Reports related to this article:
Project(s): View 5 related projects in PECWeb
Plant(s): View 3 related plants in PECWeb
Released February 19, 2024 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--The North America Industrial Spending Index for January shows that project spending fell for eight of the 12 industries tracked by Industrial Info. But one of the industries that exhibited a substantial increase was Chemical Processing, which featured a year-over-year spending jump of nearly 117%.
Chemical Processing's total investment value (TIV) for January was nearly $77 million, up from $35 million in January 2023. The Spending Index is a monthly indicator that compares active spending rates with the same month in the previous year to get a measure of growth or contraction in the industrial market. The index provides spending details by industry and market region.
The index numbers seem to align with an assessment for project spending in 2024 by Trey Hamblet, IIR's vice president of research for Chemical Processing and Refining. Speaking at Industrial Info's 2024 North American Industrial Market Outlook event, Hamblet said he expected to see an increase in North American Chemical Processing project spending this year, especially after a less-than-anticipated spend in 2023.
The value of U.S. and Canadian projects kicking off construction in 2023 ran slightly more than $11 billion, far less than the anticipated $13 billion to $14 billion for the year, Hamblet said.
"We had a tough year for the chemical industry overall" in 2023, due to a number of factors, he said. Last year's project spending was weighed down by inflation, worries about a recession in different parts of the world and geopolitical problems. Also, the world continues to wait for China's economic growth to restart, which may not happen for a couple of years.
For 2024, the value of projects anticipated to kick off construction in North America totals $21 billion, according to Industrial Info's calculations.
Hamblet acknowledged that for the project kickoff spend to go from $11 billion in 2023 to $21 billion in 2024, is "not a normal growth pattern," but added that some big-ticket carbon capture and blue hydrogen commodity projects could contribute to growth this year.
As an example, he pointed out Dow Incorporated's (NYSE:DOW) (Midland, Michigan) Path2Zero investment in Fort Saskatchewan, Alberta. The company plans to build what it says will be the world's first net-zero Scope 1 and 2 emissions integrated ethylene cracker and derivatives plant.
The US$6.5 billion project--excluding government incentives and subsidies--includes a new ethylene cracker designed to increase polyethylene capacity by 2 million metric tons per year as well as retrofitting the site's existing cracker to net-zero Scope 1 and 2 emissions. The project kickoff is planned for the first quarter of 2024. Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing Project and Plant databases can click here for the "Alberta Path2Zero" project reports and click here for the related plant profile. For related information, see November 29, 2023, article - Dow Reaches FID for Alberta 'Path2Zero' Ethylene/Polyethylene Project.
Also, "we have an impressive number of expansions and capacity (increases) in Louisiana and Texas," Hamblet said.
And then there's the ethylene component. He said a substantial oil-to-gas price ratio and the long-term demand outlook for plastics are drivers for new ethylene construction starts planned for 2024 and 2025. Industrial Info is tracking nearly 18 billion pounds of new annual ethylene capacity projects that could kick off construction in the next two years. To be sure, all of that capacity is unlikely to kick off during this period for a variety of reasons, but even a portion of that amount would be substantial, Hamblet said.
On top of all that, there's the environmental, social and governance (ESG) factor. In October, the global impact of ESG on the chemical industry was estimated at $433 billion, including $120 billion in the U.S. and Canada, Hamblet said. Since then, that number has grown by $48 billion.
In the U.S., much of that growth is due to government incentives such as the Inflation Reduction Act of 2022. However, many of those ESG-related projects are at a high risk of being moved out to later years.
On the other hand, "I think it's likely we'll get some 'blue' hydrogen this year," he said. There are 15 to 18 individual blue hydrogen projects that have been planned or proposed and "I do think we will start seeing some material movement in some of those projects."
"Blue" facilities are designed to produce hydrogen, ammonia or similar commodities with traditional feedstock and deploying carbon-capture technology to negate the effects of CO2 emissions.
Hamblet said he had a more pessimistic view regarding those projects tied to the production of "green" hydrogen, which makes use of renewable energy such as wind to produce electricity for the electrolysis of water, separating the water molecule into its hydrogen and oxygen components.
Some $8.2 billion in green-hydrogen-related construction starts are planned for 2024, but Hamblet sees two major issues that could push many of those starts into future years.
The first issue involves developing enough renewable energy to produce green hydrogen, he said.
The second issue is finding a "home" for green hydrogen end-products.
"It's great to have all these incentives to build capacity but they have to be consumed somewhere" he said. Searching Industrial Info's GMI Project Database, Hamblet said he found there aren't nearly enough projects related to hydrogen-fueled vehicles, hydrogen fuels and other products to consume all the planned green hydrogen capacity.
