Chemical Processing Industry's Core Segments Maintain Leading Roles in 2008 Project Expenditures

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Researched by Industrial Info Resources (Sugar Land, Texas)--The three largest segments of the Chemical Processing Industry (CPI), including petrochemicals, inorganic chemicals, and plastics and resins, have each held their ground in 2008 when comparing forecast versus actual spending. A previous outlook for total 2008 spending within these groups represented a combined $4 billion in capital and maintenance projects, and a revised outlook reveals an estimated $5.3 billion in these segments for this year. This strength in spending comes despite nearly $850 million in cancellations or projects placed on hold that had been planned to begin construction this year.

Price hikes have been issued this year by several of the majors in each of these CPI segments as the increased and often volatile price of energy and feedstock has greatly influence operating costs. Some of these hikes have been as much as a 25% on pending deliveries; some even included additional shipping or transportation fees, as well. The hopes are that these costs will be successfully passed along to downstream customers and have only a minimal affect on demand or consumption.

The average project value in these segments is down significantly from the original forecast made last year. The average total investment value per project is now an estimated $13.6 million compared with the previous expectation of nearly $24 million. This is partly due to a large number of projects with planned budgets of $100 million or more. There are currently 13 projects in this range equaling an estimated $2.6 billion, almost half of the total spending for these segments.

The CPI's Confidence Factor has continued to hover around 70% for the last year or more despite the continued obstacles coming its way. The Confidence Factor measures the number of active and completed projects against canceled project activity over a five-year span to determine the level of confidence in future projects maturing and moving forward. The number and type of projects discovered, researched and verified during the last six months of this year are anxiously awaited as these results will begin to shape expectations for the coming year. There is plenty of talk about what the cost of $200 oil would do to consumers at the gas pump, but what effect will it have on approving growth dollars in the CPI?

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.