Industry Trends Chemicals November 2024

Industry Investment Rating - The report does not explicitly provide an overall investment rating for the industry [1][20] Core Viewpoints - The global chemicals industry is at a crossroads, with the US benefiting from favorable conditions while Europe faces significant challenges [3] - The US chemicals industry has gained a competitive edge due to the shale gas boom, leading to lower production costs and increased investment [5][6] - Europe's chemicals industry is struggling with high energy costs, which are expected to continue hampering recovery [9][11] - The investment outlook for the US chemicals sector is significantly higher than Europe, with a CAGR of 3.8% compared to Europe's 1.5% for 2024-2034 [12][13] - Europe is expected to lag behind the US, China, and the Middle East in both chemicals and basic chemicals production growth over the next decade [16][17][18] Regional Analysis United States - US natural gas production more than doubled between 2005 and 2023, while prices dropped by more than 70% over the same period [5] - The American Chemistry Council estimates investments of USD 208 billion in more than 350 shale gas-related projects [6] - The CAGR for investment in basic chemicals in the USA is 4.7% for 2024-2034, significantly higher than the global rate of 2.7% [13][14] Europe - Europe's chemicals production contracted by 4% in 2022 and 7% in 2023, with modest rebounds forecasted at 3.2% in 2024 and 2% in 2025 [7] - The EU has reduced its reliance on Russian gas, with imports dropping from over 40% in 2021 to about 8% in 2023 [8] - The current capacity utilization rate of the chemicals industry in the eurozone is approximately 7% below its 2015-2019 average [9] - Germany, the largest chemicals producer in Europe, is expected to have a CAGR of just 0.9% for chemicals production and 0.8% for basic chemicals from 2024-2034 [18] China and Middle East - China's chemicals industry has increased capacity in recent years, supporting competitive pricing, though oversupply risks remain [14] - The Middle East benefits from plentiful local oil, gas, and chemicals feedstocks, with Saudi Arabia leading growth due to significant infrastructure investments [15] - The Middle East is forecast to achieve a CAGR of 3.0% for chemicals production and 3.1% for basic chemicals from 2024-2034 [16][18] Long-Term Outlook - Europe faces a significant loss of competitiveness in key products like ammonia and fertilizer due to high energy costs [11] - The chemicals market is undergoing a structural upheaval that is likely to reshape trade in the industry for many years [19] - European manufacturers may relocate to regions with lower energy costs, such as the US, posing a downside risk for Europe [19]