After a year of record-breaking profits, Canada's chemistry sector plans to make major investments in 2014, according to the 2013 Year-End Survey of Business Conditions released today by the Chemistry Industry Association of Canada (CIAC).
In 2013, the Canadian chemistry industry's operating profits reached $3.5 billion – an all-time record, according to CIAC. However, global markets are expected to weaken in 2014, as are prices of many chemical commodities, which could drive sales down a projected eight per cent next year. In spite of that, CIAC members plan to ramp up their capital investments by 28 per cent in 2014, to $2.6 billion.
According to CIAC, the main drivers for this change in investment outlook have been the shale gas phenomenon, which has created the prospect for long-term availability of relatively low-cost natural gas and natural gas liquids in North America; corporate tax rates in Canada that are internationally competitive – the Accelerated Capital Cost Allowance provisions have been extended again, and are in-place until at least the end of 2015; strong demand for certain inorganic chemicals that are used in the production of crude oil and natural gas; and the high price of crude oil, combined with a growing focus on sustainable development, which has accelerated the pace of global investment in new technologies for producing chemicals from biomass.
"Our members are committed to modernizing their facilities, and to building new production capacity, so that they're ready to seize the opportunity when global markets inevitably recover," said Richard Paton, CIAC's president and CEO. "Canada has many policies that encourage investment, but competition is fierce, and governments can do more to ensure that we're the destination of choice for investors."
The Year-End Survey identified the availability and reliability of electricity as a major competitiveness concern for Canadian chemistry companies, with the impact felt most acutely by inorganic chemical producers. Nevertheless, in 2013, Canada's chemistry industry saw sales exceed $27 billion, matching the pre-recession high achieved in 2008; and exports rise eight per cent to surpass $18 billion.
To read the complete CIAC 2013 Year-End Survey of Business Conditions, click on this link.