Chemistry Industry Association of Canada

December 10, 2009 07:00 ET

CCPA: Chemistry Industry not Immune to Recession

Year-End Survey Reports Sharp Declines-Slow Path to Recovery Projected for 2010

OTTAWA, ONTARIO--(Marketwire - Dec. 10, 2009) - According to the Year-End Survey prepared by the Canadian Chemical Producers' Association (CCPA), the chemistry industry fared no better than other manufacturing sectors in 2009. Recessionary forces were primarily responsible for a sharp decline in sales of basic chemicals and resins in 2009 - a decrease of 35% to $16.6 billion from 2008 levels in current dollars.

"The significant reduction in North American demand for chemicals especially in areas such as the automotive sector, housing and pulp and paper is primarily responsible for this decline," said Richard Paton, President of CCPA. "This across-the-board decline in 2009 really shows how much of a bellwether sector the chemistry industry really is. Manufacturers of all stripes continue to feel the pinch and a full recovery remains distant," he added.

Here are some key figures:

- The chemistry industry experienced a 47% decrease in sales to Canadian customers in 2009;

- Export sales were down by 31% in 2009 to $12.7 billion; and

- Sales to U.S. markets declined by 29% and account for 75% of the industry's business outside of Canada.

The only silver lining for 2009 is that operating profits before interest, taxes and special write-offs were $1.4 billion, essentially the same as in 2008. This came as a surprise and may be attributed to the decline in natural gas prices (a primary feedstock for the chemical industry that went from $13/Mbtu in mid 2008 to the $4-$5/Mbtu range today) and the resulting exceptionally high ratio of the price of crude oil to price of natural gas. This cost advantage resulted in many Canadian plants remaining open while others around the world closed.

Looking ahead, survey respondents expect sales to increase by 2% in value for 2010, while volumes are projected to remain flat. Exports to the US are expected to remain unchanged from their current low levels. Operating profit is expected to decrease by 36% in 2010. These projections are based on the strength of the Canadian dollar relative to the US, continuing weakness in the automotive, pulp and paper industries, declining conditions of Canadian manufacturing in general and heightened competition from the Middle East, China and India.

For a copy of the complete Year-End Survey, including our Outlook 2010, visit www.ccpa.ca.

Contact Information

  • CCPA
    Public Affairs
    Michael Bourque
    613-237-6215 x 225