For Immediate Release Chicago, IL – April 15, 2016 – Today, Zacks Equity Research discusses the Chemicals, including Dow Chemical (DOW), DuPont (DD), BASF (BASFY), Eastman Chemical (EMN) and Westlake Chemical ( WLK). Industry: Chemicals Link: http://www.zacks.com/commentary/78229/chemicals-industry-sto... The chemical industry traversed rough waters in 2015, contending with a spate of headwinds including soft agriculture market fundamentals, slowdown in China, lumpiness in Europe, a stronger dollar and depressed demand in energy markets. Despite these challenges, the highly cyclical industry put up a decent performance last year, thanks to continued strong momentum in the automotive market and a recovery in commercial construction -- an end-market that has long been out of favor. Amid a still-challenging macro backdrop, chemical companies are looking for cost synergy opportunities and enhanced operational scale through consolidation. The $130 billion proposed mega-merger of Dow Chemical (DOW) and DuPont ( DD) -- the biggest chemical deal ever -- is a huge testimony to these strategic moves. Chemical companies also remain actively focused on increasing their reach in high-growth markets in a bid to whittle down their exposure on businesses that are grappling with depressed demand and input cost pressures. Strategic measures including cost management and productivity improvement also remain the prime focus of these companies. Some industry-specific challenges, Eurozone’s tepid recovery and concerns over China’s future growth remain sources of near-term uncertainties for the chemical industry. Chemical makers are also feeling the pinch of weak demand in the energy space amid a still difficult oil price environment. Moreover, a stronger dollar is hurting U.S. chemical exports, reducing their attractiveness in overseas markets. While the European chemical industry remains in a rut given sluggish demand in key markets, lower prices, flat production growth and weak R&D investments, prospects in the U.S. look healthy supported by an improving economy. U.S. Looks Sunny, EU & China Still Cloudy The U.S. chemical industry is poised for growth despite several challenges. According to the American Chemistry Council (ACC), an industry trade group, U.S. chemical production will continue to expand over the next several years, and the American chemical industry will eventually transcend the nation’s overall economic growth and emerge as a long-term economic growth engine as improvements in key end-use industries and emerging markets take hold. Despite softness across a number of major markets, slowdown in China and headwinds from a stronger dollar, the U.S. chemical production expanded 3.6% in 2015. The outlook points to continued expansion as the ACC envisions national chemical production to rise 2.9% in 2016 and 4.4% in 2017. The trade group also sees the momentum to continue through the second half of the decade on the heels of new capital investments and capacity additions. The shale gas bounty and abundant supply of natural gas liquids has been a huge driving force behind chemical investment on plants and equipment in the country and have provided the U.S. petrochemicals producers a compelling cost advantage over their global counterparts. The ACC expects this competitiveness to drive export demand and new capital investment in the country. The shale revolution has made the U.S. an attractive investment hotspot and incentivized a number of chemical companies to pump in billions of dollars to boost capacity. Chemical makers including BASF (BASFY), Dow Chemical, Eastman Chemical (EMN) and Westlake Chemical ( WLK) are investing heavily on shale gas-linked projects to take advantage of ample natural gas supplies which is expected to boost capacity and export over the next several years. Outlook for Europe, however, remains tepid given sustained sluggishness in the region. The Eurozone economy continues to sputter with a lackluster growth in the fourth quarter of 2015. Chemical makers in the European Union remain affected by lower prices, flat production growth and sluggish demand. According to the European Chemical Industry Council (CEFIC), European chemical output rose just 0.5% in 2015. CEFIC expects a modest 1% growth in chemical output in 2016 factoring in a host of challenges including decelerating demand from major industries and slowdown in key export markets. Moreover, the persistent weakness in China -- a key market for chemicals -- is expected to remain a major drag on the industry. China’s economy hit a wall in 2015, growing at its slowest pace in 25 years as a raft of government stimulus measures (including interest rate cuts) failed to stabilize its financial markets. The world’s second-biggest economy remains hamstrung by its tepid property market and weak infrastructure investment, which is contributing to its sluggish economic growth. In addition, the outlook for the fertilizer and agricultural chemicals space remains cloudy in the short haul due to insipid economic growth in certain developing markets, particularly Brazil. Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today. Find out What is happening in the stock market today on zacks.com. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DOW CHEMICAL (DOW): Free Stock Analysis Report DU PONT (EI) DE (DD): Free Stock Analysis Report BASF SE (BASFY): Free Stock Analysis Report EASTMAN CHEM CO (EMN): Free Stock Analysis Report WESTLAKE CHEM (WLK): Free Stock Analysis Report To read this article on Zacks.com click here.