30 May 2007 18:58 [Source: ICIS news]
TORONTO (ICIS news)--Unlike most Canadian manufacturers, NOVA Chemicals is not suffering much from Canada's strong currency, chief executive Jeff Lipton said on Wednesday.
The Canadian dollar foreign exchange rate has risen to about 93 US cents, compared with some 65 US cents in 2002. The valuation of local currency has been blamed for higher labour costs, pinched margins, plant closures and layoffs in Canada's export-dependent manufacturing sector, particularly in Ontario.
NOVA's situation is atenuated because it both buys feedstock and sells products priced in US dollars, Lipton told an investor conference in ?xml:namespace>
The biggest impact of the strong Canadian dollar on NOVA was in labour costs in
A one-cent change in the exchange rate translated to a $6m-$7m/year impact on NOVA’s operations, he added.
Lipton, asked to comment on the flurry of mergers and takeovers in the global chemicals industry, said consolidation in styrenics would likely continue.
He added that NOVA was already planning “a next step” for its styrenics joint venture with INEOS that would have a broad, positive impact on the entire styrencis industry. He did not provide details but promised an announcement soon.
NOVA recently expanded its European styrenics joint venture with INEOS to North America.
US regulatory approval for that deal might be slightly delayed as regulators were reviewing it together with the Dow/Chevron Phillips styrenics joint venture, making the process more complex, Lipton added.
“We expect the JV to start up sometime in the third quarter, potentially a little later than we originally hoped,” he said.
(US$1 = C$1.08)
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