SLUGGISH BUT STABLE YEAR FOR INDUSTRIAL CHEMICALS IN 2016, PROMISING PROSPECTS FOR 2017
Sales of industrial chemicals are estimated to come in at $22.9 billion for 2016 says the Chemistry Industry Association of Canada (CIAC) in its annual survey of business conditions published today. The estimate represents a 2% fall compared to 2015, and a 3% increase in volume.
The survey also revealed that production volumes increased 3% compared to 2015, while operating profits are expected to decrease 9% for the year. However, the chemistry industry is experiencing its ninth consecutive year of high profits since the last recession.
“While sales were sluggish in 2016, profits remain good in historical terms,” said CIAC President and CEO Bob Masterson.
Looking ahead, a 1% increase in overall sales is forecast for next year, while production volumes are expected to fall by 2%, and operating profits are expected to continue their downward trend. Though exports for 2016 are expected to decrease 4% to $18.5 billion, a 1% increase in exports is forecast for 2017, suggesting some improvements in key export markets. These increases are expected to result in modest growth for the industry.
The year has closed out with prospects for new investments in Alberta under the Petrochemicals Diversification Program, and the provinces of Ontario and British Columbia exploring ways to facilitate investment within their jurisdictions. At the same time, recent announcements related to OPEC production cuts and Canadian pipeline approvals could also stimulate investment and growth in oil exploration and production in Canada. Chemistry companies supplying the oil industry would benefit directly.
“Looking to 2017,” said Masterson, “we expect competition for investment and market share to be fierce. All eyes will be on the new administration in Washington. All governments in Canada will need to be attentive and responsive.”
The full report can be found in the CIAC website here.