Reported North American Chemical Processing Activity in June Reinforces Focus on Maintenance Spending

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Researched by Industrial Info Resources (Sugar Land, Texas)--The number of new capital and maintenance projects identified for the North American Chemical Processing Industry (CPI) remained relatively stable for the month of June, although the number of capital versus maintenance is changing sharply. Of the nearly 100 new CPI projects identified and reported for the first time during June, the majority of the project activity swung to maintenance, with nearly 60 projects valued at $165 million. As capital budgets continue to experience even greater levels of scrutiny and are often reduced drastically, maintenance projects provide plant managers and engineers the opportunity to increase efficiencies and implement process changes.

This isn't to say that capital spending has dried up completely. Last month, Industrial Info reported more than $500 million in new CPI projects identified for the first time across North America. Some of these new projects are grassroot plants, an indicator that some segments of the CPI continue to weather the current economic storms with optimism and are moving ahead with entirely new plant sites. Two good examples of grassroot construction moving forward are plans by Nalco Company (NYSE:NLC) (Naperville, Illinois) and Agrium Advanced Technologies, a business unit of Agrium Incorporated (NYSE:AGU) (Calgary, Alberta), to begin construction of new plants over the next year, despite current market circumstances.

In addition to the new project activity identified last month, another 300 previously reported projects were verified during June as still active, cancelled or on-hold. Of these, an estimated $12 billion in total project spending was verified as still active, with a future potential for construction in the next couple of years. This includes some of the very large government spending for uranium enrichment projects at Department of Energy plant locations across the United States, which will enjoy at least some stimulus-funding in the short term.

As evidenced by the large number of identified future maintenance turnarounds, planned maintenance routines are becoming an increasingly important strategy to ensure a plant's longevity, efficiency and its ability to meet market demands. These needs, along with a growing awareness and recognition of plant and process safety, will continue to drive maintenance spending despite an overall decline in plant spending. The largest maintenance turnaround opportunities are traditionally found in the United States' Southwest market region, although these opportunities can be found almost anywhere. Looking ahead at planned CPI maintenance turnarounds identified for the remainder of the year, more than 260 projects, valued at more than $600 million, are planned to begin construction during the last six months of this year. This is a sharp increase in historical maintenance spending levels and a significant opportunity for equipment and service providers.

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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.