Formaldehyde, like so many other building block chemicals, experienced a decline in both demand and pricing during 2001. Recovery seems to be in sight as already this year over five projects have been identified, totaling an estimated $85 million in capital expenditures planned to take place over the next 18-24 months.
Although pricing and supply have not completely recovered, these projects could mean additional capacity for a sector of the chemical industry that is beginning to see an increase in demand as a more favourable outlook for the industry is coming together. A few of the projects that have been identified represent small kettle additions that will accomplish an increase in production capacity through unit efficiencies, while the other expenditures are very aggressive plant expansions. This is a tremendous increase in spending. Formaldehyde is a colourless liquid widely used in the formation of plastics, resins, sterilising agents, and preservatives. The largest single use of formaldehyde is for production of particleboard and plywood used in the housing industry. Continued strength in the housing industry will be a key ingredient to building a strong demand for formaldehyde.
