Chemical Processing Industry Project Activity Declines During Fourth Quarter of 2006

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Researched by Industrial Info Resources (Sugar Land, Texas). In spite of another year of significant growth for the Chemical Processing Industry (CPI), project starts during the last quarter of the year declined in comparison to the previous year’s performance during the same quarter. At the close of 2006, Industrial Info was tracking 164 capital and maintenance projects that were planned to begin construction during the fourth quarter of 2006, with a total investment value (TIV) of $921 million. This is a decrease in spending of over 30% in comparison to project activity during the fourth quarter of 2005.

Click on the image at right to view a chart showing the breakdown of 4Q06 CPI spending by market region.

Although the decrease looks dramatic, the difference is really very small when considering that almost half of the TIV for 4Q05 was represented by a single $600 million project. Shintech, Incorporated (Freeport, Texas) began construction in Plaquemine, Louisiana during November of last year. Construction is progressing well with plans for commercial startup during the second quarter 2007. Construction for a second phase expansion of the vinyls complex is to begin within a year or less.

The largest contributors to spending during the last quarter of 2006 were Huntsman Corporation (NYSE:HUN), BASF Corporation, Occidental Chemical Corporation and others. Huntsman’s contribution was the unexpected rebuild of its Port Arthur, Texas ethylene plant due to a fire in April of 2006. Shaw Group, Incorporated is providing engineering and construction services for the rebuild, with an expected price tag that will exceed $100 million when complete by early summer 2007. Projects planned by BASF and Occidental totaled an estimated $132 million and all but one of the projects were planned to take place in Texas or Louisiana.

Total project spending in the Southwest market region was projected to near $500 million, significantly passing its closest follower at just $108 million in the neighboring Southeast market region. Spending in the Southwest historically contributes the most to CPI spending as it is home to North America’s largest integrated petrochemical complexes. Even as spending slowed slightly when the year closed, most CPI plant owners remain very optimistic about opportunities for growth in 2007. Industrial Info is currently tracking over 685 active CPI projects planned to begin construction this year in North America.

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Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 24 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.