Recovery in the manufacturing sector has boosted demand for inorganic chemicals.
New York, NY (PRWEB) May 13, 2014
Inorganic chemicals are primarily used as intermediary additives to products such as detergents, pharmaceuticals, fertilizers, paints and tires. Therefore, the industry's wide array of end users include manufacturers in the automotive, construction and consumer goods sectors. When the recession hit, demand from downstream users declined as consumers reduced discretionary purchases, which in turn softened manufacturer demand for inorganic chemicals. However, as the construction and manufacturing sectors have recovered over the past five years, demand for inorganic chemicals has rebounded. As a result, IBISWorld estimates that industry revenue will grow in the five years to 2014.
However, the industry has also endured fluctuating raw-material costs and strict government regulation. Chemical manufacturing is energy-intensive, so rising electricity prices have a significant impact on profit growth. Even as the economy continues to grow, the effects of these challenges will likely persist in 2014, limiting revenue growth for the year, although profit is anticipated to amount to a significant proportion of revenue.
During the five years to 2019, according to IBISWorld Industry Analyst Jocelyn Phillips, “recovery growth is expected to somewhat cool, and industry revenue will likely increase at a slow annualized rate.” Downstream manufacturing industries will continue to demand inorganic chemicals, “but the industry will not receive the same kind of recovery bump it did in the years immediately following the recession,” says Phillips. Moreover, demand for imported inorganic chemicals will likely grow during the next five years as US companies (which supply the majority of the industry's imports) ramp up production to exceed precession levels. Luckily, a weak Canadian dollar will support increased demand for Canadian products in export markets, which will likely offset some of this loss.
The Inorganic Chemical Manufacturing industry has a low level of market share concentration. Nonetheless, expected increases in government regulation will likely hinder industry profit growth somewhat in coming years. In 2011, the Canadian federal government renewed its Chemicals Management Plan, which imposes costly regulations on the chemicals sector, and this legislation will likely be renewed again in the next five years. In addition to rising regulation, the industry will also face threats from rising input prices; according to IBISWorld estimates, the price of electricity in Canada 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
The Inorganic Chemical Manufacturing industry manufactures a variety of basic inorganic chemicals, most of which are mineral-based, as opposed to carbon-based organic chemicals. 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 (see IBISWorld report 32561CA) or chlorine preparations for swimming pools (IBISWorld report 32599CA).
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