Evening star., 1942-05-31
Chemical Demand
Expected 10 Soar
To New Records
Big War c Consumption
To More Thun Offset
Civilian Curbs
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, May 30.-ConSump-
ton of chemicals Is continuing at
record levels. keeping pace with the
increased rate of general industrial
activity, according to the current
survey of the chemical industry re-
leased by Standard & Poor's.
The outlook for coming months
Is favorable. True, those industries
which are already working at ca
pacity will not increase their con-
sumption Of chemicals, and those
which are operating under restric-
tions will consume less. Further
more, there may be some loss of
direct export business, because OF
the increasingly difficult shipping
problem.
Outweighing these adverse factors,
however, will be the additional de-
mand stemming from the increas-
ing rate of war materials produc-
ton. New plants coming into oper-
alton will require large amounts of
many chemicals as they push their
Upturn Is Indicated.
AS conversion to complete war
work is accomplished by the auto
mobile industry, demand for various
chemicals from this source will ex-
pand.
Similarly, the rubber industry,
which has been using less chemicals
because of the drastic restrictions
placed on the use of crude rubber,
will increase its takings as its plant
facilities are devoted to larger out
put of war materials.
Also. there will be greater demand
for various processing chemicals to
supply the synthetic rubber indus
try, now being developed to replace
the loss of natural rubber In fact,
this outlet will become an increaS-
ingly important chemical consumer
over the next several years, if the
war continues and present produc-
ton plans materiallZe. Finally.
lease lend requirements are expected
to expand considerably during the
next year or so.
In all, prospective demand will be
Sufficient to bring further year-to-
year gains in chemical sales during
coming months. For the first half
of 1912, aggregate sales are expected
to run 2O-25 per cent above those
for the corresponding l94l period,
and this pace promises to continue
In the third quarter.
Capacity Increasing.
To meet the expanding demand,
virtually all chemical plants have
been pushing production to maxi
mum limits. The Federal Reserve
Boards seasonally adjusted index
of chemical manufacturing activity
has continued to rise, with the aver
age for the first three months of
1912 running more than Is per cent
above that of year before.
Despite this, the supply situation
for many leading chemicals has re-
manned tight. This is particularly
true in the case Of ammonia.
chlorine, copper chemicals and
number of coal tar crudes. AS
result many products are sold under
priorities, to assure adequate sup
plies for war needs.
New plant facilities being placed
in operation will ease the supply
situation in the latter part of this
year. BY that time, these plants
will be augmenting the output of
chlorine, phenol, toluol. sulphuric,
nitric and hydrochloric acids and
Intermediates used to make syn
thetic rubber In addition, alcohol
output viii! be increased sharply
through conversion of whisky dis
tilling capacity and probable use of
corn and wheat as a raw material
source.
Lower Profits Seen.
Despite the sharp rise in demand,
chemical prices on the whole have
not increased sharply.
Chemical and Metallurgical En-
gineering's price index for March,
1912, was only 9 per cent higher
than the year before, and no sig
nificant change occurred in April.
Consequently, the recent general
price freeze, establishing ceilings at
the March, ,942, highs, will require
virtually no change in existing
price schedules.
AS a matter of fact, price ceilings
we're already in effect In some lines,
particularly in the solvents group.
While prices have Jagged behind
the rise in costs, average profit
margins in the trade have held up
we'll because of the larger sales.
Although depreciation and other
charges will be higher, Increased
sales and satisfactory margins will
enable most companies to show a
sizable gain in operating net. After
allowance for the heavier taxes in
prospect, however, final returns OF
all companies will be well below
those of 1941.
Some indication of the shrinkage
to be expected may be CLEANED from
the first-quarter reports of a group
of representative companies. Ag-
gregate earnings before taxes land
contingency reserves in some cases.
exceeded those of the March, 1941,
quarter by 29 per cent; after tax
allowances, net income was off 25
per cent. While tax provisions
varied considerably. in general
they were somewhat smaller than
called for under the latest proposals,
so that adoption of the latter would
indicate some further reduction in