29 December 2011 19:00 [Source: ICIS news]
By George Martin
HOUSTON (ICIS)--The status of local economies in Latin America is expected to be the largest factor in polyethylene (PE) demand in the region in 2012.
Although the eurozone crisis is having some impact on Latin America, demand for PE will likely respond more to regional and domestic issues.
GDP growth for the region as a whole will be about 4.1% in 2012, according to forecasts by the Internation Monetary Fund. Similar growth figures are usually expected for commodities, as a minimum.
Market participants in Mexico are optimistic about the prospects for 2012. Local producer Pemex completed a series of maintenance turnarounds in 2011 at all PE plants and expects to have steady production in 2012.
Plastic processors had a decent year in 2011 and expect demand to grow further in 2012.
Brazil, the largest petrochemical producer in the region, stumbled at the end of 2011 and it is struggling to keep its currency steady, but market participants remain optimistic for 2012.
Demand for polyolefins has not declined as much as other segments of the economy, a Brazilian distributor said. With the international events that Brazil will host in coming years, including the 2014 Soccer World Cup and the 2016 Summer Olympics, it is certain the country will have a healthy level of economic activity, the source said.
In Argentina, the main concerns stem from the government’s cancellation of subsidies, as well as potential tariff increases for a large number of services. Market participants expect more clarification on these proposed changes during the first months of 2012, when all details will be known.
At the end of 2011 – a good year for most market participants – there was uncertainty about market conditions for 2012. However, the current softer demand is a typical consequence of the year-end holidays, as many workers go on vacation.
Demand is likely to reappear for countries on the Pacific coast of the continent, but prices will be largely affected by whether China’s resumes of normal production activities and trade.
Conditions will be steady in Colombia, a country that depends on PE imports from Brazil, Asia and the US Gulf. With monthly price adjustments based on US Gulf benchmarks and currency fluctuations, prices in Colombia will follow international guidelines.
Venezuela is expected to increase its imports programme, as demand in that nation has gone up without a corresponding increase in production of PE. Joint ventures with Braskem remain on the shelf, waiting for favourable conditions.
Venezuela’s presidential elections in 2012 will provide more clues about the feasibility of foreign investment in the nation. But for the time being, production will likely remain spotty in Venezuela.
However, the elections of 2012 are expected to bring increased activity in the country, which will translate into more sales for all commodities, including PE.Demand from China can lift export prices in the US Gulf, and the whole Latin American region. But if China’s demand remains dormant in 2012, a tide of product from the Middle East can be expected to sail west – an event that could put a lid on prices.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections