Capital Spending Project Survey of the U.S. Chemical Processing Industry Identifies $13.9 Billion for 2002 & 2003

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In a recent survey performed by Industrialinfo.com, 281 active capital projects were identified for the chemical processing industry in the U.S. representing $13.9 billion in capital spending with planned construction kick-offs this year or next. This included 187 projects under construction or scheduled to start construction in 2002 and 94 projects planned to start in 2003.

Of the 187 active capital projects in 2002, petrochemicals led capital spending with over $2.5 billion. Fertilizer and agricultural chemicals had a surprisingly strong year with over $392 million in capital spending, despite over capacity problems. Intermediate chemicals remained relatively strong at nearly $305 million as consumers continued to spend despite a slowed economy and several M&A's within the industry. Also enjoying consumer spending, plastics and resins producers kicked-off over $1.5 billion in new capital spending during 2002.

Although 2002 started off well, it did not last long as the energy market began to tumble and a large number of capital projects already in progress were delayed. As the cost of electricity normalized, the need to pursue cogeneration projects lost its appeal. This occurred at the same time the energy industry began to unravel and everyone was concerned how far those effects were going to reach. "The chemical industry saw a large number of cancellations during 2002 as a result of a sluggish economy that kept many chemical producers in a cautious mode during the 4th quarter of 2002," commented, Ed Lewis, President and CEO of Industrialinfo.com speaking at the annual ECC conference in California last week.

Industrialinfo.com's recent survey also identified a 13% increase in 2003 for grassroot chemical processing plant construction over 2002, representing nearly $1 billion in spending. Thirty three projects were identified representing four agricultural chemical plants, five plastics and resins plants, four industrial gas processing plants, seven intermediate/specialty chemical plants, six inorganic chemical plants, and one pigment plant.

Although results from the survey indicate that the number projects planned to begin construction in 2003 is smaller and represents a lower Total Investment Value (TIV), the number of delayed or cancelled projects for next year was significantly fewer at only 12.7 percent. Petrochemicals will again lead capital spending in 2003 with spending for plastics and resins coming in second at approximately $600 million. Despite energy prices remaining relatively attractive for producers, three cogeneration projects totaling over $1 billion in spending and over 2,300 megawatts of power are still planned to begin construction next year.

Industrialinfo.com will soon be releasing its 2003 Industrial Outlook identifying global capital and maintenance spending trends for the Chemical Processing Industry and related industries. Watch Industrialinfo.com's web site for release dates of the 2003 Industrial Outlook.