Chemical Industry Maintenance Spending Planned for Second Quarter Grows

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Researched by Industrial Info Resources (Sugar Land, Texas)--Even as budgets continue to get smaller and become susceptible to a much greater level of scrutiny, maintenance budgets are something that chemical plant owners are protecting and trying to keep from major cuts. During the second quarter of 2008, Industrial Info identified 127 planned chemical plant maintenance turnarounds valued at an estimated $341 million in total investments. Looking ahead to the quickly approaching quarter, Industrial Info has identified more than 150 planned maintenance turnarounds with an estimated total investment value (TIV) of more than $380 million. This is an increase in both project activity and investment value, reinforcing the trend in the industry to utilize maintenance turnarounds as an opportunity to take product off the market during slow economic times while also implementing necessary maintenance repairs.

The largest planned chemical plant turnarounds during the second quarter will take place in Texas, including turnarounds by Sterling Chemicals Incorporated (OTC:SCHI), Shell Chemical Company, Eastman Chemical Company (NYSE:EMN) and others. Those turnarounds are considered major projects with values exceeding $10 million each. Texas and Louisiana lead all North American states with the largest number of turnarounds during the second quarter with a combined 42 projects. This is not unusual, considering the number of large petrochemical plants located in the region that are generally more susceptible to regular turnaround cycles and/or taking downtime because of market conditions. Following these two states with a significant number of planned maintenance turnarounds is Florida with nine projects identified valued at more then $24 million. Florida is home to a large population of agricultural chemical plants that are known for very regular maintenance turnaround cycles.

As early as the summer of last year, chemical plant owners were beginning to squeeze a larger number of capital projects into their maintenance budgets where possible. As the economy began to turn for the worse last summer, plant managers found themselves trying to achieve greater reliability and efficiencies to meet demand with their current assets while company CEOs were demanding more from less. A portion of the equation to successfully meeting these demands has been to pull as many capital projects in under the maintenance budgets as feasible. A $100,000 project that one or two years ago might have been executed under a capital request is now likely to still get implemented even with zero capital dollars approved in those plants where maintenance budgets can be "realigned" to meet production needs.

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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.