Competitiveness and Trade related articles

New federal budget appropriate to current crisis circumstances, CIAC

The Chemistry Industry Association of Canada (CIAC) acknowledges the new federal budget tabled yesterday will play an important role in supporting Canadians and Canadian businesses as they continue to cope with the current unprecedented public health and economic crisis. The budget also sends important signals and provides foundational fiscal supports for the future direction of the Canadian economy as it transitions to net-zero emissions by 2050.  

CIAC has identified a number of initiatives that will bring benefits to Canada’s chemistry and plastics sectors, including: 

  • funding for Canada’s world-leading Chemicals Management Plan of $476.7 million for a further five years to “continue to protect Canadians and the environment from exposure to chemicals that can be harmful”;  
  • the development of a new tax credit for carbon capture, utilization and storage; 
  • a $7 billion commitment to the Strategic Innovation Fund including the Net Zero Accelerator fund to support projects that help decarbonize heavy industry, support clean technologies and help accelerate domestic greenhouse gas emissions reductions; 
  • investing a further $1.9 billion in the Trade Corridors Fund to spur investments to our roads, rail, and shipping routes. 

There are things that are in this budget that will help with the greening of the economy. Chemistry will be front and centre in providing those solutions to all sectors of the economywhether through green energy, electric vehicles, low carbon products, energy storage and many others,” said Bob Masterson, President and CEO of CIAC.  

While this budget establishes important signals on the direction of the future economy, post-pandemic future budgets will need to prioritize attention on strengthening Canada’s capital investment environment. Achieving Canada’s long term economic, social and environmental objectives will require major changes in recent patterns of capital investment in Canada. 

CIAC and its members look forward to supporting Canadians on the path to net zero emissions and will continue to provide solutions for decarbonizing the economy. We will also continue to work with provincial and federal governments to keep plastics in the economy and out of the environment and to innovate to enable a circular economy for plastics.  

A Strong End to 2020 and cautious optimism with tailwinds into 2021

Industrial chemicals outperform manufacturing in November with 1.7% growth from October  

Industrial chemical shipments rose 1.7 per cent in November on the back of a 2.8 per cent surge in shipment for resin and synthetic rubber products. This was more than enough to offset a 2.6 per cent decline in basic chemicals shipments. The final months of 2020 saw all resin and basic chemical subsectors, except for inorganic chemicals, shipments recover to near the fiveyear average 

The potential for a resurgence of COVID-19, particularly in Asia as we approach the Lunar New Year, could render the best forecasts moot. That said, Canada’s chemical sector enters 2021 with a few tailwinds behind its back. The supply chain disruptions that occurred in the spring of 2020 and the rapid rebound in demand a few months later resulted in a drawdown of inventories to multi-year lows.  

Uneven demand recovery in downstream sectors and a very active hurricane season in the US Gulf Coast have led to a staggered production and output recovery which has kept North American demand/supply balances very narrow. CIAC expects to see strong counterseasonal demand early in 2021 as companies rebuild inventories ahead of the busier spring and summer months. 

This of course does not mean the recovery is complete and chemical products that have seen their downstream markets severely impacted continue to face headwinds. Products destined for transportation end markets (fuels, de-icing, lubricants, and additives) have been volatile and with significant capacity still to return to market margins remain under pressure. But as the calendar turned to 2021 oil and gas drilling has begun to pick upFurthermore, inventory drawdowns were not limited to industrial chemicals, re-stocking is occurring across the supply chain. Additional demand is expected as COVID-19 restrictions ease into the spring and summer and more parts of the economy re-open.  

Recent reports of multi-year highs for North American export prices of basic chemical and resin products such as linear low density polyethylene (LLDPE)high-density polyethylene (HDPE)polypropylene (PP)PVCmethanolchlor-alkalibode well for improved margins in Q1 2021The American Chemistry Council noted similar trends in the 2021 Outlook released earlier this year. Early Qearnings results show integrated chemical companies estimating low to single digit growth across product lines. Automotive and aerospace segments face headwinds into 2021 with uncertain near-term demand. 

“We are cautiously optimistic heading into 2021. We are seeing some good trends in resin markets with very robust demand down the product value chain,” says Bob Masterson, President and CEO of CIAC.
“Chemistry is a global business. We need to make sure Canada is competitive when the next wave of investment decisions is made. Last year, Alberta released the Alberta Petrochemical Incentive Program (APIP), a long-term plan to attract capital investment to the chemical sector. Chemistry is a growth business and we know that if you are standing still you are getting left behind. It is critical we attract new large-scale capital investments.

