Project Cancellations in 2008 Up Slightly for Chemical Processing Industry

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Researched by Industrial Info Resources (Sugar Land, Texas)--As the first month of the new year came to a close, the uncertainty of global markets became apparent. This wave of uncertainty swept across the Chemical Processing Industry (CPI) like so many others, although the impact is not likely to be as deep or permanent, considering the strong fourth-quarter numbers consistently being posted by most in the industry. A good many of the CPI majors are posting excellent -- even record-breaking -- profits for the closing quarter of 2007. The success of the CPI is consistent with the increased spending identified by Industrial Info as part of its North American Project Database.

Of the estimated $10.2 billion in CPI capital and maintenance project activity originally identified to begin construction during 2008 in the United States and Canada, only $650 million has been identified as on hold or canceled so far. This equals only 6% of the total investment value (TIV) originally planned for this year and represents slightly more then 40 projects. This is markedly higher than at the same time last year when only an estimated $240 million in project activity had been identified as on hold or canceled. This can be attributed to several large individual projects, such as canceled plans by Mitsubishi Rayon America Incorporated (New York, New York) for a nearly $150 million grassroot MMA plant in Texas or by BASF Corporation (Florham Park, New Jersey) for an estimated $100 million hydrogen peroxide to propylene oxide (HPPO) unit addition at its Geismar, Louisiana, plant site.

Despite the increased level of project delays, the recent market uncertainties and the effects of an election year, the CPI is expected to start the year strong with more than $2 billion in project activity beginning construction in the first three months of this year. Based on current project activity, March could see a level of investments beginning construction at nearly $1.4 billion, making it the largest investment month of the year. March will be the month that several large projects get underway, including a major modernization of the Oxyvinyls LP (Deer Park, Texas) polyvinyl chloride (PVC) plant in Pasadena, Texas, for more than $100 million.

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