APLA ’12: Latin America’s top challenge is US petchem competition

10 November 2012 23:14  [Source: ICIS news]

RIO DE JANEIRO (ICIS)--The top challenge for Latin America’s petrochemical industry is competing with US players benefiting from low-cost shale gas feedstock, the president of the Latin American Petrochemical Association (APLA) said on Saturday.

“To be competitive with the US petrochemical industry is the number one challenge. In Brazil, there are generally high costs – from raw materials to energy, to labour and logistics,” said Pedro Wongtschowski, president of APLA.

Wongtschowski made his comments on the sidelines of the Latin American Petrochemical Association (APLA) annual meeting.

“Companies need to be more efficient at the plant operation level,” he added.

However, the APLA president sees major opportunities to serve the growing Brazil and Mexico markets for local producers.

“In Brazil, where we expect to see GDP growth of 3.5-4%/year in the next few years to translate into 7-8% growth for chemicals, there is huge space for local industry to grow,” said Wongtschowski.

Brazil imports about $40bn (€32bn) in chemicals from the US annually. This could also be produced locally,” he added.

Mexico is also a fast-growing market that presents a “huge opportunity”, said the APLA president.

Mexico has competitive raw materials along with a new president who has indicated he wants to solve energy issues that have restrained growth in the chemical industry,” Wongtschowski said.

Future petrochemical expansions in Latin America will likely take place mainly in Brazil and Mexico, he noted.

“I don’t foresee any major production in Chile, Argentina, Venezuela or Colombia. There are also no indications that there will be large projects in Peru or Bolivia,” said Wongtschowski.

“I am sceptical about planned major projects in Peru, Bolivia and other countries. Some have competitive feedstocks, but lack the characteristics − such as local market size and infrastructure − to attract investors,” he added.

He sees this as an opportunity for Brazil and Mexico chemical producers.

“These companies will be in a good position to supply local markets, and Latin American markets,” Wongtschowski said.

The APLA conference ends on Tuesday.

($ = €0.79)

By: Joseph Chang
+1 713 525 2653

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