Chemical Processing Industry Completes 2005 with Fewer Cancellations and Delays than Previous Year

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Continuing to show its strength, the Chemical Processing Industry (CPI) ended the 2005 calendar year with fewer project cancellations and an increase in the number of active projects over 2004. Based on 2005 year-end results, there was an increase in the number of active projects during 2005 of over 18%, or 136 projects. Much of this increase can be attributed to CPI plant owners’ continued success in passing along price increases that equal or outweigh the increased energy and feedstock costs of the past several years. This trend is not only boosting profits, but generating dollars for reinvestment, capacity increases, and technology upgrades aimed at energy efficiency and reliability gains.

In comparing the forecast versus actual spending of 2005, the gap measurement, or difference between forecast and actual of total spending was fairly consistent and much less turbulent then that of 2004, when at least four significant spending peaks weren’t realized. The spending during 2005 came in despite of energy and feedstock costs that have remained high for the past three or more years. Major hurricane and storm related disruptions in the late summer for the Gulf Coast region increased operating rates for regions not affected by the storms, ultimately securing higher commodity pricing and increased demand from fewer plants.

The past year’s average project TIV also increased substantially over 2004. The average project TIV increased by nearly 15% to $11.4 million, up from an estimated $9.7 million in 2004. Looking at project activity planned for the upcoming year of 2006, the average project TIV is forecast to increase significantly again, possibly topping $18 million. The North American CPI appears to be poised for another stable year combined with favorable economic conditions that will support an increase in spending as the year moves forward.

The top three spenders by product group remained close to traditional patterns with organic and inorganic industrial chemicals, as well as plastics & resins producers accounting for over half of the total spending in 2005. These segments of the CPI are generally considered the lead industries and the benchmark for which the overall health of the industry is measured. Their solid performance in 2005 is expected to drive the CPI into another successful year of capital investment, as demand remains strong.

For more project spending and business trends in the Chemical Processing Industry see Industrialinfo.com's recently released 2006 Global Industrial Outlook

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