According to American Chemistry Council (ACC) Weekly Chemistry & Economic Trends report on February 3, 2023, chemical railcar loadings were up to 31,569 for the week ending January 28. Loadings were down 9.8% Y/Y (13-week MA), down (10.0%) YTD/YTD and have been on the rise for 8 of the last 13 weeks.
Within the details of the ISM Manufacturing PMI®, the chemical industry was reported to be in contraction in December. While there was growth in order backlogs for chemical products, there were contractions in production, new orders, export orders and employment. Imports of chemical products were also reportedly lower. Inventories were reported to be higher and supplier deliveries faster. Customer inventories were deemed to be “too high”. One respondent noted, “Conditions are reasonable. Sales are a little better than planned….there have been a lot fewer supply disruptions so far this year, and few expected in the short term. The crystal ball remains a little blurry for the rest of 2023.”
Chemical shipments fell for a fourth consecutive month in December, down 1.0%. The decline reflects both easing production and prices. Shipments of coatings and adhesives were higher but were more than offset by lower shipments of agricultural and all other chemicals. Chemical inventories also declined for a third month, down 0.4%, with declines across all main categories. Compared to a year ago, chemical shipments were off 3.9% Y/Y while inventories were up 6.6% Y/Y. In December, with shipments falling faster than inventories, the inventories-to-shipments ratio edged higher from 1.42 in November to 1.43 in December, the ratio’s highest level since 1991. The high level suggests further destocking to restore balance.
Chemical industry employment (including pharmaceuticals) fell by 3,500 (0.4%) in January with a large decline in production workers that was partially offset by higher employment in supervisory/non-production jobs. Compared to a year ago, chemical industry employment was higher by 23,000 (2.6%). Average hourly wages for production workers were up 7.8% Y/Y, a faster pace than December’s upwardly revised 5.9% pace of wage gains. The average workweek for chemical industry workers rose by 24 minutes in January to 41.6 hours and the total labor input into the chemical industry essentially flat in January. After factoring in productivity trends, this suggests that chemical output may have expanded slightly in contrast with the ISM report that suggested that the chemical industry output contracted.
Chemical industry construction spending fell (by 3.0%) in December and was off by 27.9% Y/Y. Chemical construction spending as a percent of total manufacturing construction spending was 17.3% in December. The comparison has been softening gradually after climbing to a sustained high proportion (around 46%) during 2014-2017.
The U.S. Geological Survey reported that monthly production of soda ash in November was 1,010 thousand tons, down 1.9% compared to the previous month and up 6.3% Y/Y. Stocks rose 16.1% over October to 346 thousand tons at the end of the month, a 10-day supply. Ending stocks were up 21.4% Y/Y.
Note On the Color Codes
The banner colors represent observations about the current conditions in the overall economy and the business chemistry. For the overall economy we keep a running tab of 20 indicators. The banner color for the macroeconomic section is determined as follows:
Green – 13 or more positives
Yellow – between 8 and 12 positives
Red – 7 or fewer positives
For the chemical industry there are fewer indicators available. As a result we rely upon judgment whether production in the industry (defined as chemicals excluding pharmaceuticals) has increased or decreased three consecutive months.
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ACC_EconomicsDepartment@americanchemistry.com
American Chemistry Council
The American Chemistry Council (ACC) represents the leading companies engaged in the multibillion-dollar business of chemistry. ACC members apply the science of chemistry to make innovative products, technologies and services that make people's lives better, healthier and safer. ACC is committed to improved environmental, health, safety and security performance through Responsible Care®; common sense advocacy addressing major public policy issues; and health and environmental research and product testing. ACC members and chemistry companies are among the largest investors in research and development, and are advancing products, processes and technologies to address climate change, enhance air and water quality, and progress toward a more sustainable, circular economy.
