Chemical Industry Finishes First Half of the Year with Strong Results

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Researched by Industrial Info Resources (Sugar Land, Texas)--As in almost every segment of the industrial market, chemical plant owners started the year with legitimate concerns about the health of global markets and anxiety about how quickly things would improve. Plant owners expected the beginning of the year to be difficult, as the emergence from a recession deeper than most experts had ever witnessed was going to be challenge.

It appears the Chemical Processing Industry (CPI) of the United States and Canada began the year with more confidence than previously expected. CPI plant owners moved ahead with nearly $1 billion more in capital and maintenance project spending during the first half of this year, compared to the same period in 2009, with total spending reaching an estimated $3.7 billion. Spending increased sharply, as did the number of actual projects; 409 began during the first six months of the year, up more than 100 from the same period last year.

The positive start to the year appears to be setting the momentum for a strong third quarter and finish. The number of project cancellations identified so far for the third quarter has declined significantly, and the focus on maintenance continues to be the trend for most plant owners. For more information, see June 23, 2010, article - Third-Quarter Chemical Industry Project Cancellations Fall Sharply Compared to Last Year; and June 22, 2010, article - Chemical Plant Maintenance Turnaround Activity to Continue Increasing in Third Quarter.

During the last half of the year, the CPI is forecast to witness more than $3.5 billion in new projects begin construction, based on capital and maintenance projects already identified as part of Industrial Info's North American Project Database. Possibly the most encouraging sign in spending expected during the close of the year is the level of dollars already approved. So far, almost $2.2 billion in projects planned to kick off in the next six months have been capitally funded or approved. Another $200 million are in some stage of advanced planning, awaiting approval in the next few months. While the average total investment value (TIV) for planned chemical projects remains historically low, at below $8 million during the last half of this year, there does seem to be enough momentum to begin seeing this number improve this year. A return to an era of average CPI project TIVs reaching $20 million or greater isn't going to happen soon, but it does appear the industry has seen the bottom.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.