Today, the Chemistry Industry Association of Canada (CIAC) presented the prestigious CIAC Chair Award to Marcelo Lu, outgoing President of BASF Canada.
In presenting the award, current Chair and Chemicals Business Manager, Imperial Oil, Peter Noble recognized Mr. Lu as a “tireless promoter of CIAC, Canada’s chemistry industry and the Responsible Care® ethic that guides the industry in Canada and worldwide.”
The CIAC Chair Award recognizes Board members who have made extraordinary contributions to the work CIAC does on behalf of the industry and who are committed to living and spreading the ethic and principles of Responsible Care.
“In his role as BASF Canada President, Marcelo has gone above and beyond to raise his visibility, that of his company, this association and Canada’s chemistry industry more broadly,” said Bob Masterson, President and CEO of CIAC, at the award presentation. “He has been a thoughtful, articulate champion for BASF Canada, CIAC and the industry at large. He has never shied away from dialogue and relationship building with even the industry’s toughest critics.”
Mr. Lu served as CIAC Chair of the Board of Directors for 2018-2019. Through his years at BASF Canada, he was very active in promoting CIAC’s key policy priorities, including co-authoring op-eds, speaking at CIAC’s panel at Globe 2020 and even co-chairing a press conference on Parliament Hill with Mr. Masterson, just to name a few occasions.
“Over my years at BASF Canada, I have been proud to support CIAC in advancing the chemistry industry’s leadership in Canada and in promoting the principles and ethic of Responsible Care,” said Mr. Lu upon receiving the award. “I look forward to what the Association will achieve in the future.”
After joining BASF in 2006, Mr. Lu held various commercial and general management positions in Germany, Hong Kong, Canada and the US before becoming Managing Director of BASF Canada and then President in 2016. Prior to BASF, Mr. Lu worked for the World Bank in Washington DC.
Mr. Lu will be succeeded by Apala Mukherjee President of BASF Canada, who will assume her responsibilities for all BASF business in Canada on March 1, 2021. Mr. Lu assumed his new role as Senior Vice President, Care Chemicals North America in Florham, New Jersey, US in January 2021.
CIAC sincerely thanks Mr. Lu for his enthusiastic work promoting the chemistry sector in Canada and wishes him well in his new endeavors. We also look forward to continuing this important work with Ms. Mukherjee in the future.
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 sub–sectors, except for inorganic chemicals, shipments recover to near the five–year 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 counter–seasonal 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 up. Furthermore, 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), PVC, methanol, chlor-alkali, bode well for improved margins in Q1 2021. The American Chemistry Council noted similar trends in the 2021 Outlook released earlier this year. Early Q4 earnings 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.”
CIAC congratulates the leadership and staff at Jungbunzlauer Canada on the announcement of the potential to invest and build a lactic acid production facility at their existing citric acid production site in Port Colborne, Ontario.
This project would lead to an increase in production output and workforce at the site. The company notes that special emphasis will be laid on using modern technology that ensures a minimal level of greenhouse gas emissions, water consumption and product side streams. CIAC is especially proud that Jungbunzlauer’s global leadership have recognized the competencies of the Port Colborne team and their facility to supply the Canadian and US markets. More details can be found on the Jungbunzlauer site here. Ontario can benefit with more good chemistry.
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.
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.
The Chemistry Industry Association of Canada (CIAC) signaled it support in principle for Canada’s updated climate change plan announced today.
“We are pleased to see that the federal government listened to industries’ challenges and is working to develop carbon policies recognizing emission-intensive, trade-exposed sectors. By stating its intention to eliminate industrial solid and gaseous fuels from the Clean Fuel Standard (CFS) there is increased confidence in Canada’s ability to attract investment into this important sector while simultaneously pursuing a low carbon economy,” said Bob Masterson, President and CEO of CIAC.
In initial discussions, the CFS was to cover liquid, gaseous and solid fuels. In 2019, CIAC called attention to the CFS’ proposed carbon pricing duplication, pointing out it would push the total carbon price to an excess of $200 per tonne, effectively doubling the cost of natural gas for the industry. This would add millions of dollars of expenses on an industry that is already facing global competitiveness concerns. CIAC also stated strong concerns about its industry being captive to compliance costs passed on by others and without an ability to influence those costs.
Masterson further noted, “A transparent, predictable price on carbon that provides competitiveness considerations for Canada’s trade-exposed industrial sectors is a much preferred approach for dealing with the challenge of climate change.”
The Canadian chemistry industry agrees that climate change is an urgent issue. Achieving Canada’s emissions goals will require chemistry-based solutions in housing, transportation, energy storage, clean energy and numerous other applications. Canada’s chemistry industry can continue to meet those needs with some of the lowest carbon chemistry pathways currently available and while attracting new investment in innovative products and processes to drive emissions even lower.
Canada’s chemistry industry shares Canadians concerns on the impacts of a changing climate and the urgency of reducing emissions in line with scientific evidence and Canada’s international commitments.
Achieving the ambitious goal of net-zero carbon emissions for all of Canada by 2050 will require chemistry-based solutions, says Bob Masterson, President and CEO of the Chemistry Industry Association of Canada.
“Our industry continues to be a solutions-provider to the world’s most challenging problems. We are ready to step up to the challenge, but we need close collaboration to meet this ambitious goal,” says Masterson. “Increasing global attention to mitigating carbon emissions presents an opportunity rather than a threat to Canada’s chemistry industry.”
