Brasilplast Could Be Harbinger Of Rebound In Latin America

The ninth edition of Brasilplast, the world’s third-largest plastics industry fair, held in São Paulo, Brazil, March 10-14, was considered a great success by organizers and the heads of the Brazilian Plastics Industry Association (Abiplast), and by the Brazilian Industrial Machine Manufacturers Association (Abimaq). The fair had over 50,000 visitors and 1200 stands representing 32 countries.

President Luiz Inacio Lula da Silva opened the fair, along with Development Minister Luiz Furlan. Both officials promised to help Brazil’s plastics industry by speeding tax reform and pitching monetary support to the industry’s new program, Export Plastic, which is currently awaiting government approval. The goal of the Export Plastic program is to reverse Brazil’s $300 million trade deficit in plastics and generate a trade surplus of $1 billion by 2013.

The fair was also an opportunity for resin producers and machine makers to announce capacity increases and new investments. Despite the climate of uncertainty in Latin America and throughout the world, the number of new projects is a strong indication that the region’s plastics industry is rebounding.

Polibrasil, Brazil’s largest polypropylene supplier, inaugurated its 300,000-tonne/yr plant on the first day of Brasilplast. Marketing director Roberto Ribeiro said that Polibrasil plans several other expansions in the coming years, including a 100% capacity increase at its pp plant in Rio de Janeiro, to 200,000 tonnes/yr, in 2004. Polibrasil is considering building a 300,000-tonne/yr plant, which would go on-line in 2006.

Braskem, Brazil’s largest petrochemicals producer, launched several new products and reinforced plans to expand pp production by 100,000 tonnes this year.

Rio Polimeros, a potential impact player in polyethylene, began its pre-marketing process at Brasilplast. Rio Polimeros will begin production at its 600,000-tonne/yr plant in August 2004. It recently announced plans to begin selling pe purchased from other suppliers to begin establishing relationships with clients.

Politeno, meanwhile, is considering a pe capacity increase. But it is negotiating a new ethylene contract before it can go ahead with the move, according to Jorge Alves da Silva.

pvc resin producers were pleased by President Lula’s announcement at Brasilplast that his government will invest real 1.5 billion ($441 million) in basic sanitation projects. This investment is expected to boost resin demand. Solvay’s commercial director, Carlos Tieghi, said he expects pvc demand to grow by 3% this year, but government investment could further boost demand.

At Brasilplast, the creation of the South American PVC Association was announced. pvc trade groups from Argentina, Brazil, Colombia, and Venezuela have joined the association, which will promote the exchange of information.

Innova sales director Marcelo Bianchi said it is moving ahead with plans to invest $150 million in a new polystyrene plant in Rio Grande do Sul. Meanwhile, BASF and Dow are working on a viability study for a ps plant.

Imerys announced that it would invest $2 million to expand its fine calcium carbonate production by 50% at its São Paulo plant. By mid-2004, Imerys will become the first local producer of ultrafine calcium carbonate, at the same plant.

Besides new investments in resin and chemical production, several companies used Brasilplast to announce new business strategies. GE Plastics, which has invested $6 million in South America over the past two years, is now focusing on helping companies improve productivity and substitute for imports. Future investments, according to Mark Kingsley, GE Plastics’ president for South America, will depend on opportunities. According to Kingsley, there is an increase of confidence in the region, and sales have increased in nearly all areas.

Rhodia Engineering Plastics presented new products for the automotive industry. According to president Jean-Claude Steinmetz, its focus will continue to be on automotive, where plastics consumption is expanding quickly. The company expected to close 20% of its 2003 sales at Brasilplast.

Machinery sales at Brasilplast surpassed the expectations of both foreign and domestic vendors. Since the devaluation of the real in 1999, domestic producers have slowly increased sales and share in overseas and domestic markets. While imports declined in 2002, when the real lost 52% of its value, most foreign machinery manufacturers are expecting a recovery this year.

Windmöller & Hölscher representative Peter Hoffmann said that sales of raffia machines from Europe were solid at Brasilplast, but added that the strong euro continues to hurt the import market. Hoffman said that W&H has been focusing on marketing machinery with technologies that are not yet common in Brazil.

Milacron also has focused on technological advantages and offering a level of sophistication. According to Hugo Korkes, head of sales for Milacron Brazil, last year’s currency fluctuations prompted many companies to hold back from purchases. Korkes believes that the stabilization of the real in recent months will help improve sales.

Fabio Seabra, general manager for Husky Injection Molding Systems in Brazil, said that while sales have been tough to come by, sales at Brasilplast were excellent. Seabra said that while Husky has attracted some new customers, 80% of the company’s recent sales have involved companies that have purchased Husky equipment in the past.

Many multinational equipment manufacturers have increased local production because of the currency devaluation and even increased exports of machinery to other parts of Latin America and to Europe and the U.S.

To keep up with local and international demand, Sandretto do Brasil announced the completion of its production capacity expansion at its plant in São Paulo. With the additional capacity, the company will be able to produce larger machines, according to Guido Pelizzari, director for Sandretto in Brazil, and hopes to export 25 to 30% of its production to other Latin American countries.

Pelizzari is also optimistic about the Brazilian market, because much of the machinery currently in operation in Brazil is dated; over the next five years, around 15,000 machines will need to be replaced.

Likewise, Bekum vp. Carlos Helfenstein said that while the Brazilian market has been slow, Bekum has increased exports of locally produced machinery to Latin America, Southeast Asia, Africa, and the Middle East.

Local manufacturers have benefited most from the currency devaluation by substituting imported machinery and increasing exports.

Carnevalli marketing director Mauricy Costa said that the company plans to continue to increase exports in 2003. Last year, the company exported 40% of its production. The company plans to focus on Latin America, but will continue to sell to the U.S. and Europe.

Costa also pointed out that recent advancements in Brazilian technology have helped Carnevalli to compete with European and American companies in terms of quality.

Other local machine manufacturers, such as Rulli Standard, also noted an increase in exports. Particularly at Brasilplast, Oscar Rocha Martinez, export director, said that the number of Latin American clients has increased and that sales to Argentina are beginning to rebound.

Maqplas also plans to increase exports, especially to Mexico and Chile. Maqplas has developed several niche markets both domestically and abroad, particularly injection machines that make packaging for flowers and fruit. Maqplas has roughly 70% of the Chilean market for grape packaging.

The success of this year’s Brasilplast is an indication that despite regional economic and political difficulties, the Latin American plastics industry is showing strong signs of recovery. MP

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