The business of American chemistry is strong, and getting stronger, the American Chemistry Council (ACC) says in its report, Year End 2016 Chemical Industry Situation and Outlook.

In the annual publication, the association representing US-based chemical producers said that US chemical production (excluding pharmaceuticals) is expected to realize overall growth of 1.6% in 2016, followed by 3.6% growth next year, and 4.8% in 2018.

“American chemistry is on the move,” said Kevin Swift, lead author of the report. “The competitive advantage the US still maintains, driven by access to affordable and abundant supplies of natural gas, continues to offset significant headwinds, including an overall drop in business investment, a rebalancing in the oil and gas sector, soft export markets, and a high dollar.” Key domestic end-use markets including light vehicles and housing continued to expand, consumer spending accelerated, the labor market firmed, and households enjoyed extra savings from lower energy costs, all of which the report states contributed to industry expansion.

According to the report, output gains were led by agricultural chemicals, coatings and other specialties, as well as bulk petrochemicals and organics and plastic resins, all areas aided by renewed competitiveness arising from shale gas. Advances in manufacturing and exports during 2017 and beyond are supposed to drive increased demand for basic chemicals and improving manufacturing activity is expected to support growth for most specialty segments.

Swift also noted that production grew in every major chemical producing region in the US during 2016. Over the next five years, ACC forecasts that the most dynamic growth will occur in the Gulf Coast region, followed by the Ohio Valley and Southeast regions. In the long-term, the US chemical industry is predicted to grow faster than the overall economy, and by 2020, US chemical industry sales are expected to exceed $1 trillion.

US basic chemicals, while benefiting from the shale gas advantage, were constrained by weakness in manufacturing and export markets. With new capacity coming on stream, production volume growth is expected to grow to 4.2% next year and to exceed 6.0% per year during 2018-2019.

In the specialties chemical segment, production is supposed to pick up and grow to 3.0% in 2017. Performance in these sectors has continued to be dampened by oilfield and mining chemicals, but demand is expected to grow as the oil and gas sector recovers.

Most notably, according to Swift, momentum for the entire industry will continue as new capacity comes online in the next several years. As of December 2016, ACC stated that more than 275 new chemical production projects had been announced since 2010 with a total value of more than $170 billion, with a full 49% already complete or under construction. “The United States remains the place for chemical companies to invest,” said Swift. Capital spending in the industry surged 21.0% in 2015, reaching nearly $44 billion, and accounting for more than one-half of total construction spending by the manufacturing sector. By 2021, ACC expects capital spending to reach $70 billion, contributing to four consecutive years of job growth in the industry.