Canadian Chemical Plant Owners Defer or Slow Projects in Response to Market Constraints

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial Info is currently tracking 88 active capital chemical projects in Canada with a total investment value (TIV) of nearly $12 billion despite the challenges that many producers are facing with the low cost of crude oil and natural gas. Low priced commodities are favorable for some chemical producers as it decreases feedstock costs for many plant owners while it depresses margins for others as contract sales prices fall.

Click the image at right for graph detailing Canadian chemical projects.

Since October of last year, Industrial Info has identified 15 chemical processing projects with a TIV of close to $2 billion that have been placed on-hold indefinitely considering the current uncertainty surrounding demand for products and commodity pricing. Another eight capital projects valued at nearly $100 million have been cancelled entirely in Canada during recent months.

Projects that have been cancelled are spread across the country, ranging from Western Canada to Ontario and Quebec. The largest concentration of these projects is in Ontario, with four projects valued at an estimated total of $56 million. Alberta, New Brunswick, Newfoundland and Prince Edward Island each have had a project cancelled in the past six months, from September 2015 until February 2016.

Similar to spending trends in the chemical industry of Canada's southern neighbor, the U.S., the largest projects have been put on hold rather than being cancelled entirely, as plant owners remain optimistic about demand and commodity prices settling into a positive rhythm sooner than later. The most prominent of projects currently on hold are IFFCO's (New Delhi, India) plans for a fertilizer complex to be constructed in Becancour, Quebec. This complex was originally announced in 2012 and would eventually include two ammonia units and two urea units. After evaluating the market conditions over the next few years, the status of the project had teetered back and forth between being on-hold and active. The latest status of the roughly $1.6 billion project is on-hold as IFFCO awaits more favorable urea pricing.

Agrium Incorporated (NYSE:AGU) (Calgary, Alberta) also was planning an expansion of two fertilizer plants in Redwater, Alberta and Fort Saskatchewan, Alberta. The $150 million project in Redwater was expected to increase urea capacity by 25% up to 2,500 metric tonnes per day, while the $100 million project in Fort Saskatchewan would increase capacity of both ammonia and urea. Both of these projects were in the early market analysis phase however at this time, the plans for both have been put on-hold.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.