. This is affecting growth in a chemicals sector also facing high energy costs and a downturn in investment in research.

While Britain’s economy is relatively dynamic, any decision to leave the EU – which remains a possibility – would hit the chemicals industry especially hard, according to a report by German think tank Bertelsmann Stiftung, as  the industry is so deeply enmeshed in the European ‘value chain’ – the support activities that add value to a company’s products.

The link between the oil and gas sector and the chemicals sector, as we saw with the USA above, was also recently made clear by Ken Cronin, chief executive of United Kingdom Onshore Oil and Gas (UKOOG).  In arguing for onshore gas development in the UK, he said ‘gas… is a vital feedstock for the chemical and process industries, which employ 500,000 people in the UK’.  

Meanwhile, revenues from energy company BP’s petrochemicals operations have boosted its financial performance, compensating for the slump in the profitability of its oil production.  

Flow measurement for chemicals

The chemicals industry is a significant market for flow measurement providers, whose systems manage a number of processes for maximising production and help to control costs.  Due to the presence of corrosive and toxic liquids and gases, chemicals plants represent a demanding environment for flow meters such as the Coriolis meter, a popular choice in the chemicals industry, which works alongside Ex~i Flow’s SFC3000 flow computer.

To find out more about the advantages and applications of the SFC3000 flow computer contact the Ex~i Flow team on 01243 554920.