Chemical Plant Maintenance Turnaround Activity Expected to Remain Flat During Fourth Quarter

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Chemical Processing Industry (CPI) of North America, like the entire industrial market, has been plagued by numerous obstacles that have kept operating rates and productivity down for more than a year now. Despite these obstacles, during the last quarter of this year, spending for maintenance turnarounds is expected to be at about the same level as last year, with more then 100 planned turnaround projects valued at nearly $250 million scheduled. Considering that improvements in the overall industrial market are minimal as we close the third quarter of this year, the forecast that maintenance spending will maintain the same spending levels as last year is quite positive.

Maintenance spending has always been a priority in chemical plants, as it is one of the primary ways to keep up with safety standards, increase reliability and increase efficiency where possible. As the Chemical Industry reduced operating rates during the first half of this year, many producers used their own staff to supplement on-site contractors or temporarily replace certain third-party contractors that have traditionally been used to meet a plant's needs during maintenance periods. Some of the largest plants that employed this tactic were located in the United States' Southwest market region, including employers such as Dow Chemical Company (NYSE:DOW) (Midland, Michigan), BASF SE (OTC:BASFY) (Ludwigshafen, Germany) and others.

Looking at the maintenance turnaround spending identified for the upcoming three months, the Southwest region remains the largest opportunity, with nearly 40 projects planned totaling an estimated $140 million. Historically, turnaround spending in the neighboring Southeast region would follow as a close second, although this is expected to change this year, with an estimated $35 million of CPI maintenance turnarounds planned to take place in the Mid-Atlantic region during the fourth quarter. The Mid-Atlantic is home to some very large chemical producers that are each planning a number of large turnarounds. Some of the largest individual turnarounds include plans by Eastman Chemical Company (NYSE:EMN) (Kingsport, Tennessee) at the company's West Columbia, South Carolina, site and by E.I. du Pont de Nemours & Company (NYSE:DD) (Wilmington, Delaware) at its Fayetteville, North Carolina, plant.

Looking ahead to the first quarter of next year, the news becomes even more optimistic, as more than $390 million in CPI maintenance turnarounds has already been identified. The largest among those projects include petrochemical plants in Texas with individual turnaround investments approaching $50 million each. There have been several major turnaround projects that have been postponed or delayed during the past year, and as markets improve, several of these should come to fruition in 2010.

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