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December 1, 2006

4 Min Read
Brazil’s northeast sees boom in plastics industry

Visitors to the inaugural Feiplast trade show in Northeastern Brazil eye web conversion equipment.

Northeastern Brazil is best known for white sand beaches and crystalline blue waters. But strong growth in the region has prompted a series of investments in petrochemicals production, bringing significant expansion in the plastics industry.

The expansion of the plastics sector in northeastern Brazil was apparent at two trade fairs held in Recife, Pernambuco in mid-August—Feiplast Nordeste and Embala Nordeste. The two events, the first of their kind in the region, had 12,000 visitors and over 300 exhibitors. “The potential of the plastics sector in this region is enormous,” said Evaristo Nascimento, the head of Alcantara Machado, the company that promotes Brazil’s most important plastics events including Brasilplast.

According to Luiz Fernando Pereira of Greenfield Business Promotions, responsible for organizing Embala Nordeste, northeastern Brazil is increasingly the focus of investments for the plastic packaging industry. Despite tepid economic growth in Brazil in 2005, demand for packaging in northeastern Brazil was 12% in 2005, three times the national average, according to Pereira.

Thermoforming machinery maker Selovac was also pleased with the results of the event. According to the manager of Selovac, Cornelis Henrique Borst, the company made several sales, including one to a Thai processor. The company expects to continue to look abroad in an effort to maintain its current growth rates of 20%.

The second edition of Embala Nordeste is scheduled for August 2007, after which the event will be bi-annual. The Feiplast fair will take place every two years, with the next edition scheduled for August of 2008. “We were extremely pleased with the number of visitors to both events,” said Anísio Bezerra Coelho, the head of Pernambuco-based plastic packaging processor Labortecne.

Both events also served to show the potential of exports from the region. “Pernambuco and the northeast in general are strategically located to serve markets in the U.S. and Europe,” said Fernando Antônio de Araújo Pinheiro, the president of the Pernambuco Plastics Industry Assn. (Simpepe). “We are a fraction of the distance to major consumer markets compared to manufacturers in China,” Pinheiro added. Pinheiro believes that the region’s exports will continue to grow, particularly as new investments in production are made.

In an effort to further promote exports from the region, Brazil’s Export Plastic program invited a delegation of international buyers from the United States, Mexico, Spain, England, and Colombia to the event. In addition to visiting the fair, the buyers were given an opportunity to visit companies in the region. Of the 110 companies that participate in Brazil’s Export Plastic program, 11 are currently located in northeastern Brazil.

Capacity underscores growth

Brazilian chemicals supplier Braskem, which has key resin production assets in the Camaçari petrochemicals complex, located in the northeastern state of Bahia, said that plastics sales in the region increased by 11% in 2005 and should increase by 15% in 2006.

Braskem plans a series of capacity expansions in the region, most important being the expansion of polyethylene supplier Politeno. Braskem, which acquired Politeno earlier this year, plans to increase output at the plant to 400,000 tonnes/yr from 360,000. Braskem is also increasing PVC capacity at its plant in Alagoas state.

Similarly, Italy’s Mossi and Ghisolfi expects its 450,000-tonne/yr polyethylene terephthalate (PET) plant located in the city of Ipojuca to begin operating in December. The plant, which will be the largest in the world, will cover Brazil’s demand for PET.

Brazil’s state-owned oil company Petrobras also plans to invest heavily in Pernambuco. The company recently began construction on a new $2.8 billion oil refinery, a JV with Venezuelan oil company PDVSA that will have a capacity of 200,000 bbl/day, and will begin operating in 2011.

As a result of these investments, Pernambuco’s plastics sector is expected to see significant growth in coming years, particularly the Suape plastics complex which already includes 450 companies processing a total of 5,000 tonnes of plastics per month. Since 2002, the industry has been boosted by a state government decision to provide incentives to processors in the region, reducing the service tax for the plastics industry by as much as 80% through 2015.

By Elizabeth Johnson • [email protected]

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