Spending for Expansions of Formaldehyde Capacity Is on the Rise

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Formaldehyde, like so many other building block chemicals, experienced a decline in both demand and pricing during 2001. Recovery seems to be in sight as already this year Industrialinfo.com has identified over five projects totaling an estimated $85 million in capital expenditures planned to take place over the next 18-24 months.

Although pricing and supply have not completely recovered, these projects could mean additional capacity for a sector of the chemical industry that is beginning to see an increase in demand as a more favorable outlook for the industry is coming together. "A couple of the projects that we have identified represent small kettle additions that will accomplish an increase in production capacity through unit efficiencies, while the other expenditures are very aggressive plant expansions. This is a tremendous increase in spending compared to the seven projects totaling an estimated investment value of $20 million that we identified during the years 2000 and 2001. The geographies of these projects run from Canada all the way down to the Southwestern U.S.," stated Trey Hamblet, Chemical Group Manager with Industrialinfo.com. "Not since 1998 or 1999 have we seen this amount of proposed spending for this sector."

Formaldehyde is a colorless liquid widely used in the formation of plastics, resins, sterilizing agents, and preservatives. The largest single use of formaldehyde is for production of particleboard and plywood used in the housing industry. Continued strength in the housing industry will be a key ingredient to building a strong demand for formaldehyde.