ChemDesign Products, Inc.

Specialty Chemicals Sector Industry Outlook

After the last decade, sometimes it’s hard to have an optimistic outlook. A financial crisis, two contentious Presidential elections, and an economy that is slowly returning to growth keep us “cautiously optimistic” at best.

Now is not the time to retreat to the cautious risk-adverse camp; despite all the talk about Federal Reserve tapering, a federal government shutdown, debt limits, Iran, Syria, or some other news issue of the day. In the specialty chemicals sector, there is an big picture view that should make us optimistic about the future of our country, our industry, and this business.

The American Chemistry Council (ACC) recently published a new report, “Shale Gas, Competitiveness, and New U.S. Chemical Industry Investment – An Analysis of Announced Projects”. It highlights our country’s access to new supplies of natural gas from previously untapped shale deposits as one of the most exciting domestic energy developments of the past 50 years. After years of high, volatile natural gas prices, the new economics of shale gas are creating a competitive advantage for U.S. manufacturers, leading to greater investment, industry growth, and jobs.

Chemical companies (including our clients) have announced plans for a significant number of new projects to build and expand their shale‐advantaged capacity in the United States. Much of the investment is geared toward export markets, which can help improve the U.S. trade deficit. Roughly half of the announced investments are from firms based outside the United States. Our country is positioned to capture market share from the rest of the world, and has a bright outlook when it comes to natural gas.

The ACC study projects that the economic benefit to the United States from these projects would lead to $20 billion in new federal, state, and local tax revenue during the investment phase and $14 billion in permanent tax revenue by 2020 as result from the over 500,000 new permanent jobs in the chemical industry.

As the benefits from this natural gas expansion trickle down into all manufacturing sectors, the demand for specialty chemicals in those sectors will drive increased demand for our customer’s products. And when our customers need to produce more chemicals, we all benefit!

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