North American Chemical Industry Finishes 2008 with More Strength Than it was Credited

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Researched by Industrial Info Resources (Sugar Land, Texas)--The North American Chemical Processing Industry (CPI) has been dramatically affected by the poor global economic climate, yet during the fourth quarter of 2008, the industry still began construction on an estimated $1.6 billion in capital and maintenance project activity. This level of activity doesn't suggest that the CPI is immune to current economic hurdles, but it does reinforce that the industry is a large and mature group of plants that will continue to spend big dollars for incremental growth and maintenance projects.

Almost daily we get reminders of just how grim the short-term outlook is for the industrial market in general. Some sectors of the CPI are feeling the pinch more immediately than others while some sectors are almost split within themselves. The industrial gases sector continues to have a favorable outlook for hydrogen and only marginal demand requirements for traditional gases like oxygen and nitrogen. Several grassroot plants and major unit additions in this sector began construction late last year despite the short-term outlook being less than desirable. Air Products & Chemicals Incorporated (NYSE:APD) (Allentown, Pennsylvania), Linweld Incorporated (Lincoln, Nebraska), and Matheson Tri-Gas Incorporated (Basking Ridge, New Jersey) each began major projects in this sector during the four quarter of 2008, representing a combined $150 million in new projects.

The Southwest market region of the United States contributed more than $630 million of the CPI spending during the last quarter of the year from 55 individual projects. Chemical producers in the Great Lakes, Mid-Atlantic and Midwest regions contributed more than $200 million each to the total, a significant spend for regions not generally thought of as big spenders in the CPI. In the Southwest, PetroLogistics LLC (Houston, Texas) began construction to convert a former ExxonMobil (NYSE:XOM) (Irving, Texas) ethylene plant in Houston to produce propylene through propane dehydrogenation. In the Great Lakes region, the largest CPI project to get under way before the year ended was a major expansion by Erco Worldwide (Toronto, Ontario) at its chlorine plant in Nekoosa, Wisconsin. This nearly $130 million project has been under development for several years and will eliminate the use of mercury cell technology for the production of chlorine when complete.

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