Canadian chemicals: industry update1
- 2011 compared to 2010:
- Total chemical production: up 9% to US$46.8 billion
- Industrial chemical sales: up 18% to US$25.4 billion
- Operating profits: up 61% to US$3.8 billion
- Jobs from direct employment: 83,300, up 5,300
- Output still remains 6% below 2008 peak levels
- Market growth forecast: CAGR of 3.7% for 2010-152
“Conditions are aligning for another cycle of investment.”
The Canadian chemical industry was hit hard during the recession. From 2008 to 2009, sales of basic chemicals and resins dropped by 35 percent and exports declined by 31 percent.6 In 2009 as the recession increased, the overall Canadian chemical industry saw year-over-year losses of 35 percent in total sales, 47 percent in sales to Canadian customers, 31 percent in export sales, and 29 percent in US sales.7 Such declines are disproportionally worse than those suffered in the industry in the US at the same time.
Since those difficult times, the industry has made a gradual but steady recovery, with yearly increases in production, sales, profits and employment. A compounded annual growth rate of 3.7 percent is predicted until at least 2015.
A business-friendly environment
Shale gas: a game changer
The current boom in shale gas has the potential of being the biggest game changer that the Canadian chemical industry has seen in decades.
This situation is based on increased access to shale gas through hydraulic fracturing or “fracking”. While there is currently little significant production of shale gas in Canada, studies show there is potentially at least 1,000 trillion cubic feet of shale gas in the country.8 In the first half of 2012 alone a number of key investments and joint ventures in Canada involved shale gas development.
New developments in bio-chemicals
“Canada offers strong competitive advantages for bio-chemical companies, including abundant feedstocks and proximity to markets.”
Executive Vice President
Along with shale gas developments, the Canadian chemical industry has seen strong growth in sustainable chemical production. In fact, Canada exported more than US$4.3 billion of bio-based chemicals in 2010 — three times more than the US on a per capita basis.9
Ready availability of bio-feedstocks helps explain much of this growth. Canada offers more biomass feedstock per capita than any other nation.10 Development has also been supported by industry groups like the Sustainable Chemistry Alliance (SCA).
An example of recent development is a US$100 million bio-succinic manufacturing plant being built in Sarnia, Ontario. The initiative is a joint venture by BioAmber, a US-based company, and Mitsui & Co., of Japan.11
“We are already seeing investment levels that we have not seen for ten years.”
President and CEO
Chemistry Industry Association of Canada (CIAC)
CIAC chose Seizing Opportunities: Growing Canada’s Chemistry Industry as the theme for its 2012-2015 Triennial Plan, to reflect the industry’s renewed optimism for the sector. During the triennial period, CIAC will continue its work to support the growth of – and investment in – the industry, while strengthening its membership base. In addition, CIAC will work to further integrate sustainability into Responsible Care® – the industry’s internationally recognized initiative, dedicated to the betterment of society, the environment and the economy.
CIAC’s advocacy priorities for the next three years will include energy, feedstock and electricity; logistics, rail and infrastructure; access to markets and skills; corporate taxation and capital costs; R&D; air quality; climate change; and, the government’s Chemicals Management Plan.
CIAC is committed to reaching the goals set out in its Triennial Plan, and as always, its actions will be governed by its three strategic directives: Be Responsible, Be Competitive and Be Credible.
KPMG LLP Canada
National Industry Leader for Chemicals
KPMG LLP Canada
Leader for Chemicals
Greater Toronto Area
1 Industry Canada, Statistics Canada, Chemistry Industry Association of Canada, Dow Jones Companies & Executives
3 2009 Year End Survey of Business Conditions in the Basic Chemicals and Resin Industry, Chemistry Industry Association of Canada
4 Chemical Statistics, Industry Canada, 2010
5 Understanding Canadian Shale Gas - Energy Brief, National Energy Board, www.neb.gc.ca
6 United Nations, Comtrade database (2010). Cited in Bio-Products, Canada’s competitive advantages, Invest in Canada 2012
8 BioAmber and Mitsui & Co. to Build and Operate Plants Producing Succinic Acid and BDO, press release, November 8, 2011, BioAmber