“We know that for the next round of investments companies are looking at feedstock cost, turnaround time and greenhouse gas intensity. Canada has abundant and diverse low-emissions feedstock, world-class storage and transportation infrastructure and growing markets for these products. We already know that governments of all levels are looking to capture that kind of investment and we need to see it here.”

Exports of chemical and plastic products continue to recover towards end of 2020

Chemical and plastic products continued to recover as 2020 wound to a close. Strong demand as economies re-opened in the summer and fall of 2020 brought chemical and resin inventories to their lowest levels in several years. Trade data from November shows exports of commoditized chemicals having their strongest end to a year in some time. The graphs below show the export volumes of some of Canada’s commoditized products through November.

On an aggregate level we are seeing the value of exported chemical and plastic products exceeding 2019 levels as we ended 2020. The American Chemical Council is a seeing similar trends to start the year.

Significant differences underlie these aggregate trends. Products whose downstream sectors remain deeply impacted by COVID-19 (auto manufacturing, oil and gas drilling, paper product manufacturing, and travel, as examples) or those continuing to face overcapacity or logistical pressures are further back in the recovery. Plastic Product manufacturers were severely impacted in the spring of 2020 by lockdown restrictions but since then, exports have reach multi-year highs. Strong demand from nearly all sub-sectors have been seen in the fall with auto parts and construction materials showing some counter seasonal trends this year.

Looking ahead

A crucial trend for 2021 will be further price strengthening accompany the strong demand. A large share of the gains seen in the graphs above are from volumetric gains. Margins remain compressed across a wide variety of chemical products. During third-quarter earnings calls in October 2020, several CEOs expected global chemical demand to remain tight through early 2021 with the normally slower winter months used to rebuild inventories and hopefully providing a boost to prices and seasonal demand normalizes in the Spring of 2021.

 

CIAC pleased to see Ontario government’s budget take steps for long-term economic growth

The Chemistry Industry Association of Canada (CIAC) congratulates the Hon. Rod Phillips, Minister of Finance, on the tabling of the 2020 Budget Ontario’s Action Plan: Protect, Support, Recover. We firmly support the government’s unprecedented efforts to support Ontario’s people and businesses in the fight against the COVID-19 and develop a framework for economic recovery.

CIAC is very pleased to see the government take concrete steps to create the conditions for long-term economic growth and prosperity. Of note, we highlight the following items:

  • New Electricity Plan for Growth & Job Creation that reduces the burden to industry of the high-cost energy contracts and better positioning Ontario against key competing jurisdictions.
  • Reducing taxes for job creators.
  • Continued commitment to cut unnecessary red tape through the Open for Business Action Plan.
  • Modernizing Ontario’s skilled trades and apprenticeship program.
  • Launching the Invest Ontario organization and focusing its efforts on advanced manufacturing, life sciences and technology.

Ontario’s $24.7-billion chemistry industry is the third largest manufacturing industry in the province, directly employing over 43,800 Ontarians in well-paying jobs and supporting another 260,000 Ontario jobs in other sectors. Our members are key employers in the Sarnia-Lambton, GTA/Niagara and Eastern Ontario regions of the province. Our sector provides important inputs to a range of key manufacturing sectors in the province including automotive, forest products, construction, and food and beverage. The chemistry sector is a key source of innovation and is an indispensable solutions provider in the area of global climate change and managing plastic waste. The industry is global and Ontario’s chemical manufacturers must compete globally both for market share and investment.

 

 

 

CIAC Welcomes Alberta Government’s Plan to Level the Investment Competitiveness Playing Field, Attracting Global-Scale Chemical Manufacturing Investments

The Chemistry Industry Association of Canada (CIAC) congratulates the Government of Alberta on launching the Alberta Petrochemical Incentive Program (APIP). Building on the strong chemical manufacturing focus within the recently unveiled Natural Gas Vision and Strategy, APIP will help level the investment competitiveness playing field and attract a surge of global-scale, multi-billion dollar investments in the province’s low-carbon natural gas-based petrochemical sector. 

“The Alberta government has a bold vision for growth of Alberta’s chemical manufacturing sector,” said Bob Masterson, President and CEO, CIAC. “The Alberta Petrochemical Incentive Program levels the playing field with other jurisdictions competing for new investment and makes that vision of a top global chemicals producer possible. The opportunity for growth in this sector exists in the province and that is good news for jobs, new global-scale investment, and Alberta’s economy.” 

The Alberta Government recognizes the importance and growth opportunity of a $12 billion sector that is Alberta’s largest manufacturing sector by exports and resource value-added. Alberta has an opportunity to diversify and build its economy on petrochemicals, a sector that has been resilient throughout the COVID-19 pandemic and is poised to see sustained demand continue for the foreseeable future. CIAC looks forward to working with the Alberta Government to attract new investment to the province. 

