APLA ’18: Trucker strike, uncertainty lower Brazil plastics outlook

CANCUN, Mexico (ICIS)–Braskem expects polyolefins demand to grow by 3-4% in 2018, slightly below its forecasts earlier in the year, an executive with the company said.

Growth should be at the same level in 2019, said Edison Terra, vice president of Braskem’s business unit for polyolefins, renewables and Europe. He made his comments on the sidelines of the annual meeting of the Latin American Petrochemical Association (APLA).

Like many economists, Braskem lowered its outlook for growth following a nationwide trucker strike that took place earlier in the year.

The Brazilian Truck Union called for the strike on 21 May, and it quickly spread to most of the nation’s 26 states. The strike was called off later that month after the truckers reached the deal with the Brazilian government.

The strike was especially disruptive to Brazil because the nation relies on roads to distribute more than 70% of the goods produced in the country, according to the credit-agency Fitch Ratings.

The strike disrupted Braskem’s operations in Brazil.

Terra also noted that the strike led to uncertainty about the future outlook for the economy, and this also contributed to the dimming outlooks for GDP growth.

Uncertainty about Brazil’s recent presidential elections also lowered growth forecasts.

The elections have resulted in a new president from a different political party, which has caused some market watchers to expect economic reforms.

The jolt in optimism could revive Brazil’s construction market, which is still sluggish, Terra said.  The construction industry is an important end market for polyvinyl chloride (PVC), and demand for this resin has suffered as a result of the slowdown in this sector.

Terra said demand is no longer falling, but it has yet to start recovering.

The APLA annual meeting runs through Tuesday.

Interview article by Al Greenwood

Pictured: Brazilian truck drivers on strike in May 2018
Picture Source: ANTONIO LACERDA/EPA-EFE/REX/Shutterstock