William Storck

It's that time again--when the world takes stock of what has happened in the past year and looks to divine the future. It is no different for Chemical & Engineering News. Our business reporters have spent the past several weeks looking at data, talking to people in the chemical industry, and figuring out what next year will hold for chemicals.

What they have found is that, barring huge surprises, growth should continue in all regions, but it probably will be less than in 2000. However, this does not mean that all regions face the same prospects and problems. For instance, as long as the euro remains weak against the dollar, the European chemical industry will get a boost from exports, despite an economic slowdown. The opposite holds true for the U.S., where imports from Europe have in large part caused the traditional trade surplus in chemicals to shrink.

The U.S. also faces the possibility of the slowdown in economic growth turning into a recession, according to many economists. This will have an important and negative impact on Asia-Pacific countries, where because of unfinished or abandoned economic and financial reforms, fiscal structures are already fragile. Any more than a moderate slowing of growth in the U.S. would undoubtedly affect its trading partners in the Western Hemisphere, especially Canada and Mexico.

How accurate were we at this time last year? In the U.S., we said chemical industry fundamentals were poised for a turnaround as the economy continued its expansion. We projected improvement for the key areas of production, prices, and shipments. We said production of chemicals and allied products in 2000 would probably rise 2.5% and that output of the key industrial chemicals sector would be up about 2.2%. Production this year will rise about 3.2% for chemicals and allied products and be up 4.3% for industrial chemicals.

We also were too conservative on pricing. We projected a 2.7% rise for the broad chemical category and a slight 1.9% increase for industrial chemicals. We were way off. Chemicals and allied products will come in with a 4.9% increase in 2000, and prices for industrial chemicals will be up some 8.7%.

However, we were closer on the value of shipments. The forecast was for growth of chemicals and allied products at 5.7%, with 3.9% growth in industrial chemicals. When complete 2000 data are released, all chemicals will have increased 5.9% and industrial chemicals, 3.6%.

Canada, we said, was poised for some major chemical investment. In fact, Union Carbide's $700 million ethylene cracker in Joffre, Alberta, should reach full commercial production by the end of this year. Spanish oil company Cepsa is building a $300 million terephthalic acid plant in Quebec. And TransAlta , the Alberta-based energy company, has broken ground for Canada's largest cogeneration facility, providing steam to Bayer, Dow Chemical Canada, and Nova operations in Sarnia, Ontario.

Latin America, likewise, was looking forward to investment. And, sure enough, companies such as Dow , DuPont , Monsanto , Solvay, and Spanish oil company Repsol YPF are fulfilling that prophesy.

In Europe, we predicted increased growth, as "chemical producers, with a rich exporting heritage, take advantage of the expanding global economy." In fact, the European chemical industry grew by about 3.9% this year, up from 3.5% in 1999. Indeed, producers certainly exported as the European industry benefited from the weakened euro compared with the dollar.

The Asia-Pacific region, we said, should see better times in 2000, but on a country-to-country basis. This was true. Basic chemical output grew some 18% in Taiwan and 4% in Korea, but only 2% in Japan.

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