Boston, MA -- (SBWIRE) -- 10/17/2013 -- BMI's Canada petrochemicals report examines how the country's petrochemicals industry is overcoming challenges related to feedstock access and growing global competitiveness. It assesses recent developments and trends in the industry and looks at the enormous potential for growth, particularly in the under-exploited propylene product chain. It also analyses the role shale gas will play in the rapidly evolving North American petrochemicals market.

Canada's chemicals and resins industry was driven by domestic demand in 2012, with BMI estimating domestic sales growth of 6.0%, while exports rose just 0.5%. Around 75% of chemicals output is exported, with the US accounting for 75% of exports. The Canadian petrochemicals industry is highly sensitive to trends in the US, although the EU market is also prominent. The domestic market accounted for 80% of the growth in chemicals industry sales. While exports were back to near their pre-crisis 2007 peak and plateauing in 2012, domestic sales remained 25% below their previous peak and growth will need to strengthen in the near term to assist with a return to full operating rates.

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Growth rates in chemicals and plastics gradually declined throughout 2011 and 2012 as the industry was affected by recessionary forces in Europe and increased US supply.

BMI makes the following forecasts and observations:

- In 2013, the industry will have to overcome feedstock cost challenges, a stronger Canadian dollar and higher labour and electricity costs.
- Canada's chemistry industry could attract close to US$5bn in new investment over the next decade, according to estimates by the Chemistry Industry Association of Canada (CIAC). If secured, the chemicals industry could lead economic growth and stimulate activity in petrochemical consuming industries.
- Exploitation of non-conventional resources will therefore be pivotal to the industry's success. Shale gas exploitation is a game-changer for the Canadian petrochemicals industry with increased ethane feedstock, both from domestic supplies and via pipeline from the US, providing the basis for sustaining and expanding olefins production going forward.
- Canada is witnessing a rise in propane supplies due to a decline in exports to the US as a result of shale gas output. Alongside rising oil-sands production in Alberta, propane availability opens up the possibility of the development of propylene and propylene derivative plants.
- In BMI's Americas Petrochemicals Risk/Reward Ratings (RRRs) Canada remains in second place, with its score increasing 1.1 points to 77.7 points due to an improvement in its country risk component. This puts it comfortably 15.1 points ahead of Brazil and 8.4 points behind the US.

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