Petrochemical and Plastic Resin Producers Top List of Biggest North American CPI Spenders for 2005

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Capital spending across most every segment of the chemical processing industry (CPI) has been strong during 2005. The top ten CPI Standard Industrial Classification (SIC) codes represent approximately $4.7 billion or 84% of the total $5.6 billion in capital investment planned to kick-off at CPI plants in North America (U.S., Canada, and Mexico) during 2005. Increased demand and a reduction in project cancellations have strengthened the outlook for many CPI producers, keeping spending levels high. See related Industry Alert titled: 2005 Project Delays Decline for Improving North American Chemical Processing Industry.

Click on the image at right to view a list of the top spenders by SIC code group for 2005 by TIV and project count.

Plastic resin and petrochemical producers are performing some of the largest capital projects in 2005, spending $2.7 billion, more than half of the industry total, across nearly 200 projects. These two groups of producers commonly lead capital investments as they directly serve the production of downstream chemical intermediates with feedstock and supply plastic producers with resins for molding and extrusion of consumer products. The continually improving demand outlook and increased pricing for propylene, ethylene, aromatics, and many other petrochemicals is supporting the trend for capital investments in unit additions, technology upgrades, and unit retrofits.

Some of the largest investments are already underway this year, including major unit additions by BASF Corporation (Budd Lake, New Jersey) at its Freeport, Texas plant site, totaling nearly $200 million in capital investments. CDI Engineering Group (Houston, Texas) has been hired to provide engineering services for large portions of these investments. Shintech Incorporated (Houston, Texas) appears to be making progress with plans for the first phase of its new vinyl complex to be located in Plaquemine, Louisiana, where civil construction is expected to begin by the year’s end. Construction could also begin late this year for a major purified terephthalic acid (PTA) unit addition in Altamira, Mexico planned by Petrocel-Temex Monterrey SA (Mexico City). Uhde Jacobs Mexico SA de CV (city, state) has been selected to provide E+P+C/M services for this estimated $250 million project.

The exceptionally strong performance of agricultural chemicals and fertilizers will likely place the sector as the third largest in capital spending for 2005 with over $400 million in capital projects. See related Industry Alert titled: Fertilizer Markets Continue to Perform Well in 2005 with Spending Nearing $400 Million.

Industrial gas producers have continued a trend of large investments during 2005 with more than 23 projects forecast to begin construction this year, representing over $320 million. Much of this spending is related to new hydrogen capacity needed by petroleum refiners to meet approaching deadlines for ultra low sulfur fuels. Although little grassroot capacity for traditional air separation has been constructed in recent years, smaller onsite generation systems and unit retrofits are being evaluated to meet incremental demand increases.

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