Slow activity in the manufacturing sector hampered demand for inorganic chemicals.
Los Angeles, CA (PRWEB) March 21, 2013
Inorganic chemicals are primarily used as intermediates in the production of a number of products, including detergents, pharmaceuticals, fertilizers, paints and tires. End users include, among others, manufacturers in the automotive, construction and consumer goods sectors. Similar to other manufacturing industries, demand for the Inorganic Chemical Manufacturing industry has been volatile over the five years to 2013. When the recession hit in late 2008 and carried on through 2009, “demand from downstream users declined as consumers reduced purchases in light of lower disposable incomes,” says IBISWorld industry analyst Radia Amari. “This decline hindered revenue growth for inorganic chemical manufacturers. But as the economy began to recover, demand from end users like the construction sector and automotive, rubber and cleaning product manufacturers began to grow, which renewed demand for inorganic chemicals.” Over the five years to 2013, IBISWorld estimates industry revenue will fall at an average annual rate of 0.4% to $4.0 billion.
In addition to shifts in demand, the Inorganic Chemical Manufacturing industry "has endured fluctuating raw-material costs and strict government regulation,” says Amari. “Chemical manufacturing is energy-intensive, so rising electricity prices impeded profit growth.” While these challenges persist in 2013, the economy continues to grow and revenue and profit will follow suit. And during the five years to 2018, downstream manufacturing industries will increasingly demand inorganic chemicals as production increases. Demand for exports will also rise over the next five years, supported by some easing in the Canadian dollar's value.
Nonetheless, increasing government regulation, which is expected to raise costs for the industry, will hinder some growth. During the past five years, the Canadian federal government renewed the Chemicals Management Plan, which imposes monitoring, surveillance, and research and policy management on the chemicals sector. This type of legislation will likely be renewed in the coming years. In addition to rising regulatory costs, the industry will face threats from rising input prices. According to CBC News, the price of electricity is expected to grow through 2020. For more information, visit IBISWorld’s Inorganic Chemical Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures a variety of basic inorganic chemicals. Inorganic chemicals are generally mineral-based. Most organic chemicals, which are not part of this industry's products, are carbon-based. Inorganic chemicals are used as inputs in a number of manufacturing and industrial processes. Key identifiable industry segments include chlor-alkali and carbon black products. The industry does not manufacture industrial bleaches or chlorine preparations for swimming pools.
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