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Engineering Industry Reports and Surveys
News Release from: ARC Advisory Group
Edited by the Engineeringtalk Editorial
Team on 07 November 2003
China and India set for plant expansion
The worldwide market for plant-level expenditures in the chemical industry will reach almost $241 billion by the end of 2008, according to a new study.
The worldwide market for plant-level expenditures in the chemical industry, which totalled more than $214 billion in 2003, will reach almost $241 billion by the end of 2008, expanding at a CAGR exceeding 2%, according to a new study by the ARC Advisory Group "After experiencing disappointing results during 2002, the worldwide chemical industry continues to be plagued by overcapacity, weak demand, and declining prices, but opportunities are available", says Senior Analyst Dave Clayton, author of ARC's "Chemical industry plant-level expenditures worldwide outlook"
"Capital spending trends and the health of the chemical industry is highly susceptible to both global and local economic influences", Clayton says.
"Although there is significant concern and consternation in the developed countries of Western Europe, North America, and Japan regarding the transfer of manufacturing to low labour cost countries, considerable opportunities are available for those companies that can take advantage of the dynamic growth now occurring in Asia, particularly in China and India".
Globalisation is a key trend that will help shape capital expenditures in the chemical industry over the forecast period.
Avid consumer demand for low-cost products is forcing many companies to look offshore to lower production costs.
Many chemical companies are expanding their presence in the developing regions of the world to take advantage of low-cost structures as well as growing demand for chemicals in these regions.
China, with its low cost labour and rapidly improving manufacturing capability, has been a major beneficiary of the move offshore.
India is also benefiting from the globalisation of the chemical industry; even if the country's economic growth has performed below expectations.
China and India offer a competitive advantage to chemical makers in terms of lower costs of production and growing demand.
Emerging Asian nations are widely recognised as major cost-effective producers of bulk generic chemicals for worldwide distribution but they are also becoming known for their rapidly growing local demand for chemicals.
Chinese and Indian companies are benefiting the most from the globalisation of the chemical market due to their lower cost structures and close proximity to the fastest growing demand for chemicals worldwide.
The dynamism of China and India's economies are the main driving factor behind the growth occurring in chemical investments worldwide.
China's production is skyrocketing reflecting its strong economic growth and signalling its upcoming status as a major global force in chemical industry.
Investing in China is not limited to US and European chemical firms.
The rise of China as a major player in the global chemical industry has also benefited the ailing Japanese chemical companies.
Now that China is a member of the World Trade Organisation, Japanese chemical companies are more willing to invest in developing manufacturing capacity in China.
Consequently, Asia will experience the strongest growth in chemical expenditures through the forecast period.
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