12 December 2008 15:05 [Source: ICIS news]
TORONTO (ICIS news)--Canadian chemical sales volumes are forecast to drop 13% in 2009 as markets are collapsing amid the global economic crisis, the country’s chemical producers group said on Friday, citing a survey of its member companies.
Sales values are projected down 27%, total exports would decline 25%, sales to the important US market would drop 24%, and operating profit was expected to fall 35% to Canadian dollars (C$) 1bn ($810m) in 2009, Ottawa-based Canadian Chemical Producers’ Association (CCPA) said.
The projections, while unprecedented, were supported by recent announcements of temporary plant closures and cutbacks around the world by some of the largest chemical producers, the group said.
"As a key supplier to many other sectors, the global slowdown will hit our sector hard in 2009," said CCPA president Richard Paton.
For the ending 2008, CCPA sees total Canadian sales of basic chemicals and resins at C$25bn, reflecting a 2% increase from 2007 in current dollars.
The increase was mainly the result of a significant increase in input prices, which were passed through during the early part of the year, the group said.
Operating profits before interest, taxes and special write-offs for 2008 were C$1.6bn, down 19% from a record in 2007.
Until September of 2008 Canadian producers were on course to see another year of record profits but sales and operating margins plunged during the fourth quarter, CCPA said.
The quarter brought “a perfect storm” of falling prices, falling credit and falling demand, said Dave Podruzny, vice president, business and economics at CCPA.
"This is the most significant economic breakdown in recent memory and the sector will be impacted severely by the financial market meltdown and economic recession which could be one of the longest in decades," he added.
CCPA was looking to a federal budget, expected for late January, to provide clear support for manufacturers, it said.
Canada's opposition parties agreed earlier this month to bring the Conservative minority government under Prime Minister Stephen Harper down if the budget fails to address the deepening economic crisis, prompting a political crisis that led to the prorogation, or suspension, of Parliament until late January.
On Thursday, Alberta's provincial goverment announced a new energy strategy aimed at developing value-added chemicals production at integrated oils sands upgrading, refining and petrochemicals sites.
CCPA represents 70 chemical producers who generate annual sales of over C$24bn at 200 manufacturing sites across Canada.
($1 = C$0.81)
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