Polymers market, which includes some plastics resins, more specifically polyethylene (PE) and polypropylene (PP), has been growing across the continent for decades.
However, domestic production in each of the major Latin American markets is not enough to meet the regional demand for PE and PP, and there is a very dynamic import market to capture part of this demand.
Join Camila Dias, Argus Brazil Country Manager, and Fred Fernandes, Latin America Polymers Senior Reporter, as they talk about the perspectives for the polymers markets in the region in 2023.
Transcript
CD: Hello and welcome to 'Market Talks' - a series of weekly podcasts produced by Argus discussing the main events impacting the commodities and energy sectors in Brazil and around the world. My name is Camila Dias, Argus Brazil Country Manager. In today's episode I talk to Fred Fernandes, a senior reporter for the Latin American polymer market. We’ll talk about the perspectives for this market in the region. Welcome, Fred!
FF: Hi, Camila. Thanks for the invitation, it's a pleasure to talk to you.
CD: Fred, I think it’s good to start by putting the polymers market in Latin America into context. What is the current situation of this market in the region?
FF: The polymer market includes plastic resins, and in our coverage more specifically everything related to polyethylene (PE) and polypropylene (PP). This market has been growing across the continent for a long time. As an example, Brazilian resin manufacturer Braskem is the largest producer of polyolefins in the Americas. Polyolefins are a family of thermoplastics that include polyethylene and propylene plastic resins. However, domestic production in each of the main markets on the continent is not enough to meet the regional demand for PE and PP, and there is a very dynamic import market to capture part of this demand. The most traditional PE and PP suppliers for Latin American markets are the US, China, and the Middle East. The normal market conditions seen before 2020 have been shaken globally after the pandemic years, disrupting logistics and changing seasonality and pricing conditions. But for the first time, market participants expect regional polymer markets to stabilize, and the forecast for 2023 is overall positive.
CD: Got it Fred, now could you tell us more specifically who are the main polymer producers in Latin America and where they operate?
Fred: The main producers of polymers such as polyethylene (PE) and polypropylene (PP) in Latin America are Braskem (Brazil), Petrocuyo and Dow Chemical (Argentina), Esenttía (Colombia), Petroquim (Chile), and Braskem Idesa and Pemex in Mexico . Braskem is the largest producer of PE and PP in the region, with several production units in Brazil and Mexico, where its Braskem-Idesa joint venture, the main producer of PE in that country, operates. US-based Dow Chemical has a significant presence in the region through its joint ventures and partnerships with local companies, producing PE in Argentina.
CD: Fred, who are the main consumers or the biggest market?
FF: Brazil is the most important polymer market in Latin America, driven by a growing economy and high consumption. The country is the largest producer of polyethylene and polypropylene in the region and an important player in the global market, also operating in the United States and Europe. In addition, the Brazilian market should continue to grow in the coming years, driven by the increased demand for plastic products in sectors such as packaging, construction and transport. However, doubts remain whether Brazil's new government will impose more protectionist policies. For example, Braskem is still awaiting a favorable decision from the new government of Luiz Inácio Lula da Silva on the extension of anti-dumping tariffs on PP imports from the US for five years. The previous government had eased the anti-dumping tariffs on October 24, 2022 applied to Brazilian imports of PP, which came into effect on January 2.
CD: Which other markets are considered important in the region? Do they connect to the Brazilian market in any way?
FF: Commercial flows of polymers from Brazil to Latin America, and in the opposite way, are strong and encouraged by local governments. As an example, Brazilian imports of PP in January increased by 46% compared to January 2022. The market share of South American output increased from 35% to 44% in the period, which means that Brazil is buying more PP abroad, with a preference for regional producers, and especially in Colombia. Polymer markets on the West Coast of South America (WCSA), including Colombia, Ecuador, Chile and Peru, are also growing rapidly. The region has abundant natural resources, a growing consumer market and a developing infrastructure, which have contributed to the polymer sector’s growth. In addition, there are several large multinational companies operating in the region, as well as local and regional producers, traders, and distributors. Peru is the second largest PP importer in South America, after Brazil. Colombian exports of polypropylene are also very strong, mainly to neighboring countries in South America. However, ongoing political issues could be a problem for growth in this region, such as the turmoil Peru is currently experiencing. Argentina also has an important polymers’ market, driven by growing consumption and strong demand for plastic products, despite macroeconomic factors such as high inflation and currency problems. The country has a well-developed petrochemical industry, with large PE and PP producers, as mentioned earlier. The expectation is that the market will continue to grow in the coming years, especially after the next presidential elections to be held in November this year, since the current government has not been able to make the local polymer market competitive, mainly in terms of imports. Finally, the polymer market in Mexico is one of the largest in Latin America, also driven by a large consumer market and a growing economy. The country is a major producer of polyethylene and polypropylene, with large companies operating in the sector. The exchange of plastic resins between Mexico, the US, and Canada, is also growing, with Mexico much more connected with the US than with Latin American countries in terms of polymer trade, especially in the case of PE and PP, with local buyers, who are generally unwilling to risk imports from abroad other than those from North America.
CD: How interesting to hear about the polymer market in Latin America. Thanks for joining us today and please come back soon to tell us how this market is evolving in the region.
FF: Thank you very much, Camila. It was a pleasure! This and other episodes of our podcast are available on the Argus website at www.argusmedia.com. Visit the page to follow the events that affect global commodity markets and understand their developments in Brazil and in Latin America. We'll be back soon with another edition of “Market Talks”. See you soon!
