Strong growth in 2018, cautious optimism for 2019, Canadian chemistry industry survey shows
The Canadian chemistry industry is forecasting a six per cent increase in sales in 2018, reaching $25.4 billion, with exports having increased significantly, rising 10 per cent to over $20.5 billion, according to the Chemistry Industry Association of Canada’s (CIAC) Year End Survey of Business Conditions, released today.
Looking ahead, Canada seems poised to capture some of the next wave of capital investment with CIAC members anticipating a 65 per cent increase in capital expenditures in 2019. CIAC also expects the next round of Petrochemicals Diversification Program (PDP) announcements in Alberta will be made early in the new year.
“We are very pleased to see the chemistry industry numbers for 2018 and are cautiously optimistic about 2019,” said Bob Masterson, President and CEO of CIAC. “There is currently over $20 billion in new investment opportunities under consideration in the chemistry sector and CIAC has maintained that action is needed to ensure that Canada can compete with other jurisdictions for this investment.”
Historically, Canada has attracted approximately 10 per cent of the total chemistry investments in North America, but recently this share has plummeted to just two per cent. CIAC’s numbers look promising in reversing that trend. Some of the elements working in Canada’s favour include feedstock costs for petrochemical production, the federal government’s recent announcement for enhancements to the Accelerated Capital Cost Allowance, and the Alberta government’s investment support through the PDP.
“Measures such as these will help turn investment prospects into reality. Canada has world-class, low carbon resources to support chemistry manufacturing,” said Mr. Masterson.
Economic conditions overall remain stable, but there are some headwinds emerging such as new capacity additions coming online in the U.S. Gulf Coast. There continues to be concern that the rise of protectionism in parts of the world could limit the ability of export-intensive economies like Canada to access those foreign markets.
Additionally, there are ongoing logistical issues with transportation (specifically rail in Western Canada), and the development of climate change policy in Canada continues to remain uncertain and could affect the sector in 2019.
CIAC will continue to work with the federal government in 2019 to develop climate change policy and address transportation infrastructure, while closely monitoring global economic conditions.