Chems capex growth to slow

Capital expenditure in the UK chemical industry grew strongly in 1997, but is set to increase `only in nominal terms' this year, according to the latest report from Market Business and Development (MBD). However, it adds, expenditure will stay at a high level.

Process plant expenditure exceeded £2.1billion in 1997, the report says. This will increase `slightly in nominal terms' through this year, relecting a `marginal decline in real terms.'

Overall, both process plant expenditure and capital expenditure have been highly erratic in recent years in all sectors, says MBD. In the oil and gas sector, for example, there has been considerable uncertaintly over taxation levels and almost unprecedentedly low crude oil prices. In the water industry, by contrast, process plant expenditure rocketed by 66 per cent in 1997, to £887million; a further 13 per cent increase is expected in 1998.

The future picture is mixed. Expenditure in the chemicals sector will decline in 2000, stabilise at a low level then begin to climb again, showing the typical cyclicality of the sector. MBD expects to see `significant declines' in both process plant and capital expenditures in the oil and gas industry, which is shifting away from fixed platforms towards floating facilities. The water industry will also see strong declines, possibly reaching 39 per cent by 2003. In petroleum refining, expenditure will fall overall.