Despite a number of challenges that have plagued the petrochemical industry, Martha Gilchrist Moore, Chief Economist and Managing Director for Economics and Statistics for the American Chemistry Council (ACC), is optimistic and excited about the resolution of these challenges in the near future.
“The chemical industry in the United States is well positioned for the year ahead. A lot of things are pointing in the right direction. You have strong demand for natural gas, and energy fundamentals and new capacity are in line,” said Moore as a participant in a recent webinar. “The table is set for a relatively good year for the chemical industry, despite some of the risks regarding Ukraine, commodity price shocks and inflation.”
Rhoman Hardy, senior vice president of Shell Chemicals and Products – US Gulf Coast, agreed with Moore’s assessment that “the outlook is really, really good” for the Gulf Coast and Louisiana chemical industry.
“Louisiana is in a unique position for energy transition and for sustainability, and people are trying to figure out what that means for Louisiana,” Hardy said. “I think that’s actually a unique advantage for Louisiana, and we’re embracing it. We’re realizing that the chemical industry is key to the energy transition. It won’t happen without it. prosperous.”
Moore is confident that construction and automotive, as well as health and safety, will be key markets driving growth in Louisiana in the years to come.
“Construction and vehicles are two of the major end-use markets we look at,” Moore said, adding that about $4,000 of chemistry is in each vehicle. “There’s about $12,000 in every single-family home start, so those are really, really big markets.”
Moore said she foresees “very, very strong demand” for light-duty vehicles, although that demand may not be easily met.
“We’ve seen the recovery from the pandemic recession, but that’s been tempered by these ongoing and persistent supply issues when it comes to semiconductors. They’re just not able to produce the [electric] vehicles because of the lack of semiconductors and flaws in the chemistry that goes into them,” she said.
Seize new opportunities
Moore observed that the ACC sees mortgage rates rising, but added that there is still very strong demand for housing. “There was a lot of pent-up demand compared to last year due to supply chain disruptions that continued this year,” Moore said. “We also have millennials starting to really enter the housing market and that’s creating a lot of upward pressure for housing.”
“We’re looking at 1.62m this year for housing starts – which is the best year since 2006 – and a very slight drop to 1.55m in 2023, so these are strong markets for the chemical industry.”
Hardy said he felt the movement toward energy transition had accelerated. As evidence, he pointed out that chemical companies are increasingly diversifying their portfolios to better weather future volatility, but he also added that these disruptions have created more opportunities.
“It’s happening even more now with things related to the energy transition, like the shift to electric vehicles. Things are going into battery technology,” he said. “We’re seeing demand growing even faster than before, so I think a lot of companies are weighing whether they should participate in that. It’s strongly tied to companies’ research and development positions and other specific things. “
The products that emerge as a result of the energy transition “are definitely at the heart of all conversations with our customers and within our businesses,” Hardy said.
For ongoing industry updates, visit BICMagazine.com.