Contact Us
For More Info!


September. 2022
In this Issue...
Who We Are
Join our social networks!
LinkedIn Facebook Twitter Youtube Vimeo Podcast
Published By
The Navigatiir

North American Chemical Project Activity Still Healthy

Despite overall economic uncertainty, there are still positive factors driving project activity in the Chemical Processing Industry, according to Trey Hamblet, Industrial Info's vice president for Chemical Processing and Petroleum Refining.

Hamblet recently provided a mid-year industrial outlook update at the Economic Alliance Houston Port Region and BIC Alliance Industrial Procurement Forum in Pasadena, Texas. He said conditions within the industry are still "pretty healthy," with high margins and corporate profits.

"On the positive side, the chemical industry has quite a few things in its favor," Hamblet said. "When you look at utilization rates, the chemical plants are at 90-plus percent," which in turn drives maintenance project spending.

Even as society increasingly is eliminating single-use plastics, demand for plastics--a big spender in the chemical industry--remains strong, he said.

"If I look at just the ESG (Environmental, Social and Governance)-motivated spend in the chemical industry--commodity chemicals, polyethylene, polypropylene, methanol, hydrogen, etc.--$9 billion worth of potential construction starts are here in our backyard, in the U.S. and Canada, between now and the end of 2023," Hamblet said. ESG initiatives include green and blue commodities such as hydrogen, ammonia, methanol and carbon capture projects. Green hydrogen is produced via electrolysis of water, powered by renewable energy. Blue hydrogen involves the use of natural gas along with carbon capture and storage (CCS).

Additional ESG initiatives include recycled plastics, alternative feedstocks and emission reductions.

Plus, maintenance project activity will remain high, largely because there's a lot more plants to maintain due to the big buildout of chemical plants in the past few years, Hamblet said.

"We've had 100-plus grassroot chemical plants come up over the last five years that didn't exist a few years ago," he explained.

As of mid-2022, the construction starts outlook for the entire year sat at $15 billion in the U.S. and Canada, Hamblet said.

A glance at Industrial Info's latest North America Industrial Spending Index shows the Chemical Processing Industry with a nearly 34% increase in project spending from a year earlier.

The index puts chemical industry project spending at $19.38 billion for the month of July, up from $14.47 billion in July 2021. Each month, the index compares the current active spending rates to the previous year, in order to get a measure of growth or contraction in the industrial market.


For July, spending was up in all but two (Oil & Gas Pipelines and Alternative Fuels) of the 12 industries tracked by Industrial Info. Spending in the chemical industry has been in positive territory for each month of this year so far.


Hamblet acknowledged that the industry continues to face headwinds, mainly inflation and supply-chain issues.

"We had hoped that would be a short-term event--that hasn't turned out to be the case," he noted.

The American Chemistry Council's (ACC) U.S. Chemical Production Regional Index (U.S. CPRI) rose by 0.2% in July following a 0.1% decline in June and a 0.4% gain in May. Chemical production was higher than a year ago in all regions except the Gulf Coast, which was 1.9% lower.

"A first look at August, several of the regional manufacturing surveys are signaling contraction," the ACC said in its August 19 Weekly Chemistry and Economic Trends report. "The New York Fed's Empire State Manufacturing Survey plunged by 42.4 points to -31.3, the second largest decline on record (since the index began in 2001). There were sharp declines in shipments and new orders. Looking ahead, businesses do not expect much improvement over the next six months."

The July Manufacturing Purchasing Managers Index (PMI) registered 52.8%, down 0.2 percentage point from the reading of 53% in June. While indicating the 26th month in a row of continued economic expansion in the U.S., the July figure was the lowest since June 2020.

Please enter any questions or suggestions below.