Spending for Agricultural Chemicals and Fertilizers Increases Momentum

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Researched by Industrial Info Resources (Sugar Land, Texas)--Earlier this year Industrial Info reported tracking nearly $370 million in future capital and maintenance spending in the agricultural chemicals segment of the Chemical Processing Industry (CPI) in the United States and Canada. That number has soared over the last few months, reaching an estimated $570 million with several large new projects identified by Industrial Info as part of its North American Project Database. This increase in spending is driven by domestic demand for fertilizers, pesticides and herbicides to support increased farm plantings in the United States for the biofuel industry, which continues to gain strength. Globally the demand for these same commodities has consistently outpaced inventory, creating yet even more demand and pressure on domestic producers.

The agricultural chemical industry faced some hard times almost a decade ago with extremely volatile natural gas feedstock prices and the early days of suspicion over whether the ethanol market would ever really become commercial in scale. Despite a significant pullback in the amount of planned ethanol capacity, the current level of installed ethanol capacity is enough to create a substantial market for the corn producers and manufacturers of ag chemicals.

The United States' Midwest market region is likely thought of first when a person thinks of farming in North America. Although this is true, the fertilizers and related products supporting this industry are produced from many corners of these countries. Western Canada, specifically provinces of Saskatchewan and Alberta, are responsible for a great deal of the investments that are planned in this industry segment during 2008 totaling more than $131 million. This is equal to the same level of spending and project activity planned this year in the United States' Southwest and Midwest market regions. The biggest contributor to this is Saskferco Products Incorporated (Belle Plaine, Saskatchewan) with plans for a major expansion of its ammonia and urea plant in Belle Plaine. Colt Engineering Corporation (Calgary, Alberta) has provided some engineering support for this project while Graham Construction (Saskatoon, Saskatchewan) has served as the project's mechanical constructor. Additional planned expansions in Western Canada over the next few years will play a key role in the nearly $1.3 billion in future spending identified for this industry segment. Plans by CF Industries (NYSE:CF) (Deerfield, Illinois) for an estimated $300 million expansion of their site in Medicine Hat, Alberta, will put Canada in that race.

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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.