Spending for the Canadian Chemical Processing Industry Remains Stable Despite Project Delays

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Researched by Industrial Info Resources (Sugar Land, Texas). An estimated $145 million in capital projects originally planned by chemical plant owners in Canada have been delayed until 2007. Another $30 million in capital and maintenance projects have been cancelled or indefinitely put on hold. Despite these set backs, the Chemical Processing Industry (CPI) of Canada is still on course to realize nearly $373 million in total capital and maintenance spending during 2006 from an estimated 53 projects. This almost mirrors the project activity identified for 2005 when an estimated $345 million in capital and maintenance activity was reported to have begun construction. The continued optimism of potential riches from the exploration of Western Canada’s oil sands and abundant access to natural gas will likely play a key role in sustaining the CPI’s long-term success in the region.

Click image right to view Spending Gap Analysis for the Canadian Chemical Market

Investments in capital projects by Canadian chemical plant owners have decreased substantially in recent years, down from historical highs of nearly a billion dollars per year only a few years ago. Alberta and Ontario share most of the active project activity with $232 million of the total scheduled to begin construction this year. The largest of the projects planned for 2006 construction starts include Air Products and Chemicals’ (NYSE:APD ) (Allentown, Pennsylvania) #2 hydrogen unit addition at its recently completed grassroot plant located in Edmonton, Alberta. Dynea Canada, Limited began site work for its planned formaldehyde resins plant to be located in Sexsmith, Alberta. One of the most significant projects planned to begin construction this summer in Ontario are plans by Lanxess, Incorporated (Sarnia, Ontario) to expand their 9,000 hp refrigeration system in the Sarnia plant to support more effective cooling of ethylene and propane feedstock.

Plans by QIT-Fer & Titane, Incorporated (Sorel-Tracy, Quebec) to delay the construction start for a second phase expansion of their titanium dioxide pigment plant located in Sorel-Tracy equals the majority of the postponed projects this year. Other significant project delays include plans by The Mosaic Company (NYSE:MOS ) (Minneapolis, Minnesota) to postpone plans for the expansion of its potash surface operations located in Belle Plaine, Saskatchewan. The most significant project cancellation for the year so far was the grassroot sodium hydrosulfite plant, originally sited for Montreal, Quebec, by Vimax Industries (Bucks, Alabama).

An early look at what next year has to offer reveals only a handful of projects currently identified representing approximately $400 million in capital and maintenance spending. Surprisingly, Quebec has the potential to lead new investments next year with just over half of the total spending based on active projects currently being tracked.

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