CIAC Responds to Ontario Government Improving Blue Box Program

The Chemistry Industry of Canada (CIAC) is pleased to support the Ontario Government’s recently announced plan to make a stronger, more effective Blue Box Program. The province is showing leadership that will help reduce the amount of waste entering the environment while moving toward a circular economy that focuses on recapturing, recycling, and recovering waste so it can be used as a valuable resource.

CIAC and its members also support implementing full Extended Producer Responsibility in the province, which transitions costs away from municipal taxpayers by making the producers of products and packaging fully responsible for costs and management of recycling systems. The government estimates municipalities will see a saving of $135 million annually. By adopting EPR, this places a natural incentive on producers to take the entire life cycle management of products into consideration, from selection of material and product design, to its recovery, recycling, and end-of-life management.

Ontario is just one of many provinces modernizing and advancing its recycling systems towards a circular economy by implementing producer-lead recycling programs and investing in innovations in recycling technology. CIAC believes that to eliminate waste from our environment, cooperation is key and this announcement shows the Ontario Government is eager to work with industry and other stakeholders to eliminate waste while rebuilding our economy.

Ontario government’s efforts to streamline regulation for the chemistry and plastics industry welcomed by CIAC

The Chemistry Industry Association of Canada (CIAC) congratulates the Ontario government and the Hon. Prabmeet Sarkaria, Associate Minister of Small Business and Red Tape Reduction on releasing the Better for People, Smarter for Business Act, 2020.

CIAC firmly supports the Ontario government’s commitment to streamline duplicate regulations that impact the competitiveness of the chemicals and plastics manufacturing sectors.  These measures will eliminate unnecessary cost, complexity and time, while protecting Ontarian’s health and the environment.

Among the initiatives contained in the Better for People, Smarter for Business Act, 2020., CIAC is very pleased to see the province:

Protect the environment and the people of Ontario by improving hazardous waste reporting

  • Making it easier for businesses to submit reports electronically instead of the current outdated system, which requires businesses to submit over 450,000 paper manifests to the Ministry of the Environment.

Address low-risk nuisance incidents

  • Update Ontario’s land use compatibility planning guidelines to help municipalities prevent new residences or other incompatible land uses from being approved near sites and industries that may create noise or odour impacts.

Support innovation and recover the value of waste

  • Committing to further engagement to support a strong circular economy and reduce the amount of waste going to landfills through the use of innovative technologies and processes such as advanced recycling and energy recovery technologies to help ensure valuable resources such as hard-to-recycle plastics can have a beneficial use, such as feedstocks for new plastics and synthetic fuels.

Alternate rules for the Operating Engineers regulation

  • Implementing alternate rules for businesses that use boilers or pressure vessels to produce their goods and services, as well as for operating engineers who run the facilities while maintaining strong commitment to ensuring public safety.

Consultations on proposed amendments for Pre-Start Health and Safety Reviews (PSR)

  • Continuing consultations aimed at amending the current Pre-Start Health and Safety Reviews PSR requirements for certain equipment and processes in factories to ensure they continue to reflect the realities of today’s workplaces.

Any action by CIAC members to address the environmental, economic and community impacts of our operations are governed by Responsible Care®, the UN-recognized initiative that ensures CIAC members innovate for safer and greener products and processes, and work to continuously improve their environmental, health and safety performance. Through the Responsible Care commitment, CIAC’s Ontario members have achieved a 47 per cent reduction in emissions targeted by the Canadian Environmental Protection Act over the past 10 years.

Ontario’s $24.3-billion chemistry industry is the third-largest manufacturing industry in the province, directly nearly 46,000 Ontarians in well-paying jobs and supporting another 230,000 Ontario jobs in other sectors.  Our members are key employers in the Sarnia-Lambton, GTA/Niagara and Eastern Ontario regions of the province.  We provide important inputs to a range of key manufacturing sectors including automotive, forest products, construction, and food and beverage.  Ontario chemistry sector  accounts for 44 per cent of the nation’s chemistry output. Additionally, Ontario’s plastics manufacturing sector is a $18 billion industry, directly employing over 49,000 Ontarians within 800 different businesses.  These sectors  provides important inputs to a range of manufacturing sectors including automotive, forestry, construction, and food and beverage.

CIAC is pleased to continue to work with the government on the many priorities to modernize business regulations to be outcome-focused and evidence-based while continuing to protect the public interest.

