Plastics processors in Chile expect their sector to grow by around 8 percent during 2005, boosted largely by packaging business on the back of strong Chilean exports.
Despite their margins being squeezed by a 40 percent increase in the price of plastic resins, processors expect annual sales of about $2.8 billion, according to the Chilean plastics industry organization Asipla.
In a country with a population of barely 15 million, direct export of plastics products, chiefly packaging goods, is already worth around $200 million compared to just $10 million in 1992, according to Asipla.
Indirect export sales for the plastics sector, through Chile's main export industries of mining, fisheries, agriculture and appliances, has topped $300 million against domestic market sales of $2.1 billion.
Overall, the packaging sector accounts for 48 percent of the Chilean industry's sales. Industrial applications represent 13 percent and the construction sector takes a 9 percent share.
Asipla has membership of 450 converting companies.
Many Chilean processors are finding it difficult to pass on the extra cost of raw materials to their customers and their profit margins are being hit hard. Jose Manuel Allende, chief executive of Santiago-based Wenco SA, an injection and blow molder of domestic goods and industrial packaging, forecast a zero rise in profit in 2005, a contrast to margin growth over the past decade.
Despite tough trading conditions, Asipla reported member companies still are continuing to invest in expansion projects.
In the flexible packaging area, Sigdopack SA, a bioriented polypropylene film extruder, plans next year to launch a new oriented nylon film line with an investment of $25 million, according to the firm's sales and marketing director Fernando García.
Sigdopack, also based in the Chilean capital, operates two film extrusion lines with a capacity of 66 million pounds per year, and generates annual sales of about $50 million. Some 80 percent of its sales are exports. The new line will help raise Sigdopack sales by $25 million, García said.
Chile is second only to Mexico in Latin America in terms of its per capita consumption of plastics products.