The Latin-American petrochemicals industry is expected to rebound in 2022 from a host of challenges, as Covid-19 vaccinations advance globally and local markets start to show signs of economic recovery.
In Brazil and Argentina, South America's largest petrochemical markets, the growth expectation is particularly strong for polymers, including polyethylene (PE), polypropylene (PP), and polyvinyl chloride (PVC). Driving the optimistic outlook are improved economic forecasts, falling prices for PE, PP and PVC, and the expectation of lower freight costs. Factors that slowed growth in 2021, including supply chain disruptions and weather-related outages in the US, are expected to recede.
Increased consumption of hygiene-related products and disposable goods stemming from the pandemic resulted in strong 2021 demand for PE and PP in Latin America.
Brazil's polyethylene imports jumped to $491mn during January-November, compared to $334mn in the same period of 2020. PP imports grew during those 11 months to $226mn from $203mn a year earlier. PVC imports increased by over $10mn to $38.5mn during the same period.
In the case of PVC, which is predominantly used in the construction sector, the region's producers saw increased demand throughout the year, and the expectation is for growth in 2022 to continue, although at a reduced pace.
In Argentina, the construction activity index in October rose by 8.3pc year-on-year, the 12th consecutive monthly increase, according to data from Indec, the national institute of statistics and census. In Brazil, PVC prices for the construction industry rose by more than 69pc from July-November, according to a study by Cbic, the construction industry chamber. Brazil construction is on pace to increase by 7.6pc this year, the fastest growth rate in a decade, according to Cbic. Brazil construction growth in 2022 will slow to 2pc, Cbic predicts.
Growth
In Argentina, the petrochemical sector should continue to grow, stimulated by greater domestic and external demand as pandemic effects diminish and regional markets such as Brazil reopen, according to Jorge de Zavaleta, executive director at Argentina's chemicals and petrochemicals industries Ciqyp.
"This is the short-term trend for the sector, as long as there are no new peaks of contagion by the coronavirus," de Zavaleta told Argus.
In Brazil, chemical industry revenue is on pace to increase this year to $143bn, up from $107bn in 2020 and $119bn in 2019, according to Brazilian chemical producers association Abiquim. Chemicals for industrial use account for half of industry sales at $71.9bn, including thermoplastic resins at $11.4bn and chlor-alkali, an input for PVC production, at $1.7bn.
"If 2020 was a year of adaptation to an unexpected reality, 2021 was a year of a lot of struggle and hard work," Abiquim chairman João Parolin said in early December. "Despite the adversities, the Brazilian chemical industry has all the conditions to generate even more wealth for the country."
Sustainability
Next year should see increased efforts among plastic producers in Latin America towards sustainability, chemical and mechanical recycling, and environmental, social and corporate governance (ESG).
The petrochemical industry in Argentina is aligned with international sustainability initiatives, de Zavaleta said. Company actions range from decarbonization and waste reduction to circularity, including plastics recycling, he said.
The plastics value chain in Argentina is collaborating under a program called Eureca that aims to develop measures to create a circular economy for plastics, Zavaleta said.
The entire plastics chain is undergoing a revolution with the issue of circularity, recycling and a softer environmental footprint, said Gabriel Rodriguez Garrido, executive director at Argentina petrochemical institute IPA.
"We must break this barrier of how to deal with plastic waste. That would be an important change for the region," he told Argus. "The petrochemicals industry is at a very interesting movement."
