North American Grassroot Plant Start-Ups See a Dramatic Rise in the Industrial Gases Segment of the CPI for 2008

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Researched by Industrial Info Resources (Sugar Land, Texas)--The industrial gases segment has been a widely profitable one for the Chemical Processing Industry (CPI) in recent years. This cannot only be seen through the substantial investments of a potential $900 million in capital and maintenance projects for 2008, but also in the record high planned new plant start-ups with a total investment value (TIV) of $580 million. More information can be found in the article "Planned Investments for New Industrial Gases Capacity Continue to Increase Sharply."

In 2008, an estimated 18 grassroot industrial gases plants are expected to begin operation. In comparison to previous years, this number is exceptionally elevated. In 2007, only three plants with the SIC code 2813 (Industrial Gases) started up, six in 2006 and not much change with four in 2005 as the pattern continues in the prior years. As discussed in the article, "Upbeat Outlook For Up-and-Coming CPI Plants during 2008 in North America,"the West Coast has a substantial foothold in the CPI predicted in 2008. This newly reenergized region is home to three of the grassroot industrial gases plants beginning operations with a total TIV of nearly $215 million, the highest investment total of any North American region. The Great Lakes region follows in a close second with an estimated $172 million spent on the construction of three plants.

The five companies of Airgas Incorporated (Radnor, PA), Linde AG (Weisbaden, Germany), Air Liquide S A (Paris, France), Praxair Incorporated (NYSE: PX) (Danbury, CT), and Air Products and Chemicals Incorporated (NYSE: APD) (Allentown, Pennsylvania) are responsible for almost 80% of the grassroot plants with a scheduled start-up date in 2008. Throughout previous years these companies have been the backbone of the industrial gases grassroot and capital project activity.

One reason that is believed to have had such a beneficial effect on this segment is the rise of oil prices. High oil prices are seen by most as a precursor to a slow economy. On the contrary, the higher oil prices so far have actually caused an increase in the industrial gases industry. Businesses can reduce their energy expenditure by consuming higher amounts of industrial gases, thus creating a greater demand for this sector.

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