Project Cancellations and Delays Continue to Pressure North American Chemical Producers

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Researched by Industrial Info Resources (Sugar Land, Texas)--In recent months, the Chemical Processing Industry (CPI) of the United States and Canada has taken drastic measures to combat the struggling economy, including the closure of plants, idling or even mothballing unprofitable units, and delaying both small and major projects. Only a few months ago, Industrial Info reported that more than 100 capital and maintenance projects, representing nearly $3 billion in total spending and that had originally planned to begin construction this year, had been postponed or cancelled entirely. Just past the mid-year mark, this number has grown to more than $4 billion.

Despite the size and number of projects delayed this year, less than half have been cancelled entirely, meaning that the majority have simply been delayed until 2010 or beyond. Although there are no clear signs of how quickly demand will increase for the North American CPI, there seems to be optimism amongst most producers that the outlook for mid- to late-2010 is showing potential improvements. Based on active projects already identified for 2010 as part of Industrial Info's North American Project Database, there is an estimated $11 billion already earmarked for the approaching year.

Looking at the geography of the projects that have been placed on hold, the U.S. Southwest market region is shouldering more then a third of the burden. This region is home to some of the country's largest integrated chemical plants, followed by the Southeast region. As the remaining months of this year progress, any improvements seen in these regions could mean potential improvements or relief elsewhere in the country.

For the spending and investment tide to turn positively in 2010, there will have to be a consistent increase in consumer confidence and consumer spending to drive increased investments in the automotive, electronics, housing and related consumer-driven markets. The CPI is accustomed to short-term pull backs in these markets, although the long-term retreat in spending has rippled through almost every commodity in the industry, prompting a decrease in capacity investments. Consumer markets have begun to show some signs of improvement, and an increase in momentum could come at a very opportune time as energy feedstock is at a low compared to recent years.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.