Value of Major Chemical Projects Increasing

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial Info is tracking more than 70 capital projects valued at $50 million each or more in the North American Chemical Processing Industry (CPI). These projects' total investment value (TIV) equals $12.8 billion, a substantial increase over the $8.2 billion from just 50 projects in a similar analysis run in August last year. Headlines in most newspapers across the country continue to talk of our "slowing economy" as an almost daily feature story, which often seems inconsistent with the dollar value and level of project activity still being identified. The number of major projects -- those with a value greater than $50 million each -- has consistently gone up in the CPI over the past two years. Projects of this size generally equal the largest number of opportunities for industry, including technology and engineering firms, as well as equipment and service providers.

Grassroot plant construction makes up an estimated $3.3 billion of the total identified in this analysis, up from just $2 billion when compiled last summer. Although this number has grown, the real strength in the industry is in the number of major unit additions and plant expansions in which the average project TIV exceeds $150 million. Consideration for several major unit additions, such as that of Nova Chemicals Corporation (TSX:NCX) (Calgary, Alberta) for a third polyethylene unit addition at its Joffre, Alberta, plant site or the addition of a new chlor-alkali unit by Westlake Chemical Corporation (NYSE:WLK) (Houston, Texas) at its Geismar, Louisiana, site are just a few examples of major projects that counter the signals of a slowing economy, at least for the CPI sector.

Nearly half of the projects assembled in this analysis are proposed at plant sites located in the United States' Southwest market region, valued at over $7.3 billion. Shintech Incorporated (Houston) accounts for nearly $2 billion of that total with the potential expansion of its recently completed grassroot plant in Louisiana and the plans for another grassroot plant in Alvin, Texas.

The Mid-Atlantic region is a distant second-place follower with spending in this analysis of only $970 million, although this spending is spread across 10 projects. Some of the largest activity in the region includes plans by PCS Phosphate Company Incorporated (Saskatoon, Saskatchewan) to greatly expand its Aurora, North Carolina, plant and plans by INVISTA Incorporated (Wichita, Kansas) to spend an estimated $200 million to expand its Wilmington, North Carolina, polyester intermediates production capacity.

There is no clear indicator how long the strong momentum of the CPI will last, although at the moment no obstacles seem too high. The price of oil and related energy feedstock has an influence on the overall CPI market, but demand for chemical commodities at the moment seems to outweigh even those costs.

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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.