According to American Chemistry Council (ACC) Weekly Chemistry & Economic Trends report on March 3, 2023, chemical railcar loadings were down to 32,234 for the week ending February 25. Loadings were down 11.2% Y/Y (13-week MA), down (8.0%) YTD/YTD and have been on the rise for 8 of the last 13 weeks according to data released by the Association of American Railroads
Within the details of the ISM Manufacturing PMI® report, the chemical industry was reported to be one of 14 industries that contracted in February. Having declined in January, chemical industry production, new orders and imports were neutral (neither increasing nor declining), but employment and new export orders contracted. Among the comments, one chemical industry respondent noted, “a slowdown in new housing construction and concerns of a slowing economy have customers delaying purchases in an effort to destock.” A respondent from the plastics & rubber products industry reported “business and new orders are softening, and customers are pushing out current orders.”
Chemical industry construction spending rose 4.5% in January and was up 3.0% Y/Y. Chemical construction spending as a percent of total manufacturing construction spending was 20.7% in January. The comparison has been softening gradually after climbing to a sustained high proportion (around 46%) during 2014-2017.
The U.S. Chemical Production Regional Index (U.S. CPRI) fell 1.0% in January following declines of 1.6% in November and 0.6% in December, according to the American Chemistry Council (ACC). Chemical output was lower than a month ago in all regions, with the largest declines in the Gulf Coast, home to much of the nation’s basic industrial chemical and synthetic materials capacity. Because the CPRI is measured as a three-month moving average (3MMA), the declines reflect not only, continued contraction across multiple key end-use industries, but also lingering disruptions from winter storm Elliott that hit in late December, which impacted the U.S. Gulf Coast, in particular. Compared with January 2022, U.S. chemical production was 4.0% lower. Chemical production was lower than a year ago in all regions, with the largest declines in the Gulf Coast.
On a 3MMA basis, chemical production within segments was mixed in January. Output of fertilizers, synthetic dyes & pigments and industrial gases were higher, but declines persisted in all other segments compared to a month earlier.
As nearly all manufactured goods are produced using chemistry in some form, manufacturing activity is an important indicator for chemical demand. Down for a third consecutive month, manufacturing output was down 0.6% in January on a 3MMA basis. The 3MMA trend in manufacturing production was mixed, with most chemistry-consuming segments contracting. Output continued to expand, however, in aerospace and apparel.
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.
