Despite increased operating costs, strong downstream demand will boost revenue.
New York, NY (PRWEB) June 08, 2014
The Petrochemical Manufacturing industry exhibited strong but volatile growth over the past five years. During the recession, demand from the manufacturing sector deteriorated and remained persistently low. On the other hand, downstream customers like the plastic and resin manufacturing industry recovered quickly after the recession, stimulating demand for the industry's products. Increased global demand, coupled with favourable production conditions helped fuel export growth over the past five years. In the five years to 2014, IBISWorld expects Petrochemical Manufacturing industry revenue to increase at an average annual rate of 9.0% to $7.5 billion, with an expected decline of 1.9% in 2014 due to a decline in the price of petrochemicals.
Profit margins (i.e. earnings before interest and taxes) are expected to increase from a low of -2.2% in 2009 to its current level of 12.1%. Increased demand from downstream users has been able to offset increasing raw material prices, leading to margin expansion over the period.
According to IBISWorld Industry Analyst Daniel Carusotto, “Industry participants face external competition from imports, which satisfy 18.3% of domestic demand.” As the Canadian dollar has appreciated, gaining strength against its trading partners' currencies, foreign-made goods have become relatively cheaper domestically. In 2010, the Canadian dollar gained significant strength over the US dollar, causing imports to jump. IBISWorld anticipates this trend will continue over the next five years as the domestic currency stabilizes. Imports are expected to increase at an annualized rate of 3.3% over the five years to 2019.
In the five years to 2019, demand from key buying industries will remain relatively constant, as will raw-material costs, causing revenue to display growth with limited volatility. “However, increasing regulation could hinder the industry by increasing operating costs. Still, increased demand will cause enterprises to expand in the region,” says Carusotto. Over the five years to 2019, the number of establishments is expected to increase at an annualized rate of 0.8% to 27.
For more information, visit IBISWorld’s Petrochemical Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
The Petrochemical Manufacturing industry manufactures petrochemicals, which are chemicals derived from petroleum and natural gas. Key products include ethylene, propylene, butylene, benzene, toluene, styrene, xylene, ethyl benzene and cumene. These products are used in the production of consumer products, automotive components and various durable and nondurable goods. Organic compounds like ethyl alcohol and inorganic chemicals like carbon black are excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.