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Analysis

Industrials M&A update: Q3 2018

While the ethylene and propylene industries are expected to experience an increase in demand, buildup delays may result in increased capacity utilization. Natural gas storage is also forecasted to increase as well. This Industrials mergers and acquisitions (M&A) update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the industrial products industry.

Industrials trends

  • Mining industry growth1: Peru, the world’s second-largest producer of copper, zinc, and silver, experienced eight consecutive months of investment growth this year, including a 6.3 percent increase in investment in August compared with last year. Newly initiated projects, part of a $58.5 billion portfolio of mining investments, could double Peru’s copper output, according to Francisco Ismodes, Peru’s Energy Minister.
  • Natural gas inventories2: Natural gas storage levels are expected to rise by 88.0 billion cubic feet following the last week of September 2018, increasing total stock to about 2.9 trillion cubic feet, 18 percent below the five-year average. The below average storage totals are attributable to an extended 2017 winter which increased heating demand and a warm 2018 summer which resulted in increased power consumption.
  • Drone usage growth3: The St. Louis region in the US has experienced increased drone usage throughout the construction, utility, and mining sectors. Drone technology has been evolving rapidly and companies are hurrying to harness its potential with large investments in exploration. In the mining industry, drones are optimizing delivery routes to reduce transportation costs. Drone integration across sectors is expected to continue to increase.
  • The outlook for petrochemical investments4: The petrochemical industry forecasts expanding demand and capacity; however, buildup delays may result in increased capacity utilization. Demand for ethylene and propylene has experienced particularly high growth, with global base chemical capacity forecasted to increase by more than 118 million metric tons through 2022. The additional capacity growth will likely be led by China, North America, and the Middle East.

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References

1 Lombrana, Laura. “Peru's Mining Investment Boom Leaves Political Woes Behind.” Bloomberg, 2018. https://www.bloomberg.com/news/articles/2018-10-01/peru-s-mining-investment-boom-leaves-political-turmoil-behind, accessed October 3, 2018.

2 Ramkumar, Amrith. “Natural-Gas Inventories Expected to Rise 88 Billion Cubic Feet” Dow Jones, October 3, 2018, https://snapshot.factiva.com/Pages/Index, accessed October 3, 2018.

3 “Exploring the Full Potential of Drone Technology.” Seychelles Nation, October 3, 2018. https://snapshot.factiva.com/Pages/Index, accessed October 3, 2018.

4 Smith, Mark. “Riding the next wave of investments in the US petrochemical industry.” Deloitte Insights, 2018. https://www.km.deloitteresources.com/sites/live/industries/KAM%20Documents/United%20States/KMIP-5600824/4384_Capital-investments-in-US-petrochemicals.pdf, accessed October 3, 2018.

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