Chemical Industry Prepares for Long Period of Slow Demand

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Researched by Industrial Info Resources (Sugar Land, Texas)--As the first quarter of 2009 came to a close, it left many chemical plant owners increasingly concerned about the potential for a prolonged downturn in the Chemical Processing Industry (CPI) across the globe. Chemtura Corporation (OTC:CEMJQ) (Middlebury, Connecticut) announced bankruptcy plans during March, adding yet another CPI company to the long list of those in the industry struggling with depressed demand. Also during the month, Occidental Chemical Corporation (Dallas, Texas) shuttered its chlor-alkali complex in Mobile, Alabama, for at least a year based on current market conditions. Overall business news for the CPI continues to be far short of positive as the industry prepares for what is expected to be a long and drawn-out spell of decreased investments that could last a year or more.

Even during times of troubled economics, there are still investments being planned, studied, evaluated and even some executed. In March, the CPI research staff of Industrial Info released more than 189 new project reports globally and verified more than 250 additional previously released project reports that were confirmed as still being active with future plans for engineering and construction. More than $10 billion in approved capital projects was identified as part of this research globally during the month with an additional $8 billion in projects still in the planning, design or estimating phases. Among the announcements of delays and cancellations, there are still a significant number of large chemical projects planned for 2010 and beyond in which engineering is under way. Presuming the industry's momentum doesn't slow even further, a number of these projects will become spending opportunities within the next year as confidence in the industry is restored and long-lead items are ordered.

The new projects identified last month in North America totaled more than $5 billion with construction starts ranging from early this year out to 2013. At least $1.8 billion of that total has been previously funded or approved with plans to begin construction over the next 12 to 24 months. The number and value of projects discovered in March were slightly lower than what was discovered during February and reflects the continued decline in demand and loss of confidence in the short-term outlook of the economy. Although not an entirely positive way to end the quarter, March brought less news of cancellations and work force reductions then recent months.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.