Chemical Industry Expects an Increase in Overall Spending in 2010

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Researched by Industrial Info Resources (Sugar Land, Texas)--The outlook for 2010 shows some signs of improvement for the Chemical Processing Industry (CPI) in the United States and Canada, with spending forecast to increase by an estimated $1.7 billion. Based on projects identified as part of Industrial Info's North American Project Database, CPI plant owners are showing confidence across most segments of the industry in anticipation that demand will increase in the coming year. Total investments including capital and maintenance turnarounds for 2010 currently exceed $6 billion.

Although slight, plant operating rates have begun to increase, including in some of the most important segments of the CPI such as petrochemicals and polymers. These two segments of the industry are often used as the benchmark for measuring the health of the CPI, and improvements in these segments are a positive note for the start of the year. Petrochemical spending is expected to rebound in 2010 to an estimated $1.2 billion--up from less than $450 million in 2009. Spending for polymers and plastics is also expected to increase in 2010 suggesting confidence in markets such as housing, automotive and other consumer driven markets.

Although many of the signs point toward a more positive year in 2010, many producers are first working to replenish inventories and stockpiles to pre-2009 levels, worrying about expansion and growth opportunities second. Replenishing stockpiles may not sound like a big opportunity to many, but this task often requires the restart of idle units, increased maintenance routines due to higher operating rates, and implementing projects that might have been previously delayed or placed on-hold. The chance to replenish inventories with domestic production could be a short-term opportunity with little pressure from imports if this can be done while significant amounts of new capacity are still under construction in Middle Eastern countries. A significant wave of new capacity is expected to come online in the next 12 to 18 months in the Middle East, and currently the timing of this new capacity is behind the current wave of expected demand increases.

Looking ahead to the geographies that will lead spending next year, the United States' Southwest market region will represent almost half of the total spending at an estimated $3.1 billion. This region is accustomed to this leading role in geographic spending, as it is home to Texas and Louisiana, the centerpieces for the North American CPI. The neighboring Southeast market region is expecting nearly $800 million in capital and maintenance spending next year, closely followed by the Great Lakes at just over $718 million.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.