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Wednesday, April 9, 2014

Petrochemical Industry Feeling Impact From Shale Development

From the Akron Beacon Journal:
Petrochemical and manufacturing conferences held this week continued to highlight the enormous potential of U.S. shale development and a long sustainable tail. IHS chemical estimates that $125 billion in petrochemical announcements have been announced related to U.S. shale with more remain likely to come. Supportive of CBI, FLR, JEC, KBR.

• The IHS (IHS) world petrochemical conference this week hosted several major petrochemical companies and each appeared more bullish than a year ago. IHS estimates last year suggested the U.S. petrochemical industry could add 85 million metric tons of new capacity by 2030 spending $120 billion. IHS 2014 estimates increased to 105 million metric tons by 2024. IHS pointed to a U.S. capital spending peak during 2016 of $14 billion, or 4x current levels. Project costs could increase around 4% per year through 2020. Importantly, we believe engineering & construction (E&C) suppliers can benefit from increasing margins and reasonable risk profiles. IHS cited a resurrection in U.S. manufacturing in energy-intensive industries including plastics, rubber resins, and metals manufacturing.
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