Looking at hydrogen-fueled boilers and related power generation projects, he said he found a "big multi-billion-dollar number," but there were relatively few projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
Chemical Processing's total investment value (TIV) for January was nearly $77 million, up from $35 million in January 2023. The Spending Index is a monthly indicator that compares active spending rates with the same month in the previous year to get a measure of growth or contraction in the industrial market. The index provides spending details by industry and market region.
The index numbers seem to align with an assessment for project spending in 2024 by Trey Hamblet, IIR's vice president of research for Chemical Processing and Refining. Speaking at Industrial Info's 2024 North American Industrial Market Outlook event, Hamblet said he expected to see an increase in North American Chemical Processing project spending this year, especially after a less-than-anticipated spend in 2023.
The value of U.S. and Canadian projects kicking off construction in 2023 ran slightly more than $11 billion, far less than the anticipated $13 billion to $14 billion for the year, Hamblet said.
"We had a tough year for the chemical industry overall" in 2023, due to a number of factors, he said. Last year's project spending was weighed down by inflation, worries about a recession in different parts of the world and geopolitical problems. Also, the world continues to wait for China's economic growth to restart, which may not happen for a couple of years.
For 2024, the value of projects anticipated to kick off construction in North America totals $21 billion, according to Industrial Info's calculations.
Hamblet acknowledged that for the project kickoff spend to go from $11 billion in 2023 to $21 billion in 2024, is "not a normal growth pattern," but added that some big-ticket carbon capture and blue hydrogen commodity projects could contribute to growth this year.
As an example, he pointed out Dow Incorporated's (NYSE:DOW) (Midland, Michigan) Path2Zero investment in Fort Saskatchewan, Alberta. The company plans to build what it says will be the world's first net-zero Scope 1 and 2 emissions integrated ethylene cracker and derivatives plant.
The US$6.5 billion project--excluding government incentives and subsidies--includes a new ethylene cracker designed to increase polyethylene capacity by 2 million metric tons per year as well as retrofitting the site's existing cracker to net-zero Scope 1 and 2 emissions. The project kickoff is planned for the first quarter of 2024. Subscribers to Industrial Info's Global Market Intelligence (GMI) Chemical Processing Project and Plant databases can click here for the "Alberta Path2Zero" project reports and click here for the related plant profile. For related information, see November 29, 2023, article - Dow Reaches FID for Alberta 'Path2Zero' Ethylene/Polyethylene Project.
Also, "we have an impressive number of expansions and capacity (increases) in Louisiana and Texas," Hamblet said.
And then there's the ethylene component. He said a substantial oil-to-gas price ratio and the long-term demand outlook for plastics are drivers for new ethylene construction starts planned for 2024 and 2025. Industrial Info is tracking nearly 18 billion pounds of new annual ethylene capacity projects that could kick off construction in the next two years. To be sure, all of that capacity is unlikely to kick off during this period for a variety of reasons, but even a portion of that amount would be substantial, Hamblet said.
On top of all that, there's the environmental, social and governance (ESG) factor. In October, the global impact of ESG on the chemical industry was estimated at $433 billion, including $120 billion in the U.S. and Canada, Hamblet said. Since then, that number has grown by $48 billion.
In the U.S., much of that growth is due to government incentives such as the Inflation Reduction Act of 2022. However, many of those ESG-related projects are at a high risk of being moved out to later years.
On the other hand, "I think it's likely we'll get some 'blue' hydrogen this year," he said. There are 15 to 18 individual blue hydrogen projects that have been planned or proposed and "I do think we will start seeing some material movement in some of those projects."
"Blue" facilities are designed to produce hydrogen, ammonia or similar commodities with traditional feedstock and deploying carbon-capture technology to negate the effects of CO2 emissions.
Hamblet said he had a more pessimistic view regarding those projects tied to the production of "green" hydrogen, which makes use of renewable energy such as wind to produce electricity for the electrolysis of water, separating the water molecule into its hydrogen and oxygen components.
Some $8.2 billion in green-hydrogen-related construction starts are planned for 2024, but Hamblet sees two major issues that could push many of those starts into future years.
The first issue involves developing enough renewable energy to produce green hydrogen, he said.
The second issue is finding a "home" for green hydrogen end-products.
"It's great to have all these incentives to build capacity but they have to be consumed somewhere" he said. Searching Industrial Info's GMI Project Database, Hamblet said he found there aren't nearly enough projects related to hydrogen-fueled vehicles, hydrogen fuels and other products to consume all the planned green hydrogen capacity.
Looking at hydrogen-fueled boilers and related power generation projects, he said he found a "big multi-billion-dollar number," but there were relatively few projects.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).
