Second-Quarter Chemical Project Cancellations Decline in North America

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Plant owners in the Chemical Processing Industry (CPI) of the United States and Canada haven't said that things are back to normal, but they are cancelling and delaying fewer projects. Based on projects identified as part of Industrial Info's North American Project Database, only 21 capital and maintenance projects previously identified as planned to begin construction during the second quarter of 2010 have been cancelled or placed on-hold indefinitely, with a total investment value (TIV) of approximately $300 million. This is down sharply from nearly 51 projects during the same time frame last year, which had a TIV of nearly $500 million. Although demand hasn't improved across the board, most CPI plant owners are beginning to witness an increased optimism on the outlook for the industry.

Overall total spending during the second quarter is expected to remain constant with spending levels of 2009, with just more than $1 billion beginning construction in the United States and Canada. Last year, a large number of the cancelled projects were a result of bankruptcies, lack of financing options, failed mergers, and other factors related to the recessionary period. This year, the cancellations seem to be more closely related to changes in niche markets and less by the general health of the industry. Solvay Advanced Polymers LLC (Augusta, Georgia) has put plans on hold for a second-phase expansion of the company's Amodel Unit in the Augusta. Ashland Incorporated (Wilmington, Delaware) has cancelled plans for installing a new powerhouse separating it from a shared agreement with a neighboring plant, and has plans to upgrade its existing infrastructure.

Niche market opportunities could drive the largest amount of CPI spending moving forward until 2012, or until significant spending in core segments of the industry, such as petrochemicals and plastics, recover strongly. Plans by SNF Incorporated (Riceboro, Georgia) and K2 Pure Solutions (Toronto, Ontario) are great examples of very large projects planned to begin construction during the second quarter that are both serving very niche markets that were impacted less by the recent recessionary period.

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