Global chemicals sector midyear outlook
A new report from the Deloitte Touche Tohmatsu Limited (DTTL) Global Manufacturing Industry group, Compass 2011: Global chemicals sector midyear outlook, indicates that the chemical industry is continuing to recover, with revenue growing at a compound annual growth rate of 7.9 percent over the near term. Higher prices and improving global economic conditions, leading to increased demand in the end markets for chemical products, have contributed to the revenue growth. This trend is expected to continue into the second half of 2011.
Contributing to the upswing was the increased global sales in the automotive industry, which is a significant market for chemicals because of the high volume of products used in the development process. Looking ahead, China is anticipated to dominate the global chemical scene with the highest percentage revenue growth for the remainder of 2011. While demand in the United States and Europe is expected to be moderate, higher prices will likely translate into stronger revenues for chemical companies in these markets this year.
The current 30 percent spread between oil and natural gas prices per barrel in the United States is creating market advantages for chemical companies with production facilities that are capable of feedstock flexibility. Merger and acquisition (M&A) activity is a bright spot for the global chemicals sector, with 2011 deal volumes and values likely to exceed pre-recession figures.
According to the report, sustainable housing and agriculture are two global megatrends in play this year for chemical companies looking to gain a competitive advantage. Chemical players that are proactively looking to capitalize on megatrends are now focusing their long-term business strategies on solutions that are critical to society.
The global chemicals sector is well positioned for the remainder of 2011 to not only hit revenue forecasts, but also to create opportunities to enhance growth in the future.