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May 01, 2000 02:00 AM

Mexican PE demand outstrips its supply

Angelo Young PLASTICS NEWS CORRESPONDENT
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    MEXICO CITY — U.S. polyethylene resin exports to Mexico are growing rapidly, fueled by demand from construction, electronics and packaging applications. While some Mexican firms would like to boost domestic resin production, local analysts predict the nation still will be a heavy PE importer in 2010.

    "We simply don't have the resources. It's like the Mexican baseball league," said Sergio Sosa, president of Anipac, Mexico's national plastics association. "The Diablos Rojos [Mexico City's baseball team] is not in the same league as the New York Yankees. But, in reality, there are some star Mexican players, like [Fernando] Valenzuela. But they play in the U.S. because it's more profitable.

    "What we need is a draft, we need to [recruit] players to get Mexican factories to manufacture for the national sector."

    The economic crisis of 1995 now is more a memory than reality, and Mexico's plastics sector is growing. Prognostics for the next five to 10 years show acceleration of demand and investment.

    According to a report issued April 11 by the Mexico City-based industry consulting firm De la Tijera y Asociados SC, PE pipe sales should grow nearly 18 percent a year through 2005 thanks to the investment in the natural gas distribution sector that Mexican energy officials say is necessary to keep up with demand. Growth in the packaging sector should also be strong, at nearly 12 percent.

    Demand for plastics products in Mexico has grown 38.5 percent since 1995 and is expected to grow 8.7 percent a year until 2005.

    Del la Tijera revealed the findings at Polyethylene Seminar Mexico 2000, a one-day conference in Mexico City.

    Between 1995 and 1999, PE imports grew 92.7 percent while domestic demand grew 43.9 percent, according to Anipac. The strongest growth was in the maquiladora industry, where PE imports grew 162 percent in the past five years, mostly in the production of enclosures for electronics and consumer goods.

    Eduardo de la Tijera, director general of De la Tijera y Asociados, said the key issues revolving around a growing demand for HDPE involve various factors.

    "One is the substitution of laminated cardboard with bottles," said de la Tijera. "As well as the investment in the natural gas industry, and the gradual penetration of plastic containers throughout the country."

    According to Anipac, for Mexico to fulfill domestic demand by 2004 would require $6.5 billion worth of investment in the production and distribution chain.

    "In our dreams," joked Sosa.

    The best estimates in Mexico still maintain a resin deficit by 2010. If five new plants are built by 2009 as expected by the industry hopefuls, there will still be a deficit of nearly 100,000 tons of HDPE in 2010 vs. this year's estimated 317,000-ton deficit.

    Another issue facing the Mexican plastics industry is distribution, "an important part of competitiveness," says Angel Oria Varela, director general of Mexico-based polymer company Grupo PolyMat.

    "The professionalization of polyethylene distribution hasn't happened yet in Mexico," he added, citing consistent problems in scheduling and customer relations.

    Oria, who gave a presentation to Anipac members on cost analysis, said he hopes industry in Mexico will be able to adapt to global standards throughout the production and distribution chain. Until then, Mexico will continue to import PE, he said.

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