US Specialty Chemicals Volumes Up In October: 3 Stocks To Buy

The U.S. specialty chemical industry started the fourth quarter on a positive note with October seeing a rise in volumes, according to the latest report from the American Chemistry Council (“ACC”).

Positive October Readings

The Washington, DC-based chemical industry trade group said yesterday that U.S. specialty chemicals market volumes rose 0.3% in October on a monthly comparison basis. This follows a 0.4% gain a month ago and a 0.6% increase in August. The data changes are reported on a three-month moving average basis.

Of the 28 specialty chemical segments monitored by the ACC, 17 saw growth in October. During the reported month, large market volume growth (1% and over) was witnessed across foundry chemicals, lubricant additives and textile specialties.

Per the ACC, the overall specialty chemicals volume index went up 6.1% on a year-over-year basis in October. Volumes were driven by year over year growth in 22 markets and functional specialty chemical segments. Oilfield chemicals notched up the strongest growth with volumes climbing 16.6%. The index stood at 114.4% of its average 2012 levels in October, which is equivalent to 3.54 million metric tons.

Trade Tensions Cloud Prospects

Specialty chemical products are used based on their performance and have a specific purpose. They have application in the manufacturing process of a vast range of products including paints and coatings, cosmetics, petroleum products, inks and plastics.

The ACC envisions national chemical production (excluding pharmaceuticals) to rise 3.4% in 2018 and further gain steam with a 3.6% growth in 2019. The growth is expected to be spurred by higher demand across light vehicles and housing markets, an upswing in U.S. manufacturing, favorable shale gas economics, capital investments and strengthening export markets. The trade group expects improving industrial activities to contribute to the growth of the specialty chemicals segment.

However, the prospects of the industry of late are being clouded by escalating trade tensions between the United States and China. The Trump administration imposed tariffs on $50 billion in Chinese goods earlier this year that led to China retaliating with tariffs on American products of equal value. The U.S. administration, in September, also slapped a 10% tariff (slated to rise to 25% starting 2019) on $200 billion worth of Chinese imports, thereby intensifying the trade tensions. In response, China hit back with tariffs on an additional $60 billion in American products.

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