CIAC Responds to Federal Government’s proposed integrated management approach to plastic products to prevent waste and pollution

Plastics are vital to our modern way of life and are used to advance our society’s environmental, health and safety priorities, including a transition to a net-zero emissions future. However, plastic does not belong in landfills or the environment, it belongs in the economy.

The Chemistry Industry Association of Canada (CIAC), remains firmly of the view that the Canadian Environmental Protection Act (CEPA), 1999 is not an appropriate tool for managing post-consumer plastic waste. CIAC supports the development of national waste legislation that will provide the appropriate authorities and the tools to support advancing a circular economy for plastics in Canada.
CIAC is also concerned with the emphasis on banning certain products solely because they are widely used in society and are improperly managed at end of use. Our goal, as a society, must be to properly manage and establish a circular economy for all plastics products. Today, important work is being done in all jurisdictions, including Alberta, British Columbia, Ontario and Quebec, to modernize and advance recycling systems towards a circular economy.

CIAC believes the Government of Canada should allow the appropriate time for consultation with industry and the provinces to ensure that its proposed approach to a circular economy for plastics is in line with the Canadian Council of Ministers of Environment (CCME) National Strategy and Action Plan on Zero Plastic Waste. We ask the Government to delay the timing of the addition of “manufactured plastic items” to Schedule 1 of CEPA in Canada Gazette Part 1 from October 10 until a period following the end of the public consultation on its Discussion Paper. This would allow sufficient time for industry and the provinces to provide input and ensure a decision is not made prematurely.

Canada’s plastics producers are taking important actions to address plastic waste on land, including source reduction, design for recycling, and reuse models; and investing in technologies to improve recycling. They have also made circular economy commitments to ensure that:
• 100 per cent of plastics packaging being recyclable or recoverable by 2030;
• 100 per cent of plastics packaging being reused, recycled, or recovered by 2040; and
• Implementation of Operation Clean Sweep by 2022, an international plastic stewardship program aimed at eliminating the escape of plastic pellets from industry operations, with a focus on preventing leakage into rivers and oceans.

Canada’s plastics manufacturers add $28 billion to the national economy annually and directly employ over 93,000 Canadians within 1,850 different businesses; 86 per cent of these are SMEs and the impact and job losses will be felt in communities across the country by family-run companies that have been operating for multiple generations.

CIAC will be providing advice to the federal government regarding its proposed integrated management approach to plastic products to prevent waste and pollution and we look forward to working with all levels of government in Canada to transition to a circular economy for plastics while maintaining well-paying jobs for thousands of Canadians.

CIAC Delivers Pre-Budget Submission, Focuses on Economic Recovery and Cooperation

Dedicated to helping Canada rebound from the impacts of the on-going COVID-19 pandemic, The Chemistry Industry Association of Canada (CIAC) delivered its pre-budget submission to the federal government on Friday, providing effective, realistic recommendations aimed at rebuilding the Canadian economy quickly, and in a cooperative manner.

The comprehensive paper outlines recommendations that ensure regulations stay in place to protect the health of Canadians and the environment while pushing for less red tape, R&D funding, and increased investment in chemistry and plastic industries which are essential to Canada—providing a nearly $70 billion to the Canadian economy in 2019.

“While Canada is showing signs of economic recovery, we remain well short of pre-COVID economic activity,” said Bob Masterson, President and CEO of CIAC. “Further progress is going to be difficult and hard-earned. The federal government must maintain a strict emphasis on economic recovery. There is no need to backtrack on current regulations, however, before introducing any new measures there must be evidence that those measures will contribute to and not detract from the much-needed economic recovery.”

Key recommendations in the pre-budget submission include:

  • Extend the full 100% Accelerated Capital Cost Allowance with no phase-out until 2030 and make it permanent to offset the damage of the COVID-19 pandemic;
  • Work with the provinces to maximize the impact of investment support programs by ending the taxation of investment support programs;
  • Reform the SR&ED program to help foster R&D in Canada by raising the investment tax credit to 20% from the current 15% and eliminating or substantially raising the upper limit for taxable capital phase-out range from the current $50 million, reinstating capital expenditure eligibility that was phased out beginning January 1, 2013; and eliminating the 20% disallowance on arm’s-length consulting payments;
  • Establish the Plastic Technology Innovation Fund (PTIF) with an initial allocation of $200 million, operated by Natural Resources Canada to further research and development of groundbreaking plastic technology applications in Canada.

With industries and all levels of government working in tandem toward the common goals of creating jobs and rebuilding the economy, CIAC believes Canada can have a bright, post-pandemic future.

Read Submission

 

 

 

 

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