West Coast Chemical Industry Outlook Positive Despite Current Economic Climate

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Researched by Industrial Info Resources (Sugar Land, Texas)--At a time when all industries are examining future spending with an extra dose of scrutiny, chemical-plant owners along the United States' west coast had a tremendous year in 2008 and are optimistic that 2009 will not be as devastating as current market indicators show. Thanks mostly to two large hydrogen capacity projects in California, the Chemical Processing Industry (CPI) on the west coast began construction for more than $500 million in capital and maintenance projects during 2008. This is almost double the level of CPI spending that would be considered normal for this region, which is home to only 263 chemical plants that employ an estimated 16,000 people.

Looking ahead to the upcoming year, Industrial Info is currently tracking an estimated $300 million in capital and maintenance project activity for the CPI on the west coast as part of the North American Project Database. The largest of these projects is being planned by the Yasheng Group Limited (Redwood City, California), which is currently working with a design-build contractor for the construction of its planned grassroot chemical logistics center to be located in Victorville, California. Plans for this new plant have been in development for several years and it appears that enough momentum was made ahead of the current economic setbacks to keep the first phase of this new complex moving forward.

Even without Yasheng's major investment plans, there is still an estimated $200 million in additional CPI spending planned to begin construction in the region during 2009. Air Liquide Industrial U.S. LP (Houston, Texas), a subsidiary of Air Liquide AS (OTC:AIQUY) (Paris, France), is moving swiftly with plans to build a new air-separation unit and liquefier at its Etiwanda, California, plant that could cost an estimated $50 million to complete. Specialty Chemical Products (Rock Island, Washington), with the help of selected engineering and construction management firms, plans to award subcontractors this month to begin construction early next year for the company's planned brownfield precipitated silica plant in Moses Lake, Washington. These project owners aren't alone in their confidence of the west coast market--more than one grassroot CPI plant is being considered in the region for next year, combined with more than 20 planned chemical-plant maintenance turnarounds currently identified.

The project activity reported for next year does include spending for a production unit closure by The Dow Chemical Company (NYSE:DOW) (Midland, Michigan). Dow Chemical is planning to permanently close and possibly dismantle a latex-production unit located in its Pittsburg, California, plastics plant. Three CPI plants permanently closed their doors during 2008 in the region, including Huber Engineered Materials Company (Atlanta, Georgia) in Longview, Washington, Kelly-Moore Paint Company Incorporated (San Carlos, California) in Seattle, Washington, and Valspar Composites (NYSE:VAL) (Minneapolis, Minnesota) in Gardena, California. So far, no other chemical plant closures have been identified for next year.

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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.