FocusGrowing Argentine auto industry to increase chemicals demand

01 February 2011 00:56  [Source: ICIS news]

By Cristina Kroll

BUENOS AIRES (ICIS)--A boom in the Argentine automotives sector in 2011 will increase demand for styrene butadiene rubber (SBR) and carbon black for tyres, as well as for chemicals used by the plastics industry, an industry source said on Monday.

The Argentine automotive sector experienced its best year ever in 2010 with a record of 724,023 vehicles produced, an estimated 41.2% increase over 2009, according to the Argentine Automotive Manufacturers Association, ADEFA.

The automotive sector is one of the most dynamic industries in Argentina, according to a report from the international consultant Deloitte. The report also states that within the country’s industrial sector, the automotive, plastic and rubber, textiles and basic metal industries have seen above-average growth.

Consultancy Abeceb said it expects a 15% increase in auto production this year in Argentina.

The automotive industry has been at the core of the current administration’s strategy to boost local industrial production through local components, which is why many international companies are looking to invest in local firms that manufacture automotive parts.

Recently, Canada-based Magna bought local car seat manufacturer Pabsa, which has two facilities in Buenos Aires province and one in Cordoba province.

Magna said it would invest $5m (€3.7m) in the newly acquired company, now operating as Magna Seating Argentina. It will become part of the seating unit of Magna International.

In addition, the German group Lanxess acquired Darmex, an Argentine company specialising in chemicals for the tyre industry. The acquisition included Darmex facilities in Buenos Aires and San Luis provinces in Argentina, and one in Colonia, Uruguay.

According to the Argentine Tyre Chamber, there are three tyre producers in Argentina: Pirelli, Fate and Bridgestone.

“In relation to this general growth of the automotive industry, we expect an increase of 15% in the carbon black and SBR demand for 2011”, a source with the Tyre Chamber told ICIS.

The company Fate planned to invest $230m in tyre production for trucks and buses, and would produce $90m worth of tyres in Argentina that otherwise would have been imported. This kind of imports substitution has been one of the main goals of President Cristina Kirchner’s administration.

With this investment, Fate would double current production at its San Fernando Facility in Buenos Aires province - therefore also doubling its chemical raw materials demand.

Fate’s goal is to produce 800,000 units/year in 2012. The company has 30% of the market share in the tyres for trucks and buses segment in Argentina.

Pirelli also saw potential in Argentina’s automotive industry, and will expand its nameplate capacity from 5m tyres/year in 2010 to 6m tyres/year in 2013. This will increase its SBR and carbon black demand by 20–25% a year.

These investments in parts and chemicals for the local automotive industry will likely increase the manufacture of new car models in Argentina by international companies.

($1 = €0.74)  

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By: Cristina Kroll
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