Third-Quarter Investments for North American Chemical Industry Appear Strong

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Researched by Industrial Info Resources (Sugar Land, Texas)--So far this year, the Chemical Processing Industry (CPI) has shown consistent signs that plant operating rates are on the rise and investment spending is beginning to increase. Looking ahead at the quickly approaching third quarter, Industrial Info is tracking a total of 266 capital and maintenance projects planned to begin construction. This level of project activity equals an increase of more than 30% from the same quarter last year, with the total investment value (TIV) reaching an estimated $1.9 billion.

Economic worries worldwide certainly haven't faded, although the improvements witnessed so far seem to be fueling a considerable amount of optimism. Operating rates are estimated to be in the mid-70s range, and consistently inching up slowly. "What's really encouraging to me about the third quarter is the level of spending for projects that have already been funded and approved," said Trey Hamblet, the vice president of Chemicals Research for Industrial Info. "Nearly $900 million in project activity planned to begin construction during the third quarter of this year has already been approved and is nearing the start of construction." Another $300 million in capital projects planned to begin construction during the quarter are in the final phases of review and consideration for approval, while nearly $400 million remain in the early planning phase and represent the greatest risk for delay.

The United States' Southwest market region is expected to represent the largest number of projects and the greatest investment value. More than 70 projects are planned to kick off in the region during the third quarter, while totaling more than $900 million in spending. Some of the largest contributors are Air Liquide Industrial U.S. LP (Houston, Texas), NA Industries Incorporated (Chattanooga, Tennessee) and SNF Incorporated (Riceboro, Georgia). Air Liquide plans to begin construction on a hydrogen unit addition, referred to as the Gulf Coast SMR Project, at the company's Pasadena, Texas, facility this summer to serve local and regional pipeline customers. NA Industries will build its first plant in the Southwest, next to American Acryl LP in Pasadena. SNF Incorporated is also preparing to begin construction for a grassroot plant in the region this summer in Plaquemine, Louisiana.

Overall maintenance spending for the quarter is up considerably compared to last year. At the moment there are an estimated 164 planned maintenance turnarounds expected to begin during the quarter valued at more than $360 million. Last year, maintenance activity during the quarter totaled 131 plant or unit turnarounds, reaching only $275 million. As the industry continues to gain confidence and momentum, the number of maintenance projects will rise with it.

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