One of Mexico's top three independent resin distributors plans to open a sales office in Argentina as it prepares to weather the global economic downturn by extending its operations to South and Central America and the Caribbean.
``We have a very complete portfolio of products and the best way to grow is outside the country,'' said Ãngel Ramón Oria Varela, managing director of Polímero y Materias Primas Internacionales SA de CV, or Polymat.
With annual sales of $250 million this year, the Mexico City-based company, founded in 1988, grew at an annual rate of 10-12 percent until 2007, he said.
``We have not grown this year,'' he said, ``and we expect 2009 to stay flat,'' hence the expansion beyond Mexico's borders.
``We have plans to compete in South America,'' said Oria. ``We are opening an office in Buenos Aires. Our idea is to become more active in Central and South America and also in the Caribbean islands.''
Polymat, which has two subsidiary companies, Polyresinas SA de CV and Polyresinas de Ingeniería SA de CV, claims 1,200 customers in Mexico (close to a third of the country's total number of 4,000 processors), whom it serves through sales offices and warehouses in Monterrey, Guadalajara, León, Puebla, the Federal District and southeast Mexico.
Its customers are primarily small companies, although Polymat does have some large clients on the books. Its portfolio of products includes polyethylene and polypropylene, polystyrene, nylon, polyester and engineering resins, masterbatch, additives, concentrates and color pigments.
It suppliers include Petróleos Mexicanos (Pemex); Formosa Plastics Group of Taipei, Taiwan; Sunoco Inc. of Philadelphia; European conglomerate Ineos; and Equistar Chemicals LP of Houston.
It's also a distributor of BASF SE in Ludwigshafen, Germany.
``Right now the availability of raw materials is tight because the suppliers couldn't get raw materials on time or ship their orders on time because the railroad companies had problems with the hurricanes [in the Gulf of Mexico],'' said Oria, whose founding partner in the business is Fernando López.
But next year he expects a glut of material.
``Worldwide sectors like construction and automotive will not grow, and if these two sectors — that are very important for our industry — don't grow, it means that China, which is a big consumer of materials, will not buy. So suppliers in Asia and the Middle East will come to our market and try to sell.
``There will be a lot of availability from the Middle and Far East and the U.S. and, of course, this excess will cause prices to drop. Demand will be very soft. It means lower prices and less profit for the distributors.''
A former president of Anipac (Asociacón Nacional de Industrias del Plastico), Mexico's national plastics trade association, Oria fears for the future of Mexico's processors.
He agrees with a recent assessment made by Mexican plastics industry consultant Rafael Blanco that about 25 percent of them will either be forced out of business by the financial and economic crises or be forced to switch from processing to trading.
``The rest will survive but find it tough or will grow and be integrated into other companies,'' said Oria, paraphrasing Blanco. ``I think this is a very accurate [assessment].''
Mexico's processors already are beginning to suffer from a credit crunch, he said.
Oria is scornful about the government's failure to support a strong petrochemicals industry in Mexico.
``Brazil is moving very fast in the petrochemicals business. The Brazilians are making a lot of mergers and acquisitions and investing a lot of money in technology and research and development and, unfortunately, we are not.
``The proposed reforms of Pemex mention nothing about this … [The legislators] are always talking about exploration and exploitation, about new gasoline refineries but nothing at all about the petrochemical industry, which is a pity because this is the one that gives the oil industry a lot of added value. I think what they are thinking about is leaving this business to the private sector.
``The government should be investing in the whole chain, not only in oil refineries but also in petrochemical facilities, in monomers and polymers because it would give Pemex greater profitability,'' Oria said.