08/30/2024 | News release | Distributed by Public on 08/30/2024 11:06
Chemistry is foundational to economic growth and innovation, supporting nearly every corner of the economy from agriculture and national defense to clean energy, life-saving medical devices, and cell phones.
As the global economy grows and prospers, so will demand for chemicals. According to data from the Independent Commodity Intelligence Services (ICIS), demand for chemicals1 is expected to increase by 30% over the next decade. Much of that growth will be in emerging economies where millions of consumers will be transitioning into a middle-class lifestyle.
In the United States (U.S.), chemical demand is expected to grow by nearly 15% by 2033, driven in large part by new manufacturing capacity and infrastructure investment incentivized by recent once-in-a generation legislation, including the Inflation Reduction Act, the Bipartisan Infrastructure Law, and the CHIPS Act. More than 80% of basic and specialty chemicals are consumed by the industrial sector, and these new laws have helped increase demand for these chemicals. In addition, manufacturing is returning to the U.S. as post-COVID disruptions brought into focus the need for shorter supply chains.
To support the growing demand for chemistry products in the U.S., manufacturers are investing in new production to make the innovative chemistries needed to produce clean energy, semiconductors, and other manufactured goods and building products. American manufacturing depends on a robust supply chain for thousands of chemistries and U.S. chemical capacity is expected to grow 10% over the next decade, less than the expected 15% growth in demand.
But capacity is growing substantially in other parts of the world. In China, already the world's largest chemical producer, capacity is expected to grow by more than a third while demand is only expected to grow by 27%. To the extent that China, buffeted by economic headwinds, cannot consume what it makes, it will look to export markets to fill the gap.
A competitive domestic chemical industry is vital to U.S. manufacturing supply chains and for supporting national priorities. To do this and stay competitive in the global market, a sensible regulatory environment is imperative. The recent surge in misguided regulatory restrictions and a lack of coordination among federal agencies is handicapping the ability to develop and make chemicals here at home. For instance, a survey of ACC member companies found that 70% of chemical manufacturers decided to introduce new chemicals produced outside of the U.S. Unfortunately, far too often policies have been made in a vacuum, not accounting for the ripple effects restricting chemical production can have on manufacturing, the availability of everyday products, and across the broader economy.
The U.S. is at a crossroads. America needs to adopt smarter, pro-growth policies that support domestic chemical manufacturing to meet the growing demand, strengthen its competitive edge, and protect the nation's trade balance.
1 ACC used data from the ICIS Supply and Demand database to look at trends across a basket of 14 chemical products, including ethylene, propylene, butadiene, benzene, toluene, paraxylene, methanol, styrene, ethylene glycol, ethylene oxide, polyethylene, polypropylene, polystyrene, and polyvinyl chloride. Together, these chemicals represent the majority of basic chemical production (excluding inorganics).
The American Chemistry Council's mission is to advocate for the people, policy, and products of chemistry that make the United States the global leader in innovation and manufacturing. To achieve this, we: Champion science-based policy solutions across all levels of government; Drive continuous performance improvement to protect employees and communities through Responsible CareĀ®; Foster the development of sustainability practices throughout ACC member companies; and Communicate authentically with communities about challenges and solutions for a safer, healthier and more sustainable way of life. Our vision is a world made better by chemistry, where people live happier, healthier, and more prosperous lives, safely and sustainably-for generations to come.
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