Canada’s chemistry and plastics sectors create some of the lowest greenhouse gas-intensive products on the planet. Through the U.N. recognized sustainability initiative, Responsible Care®, CIAC’s members have engaged in safe, responsible, and sustainable chemical manufacturing for 35 years. Investments in research and innovation have allowed our sector to modify processes reducing our overall greenhouse gas emissions by 67 per cent since 1992. There is opportunity to do even more while providing Canadian-made products to help other sectors achieve further reductions.
To assist in meeting our shared objectives, our sector will be focused on working with federal and provincial governments in critical areas involving: carbon capture and storage; hydrogen production and utilization; energy efficiency; bio-based chemistries, and; creating a circular economy for plastics, which will allow carbon already in the economy (in the form of post-consumer use plastics) to be continuously recycled and avoid emissions from the production of new plastic resin.
Carefully designed, in collaboration with industry, Canada’s net zero carbon plan has the potential to strengthen Canada’s chemistry sector further and contribute to making Canada’s economy more resilient and competitive. Emission reductions in key sectors such as green buildings, sustainable transportation through light weighting vehicles for greater fuel efficiency, clean energy and sustainable agriculture would be impossible without chemistry and plastics.
To successfully transition to a low-carbon economy and achieve net-zero emission goals, the chemistry sector requires closer collaboration and alignment between the federal and provincial governments through: recognizing the important role of the chemistry sector in research, innovation, and the implementation of climate-focused solutions; promoting active engagement and collaboration with industry, and; supporting the low carbon transition of the chemistry sector.
Canada is a country with diverse energy resources and needs which will require regional solutions and a range of options to address the requirements of Canadians, businesses and industry. We also believe national standards and harmonization between the federal government and the provinces will be vital.
For more information, please see: Chemistry: Essential to Canada’s Transition to a Low-Carbon Energy Future.
The Chemistry Industry Association of Canada’s (CIAC) new Plastics Division is pleased to announce it has officially joined the American Chemistry Council (ACC), Plastics Industry Association (PLASTICS) and 29 other international trade associations in Operation Clean Sweep® (OCS). This important occasion reflects another strong commitment by North America’s plastics industry to product stewardship and reducing plastic resin loss.
Launched in the early 1990s, OCS, which has over 500 participating members, is a plastic stewardship program for facilities that handle plastic materials. The purpose of OCS is to support the proper handling and disposing of plastic pellets, flakes, and powders, and avoiding spills. CIAC also will participate in Operation Clean Sweep Blue, an enhanced OCS program, which provides greater reporting and stronger metrics on practices related to plastic resin loss.
“We welcome CIAC’s participation,” said Patrick Krieger, Director, Sustainability & Materials at PLASTICS. “Their operation of OCS in Canada helps ensure that the plastics industry of North America has the tools necessary to move toward zero plastic resin loss.”
CIAC’s new Plastics Division represents the entire plastics industry value chain from resin producers and raw material suppliers to processors, converters, and recyclers. The Division is committed to promoting responsible plastic production in Canada while working towards reducing and eliminating plastic pollution from the environment.
“CIAC is pleased to join Operation Clean Sweep. Working to unify North America’s plastic industry on the importance of product stewardship and responsible operational practices while focusing our efforts to effectively and efficiently address the issue of plastic pollution is a priority for the industry, and we look forward to working together and reducing plastic pellet loss,” said Elena Mantagaris, Vice President, CIAC Plastics Division.
“Industry collaboration is essential in tackling marine debris, both at home and globally,” said Joshua Baca, ACC’s Vice President of Plastics. “We’re working to enhance the rigor and transparency of our pellet stewardship program, and we’re pleased to have CIAC join us in this important value chain initiative.”
For more information about Operation Clean Sweep®, please visit: www.opcleansweep.org.
About the Chemistry Industry Association of Canada
The Chemistry Industry Association of Canada is the association for leaders in Canada’s chemistry and plastic sectors—adding C$54 billion and C$28 billion respectively to the Canadian economy. The Association represents close to 200 members and partners across the country. We provide coordination and leadership on key issues including innovation, investment, plastics, taxation, health and safety, environment, and regulatory initiatives.
About the Plastics Industry Association
The Plastics Industry Association (PLASTICS), is the only organization that supports the entire plastics supply chain, representing over one million workers in the $432 billion U.S. industry. Since 1937, PLASTICS has been working to make its members and the industry more globally competitive while advancing recycling and sustainability. To learn more about PLASTICS’ education initiatives, industry-leading insights and events, networking opportunities and policy advocacy, and North America’s largest plastics trade show, NPE: The Plastics Show, visit plasticsindustry.org. Connect with PLASTICS on Twitter, Facebook, LinkedIn and Instagram.
About the American Chemistry Council (ACC)
The American Chemistry Council (ACC) represents the leading companies engaged in the business of chemistry. ACC members apply the science of chemistry to make innovative products and services that make people’s lives better, healthier and safer. ACC is committed to improved environmental, health and safety performance through Responsible Care®; common sense advocacy designed to address major public policy issues; and health and environmental research and product testing. The business of chemistry is a $553 billion enterprise and a key element of the nation’s economy. It is among the largest exporters in the nation, accounting for ten percent of all U.S. goods exports. Chemistry companies are among the largest investors in research and development. Safety and security have always been primary concerns of ACC members, and they have intensified their efforts, working closely with government agencies to improve security and to defend against any threat to the nation’s critical infrastructure.