Chemical processing industry finishes year on a strong note

01/24/2006


Houston, TX —The Chemical processing industry (CPI) ended 2005 in a strong way, with more active projects than in 2004 and fewer project cancellations, research by Industrial Information Resources (IIR), a marketing information service company, shows. North American CPI appears poised for a stable year, with favorable economic conditions supporting a spending increase in 2006.

Number of active projects in 2005 rose 18%, or 136 projects, over 2004, the study shows. Much of the increase is attributed to CPI plant owners’ successfully continuing to pass along price increases that equal or outweigh increased energy and feedstock costs over the past several years. The trend, says IIR, is boosting profits and generating dollars for reinvestment, capacity increases, and technology upgrades aimed at energy efficiency and reliability gains.

 

Forecast and actual total spending were fairly consistent and much less turbulent than in 2004, says IIR’s 2006 Global Industrial Outlook. Spending continued despite the high energy and feedstock costs. Major hurricane and storm related disruptions in the Gulf Coast affected operating rates in regions not hits by the storms, ultimately securing higher commodity pricing and increased demand from fewer plants.

 

Average project total investment value (TIV) in 2004 increased substantially over the previous year, rising nearly 15% to $111.4 million. This level is up from an estimated $9.7 million in 2004. Average TIV is expected to increase significantly again in 2006, possibly topping $18 million. Organic and inorganic industrial chemicals and plastics and resins producers accounted for half of the CPI spending in 2005. These segments are generally considered benchmarks of the overall health of this industry. Their solid performance is expected to drive the CPI into another successful year of capital investment, says IIR.

Click here for more on the report.

—Control Engineering Daily News Desk
Jeanine Katzel, senior editor, jkatzel@reedbusiness.com





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