New Energy research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 12/31/2013 -- Chemicals, plastics and rubber manufacturing sales experienced a sharp downturn following the 2008 financial crisis, a situation Canada shared with the global market. In following years, the industry has staged a gradual, if unspectacular, recovery. By 2013, the industry was back to the level of sales seen before the crisis due primarily to growth in exports to the US, Canada's main petrochemicals export market.
In 2013, plastic manufacturing sales made a partial recovery from the temporary slump in Q113 when output was undermined by stoppages and moderating market activity. BMI estimates that the overall chemical capacity utilisation rate was around 81% in 2013, two percentage points (pp) higher than the previous year. However, plastics and rubber rates were each 1pp lower at around 76% and 82%, respectively. Chemicals sales trends were stronger, while rubber exhibited weaker growth. Consumption took a knock in the early months of 2013, although this was partly offset by growth in net exports.
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In the domestic market, demand for engineering plastics and rubber was undermined by the decline in the automotive industry, which saw output volumes decline 5.7% in 2013. The construction sector also posted weak data in 2013 with infrastructure (or civil engineering) outperforming the residential and non-residential building sector, a trend we anticipate will persist into 2014. This has depressed polyvinyl chloride (PVC) consumption, although as it was slowing it was still growing with overall construction growth of 2.2% and residential and non-residential building rising 1.8% in value terms. The outlook for the medium term is more favourable across the petrochemicals-consuming industries, although BMI anticipates only slow growth and a lag behind overall industrial growth. As such, Canadian producers will remain reliant on exports to the US.
BMI makes the following forecasts and observations:
- The advent of shale gas has lowered both energy and feedstock costs in North America, which relies mostly on ethane as a feedstock for the region's crackers. The development of shale gas resources will reverse Canada's falling gas production trend and fuel growth in petrochemicals capacity over the long term.
- BMI expects ethylene capacity of 5.05mn tonnes per annum (tpa) by 2018 with polyethylene (PE) at just under 4mn tpa and propylene at 1.1mn tpa, with growth led by Nova Chemical's ethylene and PE capacity expansions that are exploiting oil sands and shale energy production in the US and Canada. There is an upside outlook with potential for greater expansion in capacity over the medium term. In addition to ethylene production opportunities, Canada could see a revival in polypropylene (PP) from on-purpose propylene production. Williams is building a propane dehydrogenation (PDH) plant in Alberta, providing the possibility for PP production in western Canada.
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