Investments in Plastics and Polymers for 2010 Expected to Fall Short of Last Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--The plastics and polymers producers of the Chemical Processing Industry (CPI) are very dependent on consumer and industrial manufacturing activity to sustain growth and investments. Despite marked improvements in the financial markets, the combination of high unemployment in the United States, a lack of significant consumer demand, and a still depressed automotive market are making it difficult to justify spending levels seen by this group of producers in previous years in the U.S. and Canada. Based on projects identified as part of Industrial Info's North American Projects Database, an estimated $1.4 billion in total projects began construction last year in the plastics and polymers segment of the CPI. This is significantly more than the projected outlook for the segment this year, which is only $900 million.

As in many segments of the CPI, the focus of these producers during 2010 will largely be for projects that offer increased reliability and greater efficiencies of existing assets, as well as more extensive maintenance programs to increase equipment life and runtimes. More than $215 million of the investments in this segment in 2010 will be for planned maintenance turnaround programs.

Despite the decrease in overall investments, there are exceptions, including several very large capital projects planned in the segment this year that stand out as opportunities for new construction or expansions. DuPont Tate & Lyle BioProducts LLC (Loudon, Tennessee) has secured an engineering firm to complete design and planning for a potential expansion of the company's Loudon polymers plant with an investment of approximately $60 million. Construction for this project could begin during the third quarter of this year if approved in the next couple of months. NA Industries Incorporated (Chattanooga, Tennessee) has also secured an engineer to help evaluate and design a major polymers project that will require the construction of a grassroot plant in Texas.

Despite the expected decrease in spending during 2010 for this and other segments of the CPI, operating rates in the industry have begun to increase in the past three to four months, signaling that the industry is slowly beginning to experience or is expecting improvements in the near future. As the confidence of consumers improves and export opportunities return, so will demand for plastics and polymers. So far, the stage appears set for at least some measureable improvements this year.

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