The Chemical Processing Industry to End 2006 with a 14% Increase in Forecast Project Activity During the Fourth Quarter

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Researched by Industrial Info Resources (Sugar Land, Texas). Industrial Info had originally forecast 147 capital and maintenance projects planned to begin some phase of construction during the last quarter of 2006. After careful analysis and monitoring of over 734 active CPI projects currently being tracked in the United States and Canada, the number of CPI projects expected to begin construction during the fourth quarter of 2006 has increased by 14% to 171 projects valued at over $1 billion in total investment value (TIV).

Click on the image at right to view a chart showing the breakdown of projects by region.

The additional project activity comes from projects originally forecast to begin construction earlier this year and added another $159 million to the TIV for the fourth quarter of 2006. Twelve projects originally planned to begin construction this fall have been cancelled or placed on hold equaling a loss of over $400 million in capital spending. Despite the net decrease or gap in spending for the quarter, a double-digit increase in project activity is a very positive indicator in today’s market where plant owners are being squeezed by the increased cost of transportation and the volatile cost of feedstock. Gap Measurement refers to a method of benchmarking active capital projects and capital spending forecasts from two periods and measuring the gap, or fallout, between the two periods.

Looking back to compare project activity for the last quarter of 2005, Industrial Info only identified 119 CPI projects with a TIV of just over $733 million of which 23 projects were cancelled or indefinitely placed on hold. This shows a substantial increase in forecast project activity in comparing the two quarters and supports Industrial Info’s published Confidence Factor for the CPI of over 60%. As the year comes to a close, everyone, including plant owners and equipment & service companies, watch the industry to determine the mood for investments leading into the New Year. So far, the outlook is positive.

Some of the most significant project activity during the fourth quarter is expected to take place in Southwest and Great Lakes market regions. These two regions represent almost half of the total project activity and well over half of the total spending for this time period. The largest project in the Great Lakes region is a major replacement of two large coal-fired boilers. A turnkey contractor has been selected for the $30 million project that will include the installation of four new oil and natural gas-fired boilers. The most significant capital project in the Southwest region will likely be a major expansion of the polyols production at a chemical complex located in Geismar, Louisiana. Construction is planned to begin before the end of the year for the estimated $80 million project.

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Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.