Canada chem industry eyes growth of up to 4% in 2025, but warns about political and trade risks

TORONTO (ICIS)–Shipments in Canada’s chemistry sector are expected to grow between 1-4% in 2025 and in the plastic sector they are expected to grow 2-3%, David Cherniak, policy manager, Business and Transportation, at the Chemistry Industry Association of Canada (CIAC), said in a webinar.

• Trade disputes and tariffs
• Canadian elections bring political uncertainties
• Renewed labor disruptions

CIAC’s projections assume a pick-up in the global economic growth in 2025, he said but also warned of downside risks, in particular from possible US tariffs and Canada’s elections next year.

The Ottawa-based trade group speaks for both Canada’s chemical and plastic industries.

In chemicals, the 2025 growth would come after projected growth of about 2% for 2024, which was weaker than CIAC initially expected as interest rates did not fall by as much as had been anticipated, Cherniak said.

The higher rates affected demand for chemicals from interest-sensitive end markets, in particular housing and auto, “which take up a lot of chemicals”, he said.

TAILWINDS IN 2025
For 2025, CIAC sees a number of tailwinds for the industry, Cherniak said:

• Interest rates coming down, driving up demand for chemicals and plastics from housing, autos and other interest-rate sensitive markets, probably more towards the second half of the year.
• Increased diversification as Canada ships chemicals from its West Coast ports to new markets.
• Shutdowns of older plants in the global chemical industry.
• Canada’s “structural advantage” in production costs, due to low natural gas and energy prices.
• A weak Canadian dollar, which is “definitely a tailwind” for Canada’s highly export-dependent chemicals sector.
• New investments, with CIAC tracking 26 projects that could move to final investment decisions.

HEADWINDS
However, the industry is also facing “high political uncertainties” as Canada is heading into an election year, Cherniak said.

A change in government could affect programs and incentives for investments in low-emission chemical projects, he noted.

Another major headwind for the chemical industry is trade tensions, Cherniak said and went on to note the threat earlier this week by US President-elect Donald Trump to put a 25% tariff on all imports from Canada and Mexico.

The US is the largest market by far for Canada’s chemicals industry.

CIAC, for its part, will be making the case that the US-Canada chemical industry is integrated and that both the Canadian and the US economies are relying on the industry to perform well, he said.

If implemented, Trump’s tariffs would not just harm the chemical and plastics industries but would have broad impacts across the overall economy, he added.

However, tariffs were not just a US issue, he said. Rather, trade tensions related to chemicals were increasing globally, he said.

In the past year alone, countries such as China, India, South Korea or Brazil targeted chemical products in trade disputes, he said.

Brazil plans an investigation into polyethylene (PE) arriving from Canada and the US. According to CIAC data, Canada exports about Canadian dollar (C$) 4 million/month (US$3 million/month) of PE resin products to Brazil.

Domestically, labor disputes and disruptions at Canada’s freight railroads or ports could yet again pose challenges for chemical producers in 2025, following this year’s disruptions, he said.

A labor union has already obtained a mandate for a strike at freight rail carrier Canadian National that could begin on 1 January, and it is planning a strike vote at Canadian Pacific Kansas City (CPKC), it said this week.

Taken together, trade tension and transport disruptions have made it harder to move chemicals around the world. Combined with weakness in key end markets, the entire global market could become unstable, he said.

“A lot of different clouds are circling on the horizon, a lot of different things” could slow down what CIAC otherwise expects to be “a decent year”, he said.

(source: CIAC)

(US$1=C$1.40)

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