Outlook Positive for 2013 Construction Kickoffs in U.S. Chemical Processing Industry

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Chemical Processing Industry (CPI) has seen a dramatic increase in its number of projects that are likely to begin construction in the United States. Industrial Info has identified 231 projects with a total investment value of more than $11 billion that have been given funding approval for construction kick-off in 2013.

Throughout 2012, only 128 capital projects valued at almost $6.9 billion began construction. At the end of the first quarter of 2013, the projects already approved to begin construction during the year are approximately $4 billion higher than all the projects that began construction in 2012. Although this number is expected to fluctuate over the course of the year, it shows a much more positive outlook for the CPI than in years past.

This considerable increase in projects is primarily a result of the low cost of natural gas feedstock. Several companies are rushing to take advantage of this inexpensive raw material and are looking to either expand existing plants or build new ones. One product that has felt the effect of the economical feedstock is ethylene. There are three major ethylene projects that have been approved to begin construction this year with a total investment of almost $800 million.

LyondellBasell Industries (NYSE:LYB) (Rotterdam, Netherlands) is looking to expand the capacity of the QE1 ethylene unit in La Porte, Texas, by 850,000 metric tons per year through the installation of new furnaces. This project, which is likely to kick off soon, is expected to be completed by the end of the first quarter of 2014.

Ethylene is most commonly used as a feedstock to produce several other chemicals. With the increased capacity of ethylene, downstream products are most likely going to expand capacity as well. Currently, there are four additional projects, with a total investment value of more than $500 million, that utilize ethylene as a feedstock and are expected to kick-off construction later this year. Each of these units or expansions is located along the Gulf Coast in Texas, which traditionally hosts most of the petrochemical producers. It also is where much of the new planned ethylene capacity is located.

Noltex LLC (La Porte, Texas), a joint venture between Mitsubishi Chemical Corporation and Nippon Synthetic Chemical Industry Company Limited, is currently planning to construct a third production line for ethylene vinyl alcohol (EVA), a downstream derivative of ethylene, at its plant in La Porte. Together with Toyo Engineering, Noltex hopes to begin construction next month, with the new capacity to be online by mid-2014.

As has been the case in the last several months, the fertilizers industry has seen an uncharacteristic outpouring of new capacity that is planned to hit the market. More than $4 billion has been approved for projects that are to begin construction in 2013. Midwest Fertilizer Corporation, a subsidiary of Fatima Fertilizer (Lahore, Pakistan), is hoping to begin construction on its $1.3 billion ammonia, urea and nitric acid plant by the third quarter of this year. These plans have been under scrutiny, but the owners seem hopeful that the project will stay on schedule.

There are an additional 127 projects valued at $9 billion that Industrial Info is currently tracking that have construction kick-off dates in 2013, but have not been approved. As the year progresses, additional projects are expected to be approved and kick off construction.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.