Monday, December 16, 2013

The used plant market

...In June, the biotechnology firm Affymax auctioned off pharmaceutical equipment at its Palo Alto, Calif., facility, raising $1.4 million. Earlier in the year, Affymax recalled its only product, a drug to treat anemia. The company announced it would restructure itself and might declare bankruptcy. 
Idle equipment from firms such as Hoku and Affymax was once likely destined for the scrapyard or a ship bound for China, but these days it may end up back on U.S. production lines. Used equipment dealers are anticipating a resurgence in U.S.-based manufacturing brought on by cheap energy and raw materials derived from shale gas. 
Right now, dealers have huge inventories of unused plants and equipment. Although some of that inventory comes from recent bankruptcies or business reversals, even more idle equipment is sitting around because of mergers and industry consolidations, some of those going back to the Great Recession of 2008. 
International Process Plants, which buys petrochemical, pharmaceutical, fertilizer, and oil-refining plants, owns 100 complete process plants for sale, according to IPP President Ronald H. Gale. 
IPP’s inventory includes methanol, hydrogen, polyester, and polyethylene facilities. Until recently, a lot of used plants and equipment went from the U.S. and Europe to buyers in the developing world, Gale says. But low-cost U.S. natural gas is beginning to change the flow of asset purchases. 
In what he hopes may be a harbinger of things to come, Gale says some used plants and equipment are being shipped to the U.S. from overseas. His firm recently sold a pharmaceutical-grade glycerin purification plant in the U.K. to a customer who relocated it to the U.S. 
But the cost of moving large equipment over long distances can be high. Gale is counting on the planned buildup of shale-gas-fueled petrochemical facilities by firms such as Dow Chemical, Shell Chemicals, and Braskem to drive up U.S. demand for some of the downstream plants that IPP owns.
If I had all the time in the world, I would keep track of this more closely than I do. It's always interesting to me, the secondary markets in used equipment. 

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