Canada chemical capacity utilisation fell to 77% in Q4

31 March 2009 21:06  [Source: ICIS news]

TORONTO (ICIS news)--Canada’s chemical-industry capacity-utilisation rate dropped to 77% in the fourth quarter from 82.8% in the third quarter, according to a data released on Tuesday by federal statistics agency StatsCan.

A moderate rise in production by the manufacturers of pharmaceutical products was not sufficient to offset a reduction by manufacturers of basic chemicals, resin, synthetic rubber, pesticide and fertilizer, the agency said.

It did not provide comparable data for the 2007 fourth quarter.

For all of 2008, chemical capacity utilisation was 81%, down from 82% in 2007.

Canada’s chemicals producers said earlier they expected 2009 chemical production volumes to fall by 13%. Year-to-date through 21 March, Canadian chemical railcar shipments are already down 24.6%, to 127,894 carloads from 169,720 in the same period in 2008.

The capacity utilisation data compares with overall Canadian manufacturing capacity utilisation of 73.8% in the fourth quarter, down 5 percentage points from 78.8% in the third quarter, and full-year 2008 manufacturing capacity utilisation of 78.1%, down 4.8 points from 82.9% in 2007.

Transportation equipment manufacturing and primary metal manufacturing were the main contributors to the decrease in the fourth quarter, the agency said.

Manufacturers of motor vehicle and car parts recorded declining demand, and some manufacturers temporarily shut down plants during December, it said.

In related news on Tuesday, commentators said Canada’s government may need to do more to help its struggling automotive sector. The industry directly employs over 150,000 Canadians and is an important end market for chemicals and plastics.

Charlotte Yates, head of social sciences and labour studies at Ontario’s McMasters University in Hamilton, said Canada needed to follow the US government, which was considering a more active role to encourage consumers to buy new cars.

Canada should grant government-backed warranties for new cars as well as incentives for drivers to trade in older, less fuel-efficient vehicles for newer models, she said in a media briefing.

Her comments came after federal industry minister Tony Clement on Monday rejected restructuring plans submitted by the Canadian affiliates of General Motors (GM) and Chrysler as “not sufficient”.

Canada is contributing 20% of the US interim financing for GM and Chrysler, in line with its share of total Canada–US vehicle production by the Detroit Big Three.

“While the restructuring plans represent progress, they do not go far enough to ensure the long-term viability of these companies. Therefore, we are not certifying their proposals,” Clement said.

Paul Hodges blogs about key influencers in the chemical industry in Chemicals and the Economy.
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