The US is the second largest chemical producing nation, after China, and the nation’s chemical industry is expected to continue to grow substantially over the next decade as abundant energy resources in the United States have tilted the competitive advantage in many types of chemical production toward producers in the U.S.

A world leader with $526 billion in chemicals shipments, the industry is making huge investments to capitalize on its advantages. Nearly $200 billion of investments in new shale-advantaged capacity have been announced since 2010, with half of that investment either already completed or under construction, according to the 2018 Elements of the Business of Chemistry report published by the American Chemistry Council (ACC). As the US has become a major destination for chemical investment, two-thirds of the announced investment represents foreign direct investment.

Foreign direct investment (FDI) is the funnel through which exports flow. In conjunction with growing exports, since the early 1980s, the US chemical industry has become increasingly global in scope, with growing US investment abroad and increasing foreign investments in the United States.

American companies have long established a presence in overseas markets, with many “going global” in the 1950s and 1960s. This presence has continued. Western Europe accounts for more than half of the overseas investment by American companies. Canada, Brazil, China, Australia, Singapore, and Thailand are other large destinations for American investment. Because investment positions are measured by book value, investments made by foreign companies in the United States tend to be more recent, and as a result, the position is higher than US investment overseas. In terms of replacement value, however, US investment overseas is higher.

As its competitiveness improves, the US chemical sector is in demand across the world with exports of nearly $130 billion. In fact, the industry produces a large and growing trade surplus, reaching close to $33 billion in 2017. These positive contributions to trade contribute to the broader US economy. “Our continued economic growth and job creation is heavily dependent as access to global markets. Free trade and open markets are essential to maintaining our pro-growth, pro-competitiveness agenda”, states Cal Dooley, the ACC’s President and CEO. (mr)