Brazil's PVC imports to increase steadily; North American producers may benefit

Bob Moser
PLASTICS NEWS CORRESPONDENT

Published: September 13, 2013 5:24 pm ET
Updated: September 13, 2013 5:33 pm ET

Related to this story

Topics Materials Suppliers, South America

SÃO PAULO — Slow but steady GDP growth, demand for new public-private housing construction and investments for both infrastructure and sanitation through at least 2016 will keep PVC imports on the rise for Brazil.

Analysts with IHS Inc. project that Brazil's PVC needs will approach 2.2 billion pounds by the end of this year, with steady annual growth topping 2.84 billion pounds by 2020. That demand will increasingly be met by imports, with no prospect of a PVC player investing in a new Brazilian plant or expansion of installed capacity, said João Cataldo, an IHS Brazilian specialist in PVC and chlorine.

"Brazil's economy will only continue to grow, despite low prospects for [gross domestic product]. All that development requires PVC and the majority must be imported, so it's a good market to focus on," Cataldo told Plastics News during the IHS Latin American Petrochemicals & Polymers Conference, held Sept. 4-5 in São Paulo.

Brazil currently boasts almost 2 billion pounds of installed capacity for PVC among three domestic Braskem SA plants, and one under Belgian producer Solvay SA. The domestic market produced 1.4 billion pounds in 2012, up 40 million pounds from the previous year, while operating at 72 percent capacity.

Brazil's PVC imports topped 680 million pounds in 2012 and are expected to reach 900 million pounds this year, with imports for January through July having totaled 520 million pounds. Those imports face a general tax of 14 percent, in addition to antidumping tariffs against specific countries that vary from 2-22 percent.

Braskem confirmed Sept. 3 it is bidding to buy the PVC assets of Solvay's Indupa business in Argentina and Brazil's São Paulo state, which produce PVC and caustic soda. Mexico's Mexichem and Braskem are seen as the most likely buyers. Solvay had announced in February a desire to sell the Indupa assets, which have a PVC production capacity of more than 1 billion pounds.

Cost challenges

Electricity dominates Brazilian PVC production costs to the tune of 59 percent, and the high cost of that energy puts Brazilian producers at a global disadvantage from the get-go.

Electricity in Brazil costs $75/MWh, compared with $13 in the Middle East, $27 in the United States, $46 in Asia and $68 in Europe. Only China, at $87/MWh, faces a greater challenge, according to IHS data.

The cost of natural gas in the U.S. is $4-$5/MMBtu, compared with $12-$14 in Brazil. IHS estimates a cost for U.S. shale gas of $260-$280/ton for ethane input, while producers in Brazil face $900-$950/ton for naphtha.

Producers in Brazil also face an industrial tax rate of more than 50 percent, while in the United States it is 35 percent, and in Europe 33 percent. These factors and more make Brazil an ideal export target for North American producers of chlorine derivatives, as shale gas helps drive down production costs there, IHS analysts said.

Cost challenges aside, Brazil's infrastructure deficiencies lock it in for PVC demand over the next decade, said Mauricio Harger, CEO of Mexichem Brasil.

"The infrastructure growth potential is great for housing, agribusiness and irrigation," said Harger, citing focal areas for Mexichem Brasil. Brazil currently has just 48 percent of its national waste sanitation network outfitted with contemporary piping, he added.


Comments

Brazil's PVC imports to increase steadily; North American producers may benefit

Bob Moser
PLASTICS NEWS CORRESPONDENT

Published: September 13, 2013 5:24 pm ET
Updated: September 13, 2013 5:33 pm ET

Post Your Comments


Back to story


More stories

Image

Foster building medical polymers plant

September 19, 2014 1:39 pm ET

Foster Delivery Science is investing $8 million in a new plant in Putnam, Conn., for production of medical polymer blends, as well as rods, film or...    More

Image

BP to restart damaged PTA unit in limited capacity by November

September 19, 2014 10:27 am ET

British Petroleum plc may restart its fire-damaged purified terephthalic acid (PTA) feedstock unit in South Carolina in late October or early...    More

Image

Bayer spinning off plastics business

September 18, 2014 8:49 am ET

Bayer AG will spin off its MaterialScience plastics group into a separate, publicly-traded company within the next 12 to 18 months.    More

Image

Investor group wants DuPont to split in two

September 18, 2014 7:37 pm ET

Investment firm Trian Fund Management LP is calling for plastics and chemicals giant DuPont Co. to split itself into two firms, one of which would...    More

Image

China's Polymax Elastomer launches U.S. production in Illinois

September 17, 2014 3:35 pm ET

Chinese materials maker Polymax Elastomer Technology Co. Ltd. has opened a North American production site and headquarters in Waukegan, Ill.    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events