LatAm chemicals distribution sector is fragmented but growing

10 November 2011 19:36  [Source: ICIS news]

BONITA SPRINGS, Florida (ICIS)--Chemicals distribution in Latin America is still very fragmented, but the region’s good growth is putting positive pressure on the market, a leading Mexican distributor said on Thursday.

Speaking on the sidelines of the 40th annual meeting of the National Association of Chemical Distributors (NACD), Eugenio Manzano, executive director of Mexico-based chemical distributor Grupo Pochteca (GP), said business in Latin America “was definitely better than it was 12 or 24 months ago.”

Growth in the region’s chemicals sector has been “north of 3%/year,” said Manzano, because of increased diversification of trade.

He said more Latin American business was being conducted with Asia and Europe, meaning a lessening of the region’s reliance on trade with the US.

However, Manzano does note that “if US growth goes under 2%/year, it will have an impact”.

Latin America continues to be a market that is attractive to multi-nationals, GP’s executive director noted, with more companies increasing business there, and in some cases moving back.

“Jobs are coming back to Mexico from China,” Manzano said.

Companies have been encouraged by lower interest rates, a better service component to the value train, and proximity to the US market, so the distance a product has to travel a major market is greatly reduced.

The primary macroeconomic trends in Latin American chemical production are the ones that are “recession resistant,” said Manzano, such as personal care items and products for the food value chain, from agro-chemicals to food ingredients.

In addition, he cited especially strong growth this year in water treatment chemicals and pharmaceuticals.

The potential for even greater growth in the Latin American region has been hindered because the chemicals distribution sector is “very fragmented … and ‘Responsible Distribution’ is not commonplace,” said Manzano.

“There are many smaller family businesses that don’t see the benefit of the programme,” he said.

The Responsible Distribution program is an NACD initiative that requires third-party verification of a chemical distributor’s safety measures, and it obliges members to continuously improve performance in health, safety, and security.

GP is the only Mexican distributor enrolled in the NACD’s Responsible Distribution, he said.

While Mexico's own Asociacion Nacional de la Industria Quimica (ANIQ) has its “Responsibilidad Integral” programme, “still not many companies have passed verification,” Manzano said.

This is changing, though, as suppliers and their customers, especially the larger multinationals companies “are pushing for better practices”, he said.

The NACD annual meeting began on Monday and was to conclude on Thursday.

By: Ivan Lerner
+1 713 525 2653

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