Economic growth boosts Argentine market for plastic packaging

26 July 2012 17:24  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--Argentine economic growth has increased disposable incomes, food and beverage consumption, and thereby plastic packaging uptake, consulting company Frost & Sullivan said.

Argentina’s economy has weathered the economic downturn, lending some stability to its GDP rate, which is expected to increase by 6% over the next few years and stabilise at 3.5% by 2017, the consultancy said on Wednesday.

“Growth in GDP rates directly influences commodity plastics consumption,” said Frost & Sullivan analyst Hernan Cavarra. “For every GDP point, the polypropylene (PP) segment grows by 1.2% and polyethylene (PE) by 1%.”

Economic stability means Argentine supermarkets are thriving, with retailers holding sway over the types of packaging used in the food and beverage industry.

“Retailers are opting for plastic instead of glass and other materials,” said Cavarra. “Plastic is lighter, it doesn’t break and it’s easier to carry,” he said.

However, the analyst emphasised that plastics packaging manufacturers have to strategise to counteract gas scarcity and high inflation.

“In the winter, domestic gas requirements are given priority while industrial gas supply faces cuts,” he said. “This means petrochemical production suffers.”

Polymer production capacities, currently low as a result of domestic gas scarcity, could be boosted by shale gas discoveries in Argentina.

“Of course, shale gas production would help the whole petrochemical industry, but at the moment that is a very long-term solution,” Cavarra said.

Cavarra also warned against high rates of inflation, currently standing at 9.9% according to government statistics agency INDEC.

“Certainly high inflation could be a big restraint in the long term on food and beverage plastic packaging uptake,” he said.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Simon West

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