U.S.-based chemical giants Dow Chemical Co. and DuPont Co. each have lengthy histories in Brazil — and now are looking to leverage that experience to capitalize on the country's economic strength.
Wilmington, Del.-based DuPont has operated in Brazil since 1937 and now employs 3,500 there at 11 plants, including two joint ventures. The firm operates a prominent plant making automotive paints in Guarulhos. In 2008, Brazil's sales total of $1.8 billion represented almost 6 percent of DuPont's overall sales. Earlier this year, DuPont expanded a research and development lab in São Paulo.
For Midland, Mich.-based Dow, Brazilian operations date back to 1956 and now include 2,300 employees at 17 sites. Dow's agrosciences business operates a headquarters in São Paulo, and the firm's 2009 Brazilian sales total hit $2.3 billion — almost half of the firm's total Latin American sales. Late last year, Dow invested $2 million into a technology center it operates in Jundiaí.
But surprisingly, neither Dow nor DuPont have major plastic assets in Brazil. Dow supplies the region with low density and linear low density polyethylene from a major plant in Bahía Blanca, Argentina. It operates a plant in Guarujá, Brazil, making specialty plastic materials such as epoxies, polyols and polyglycols, but spun off its polystyrene plant there to Styron LLC last year.
DuPont long has operated a plant compounding its market-leading Zytel-brand nylon resins in Berazatequi, Argentina. Other top materials — such as Surlyn-brand ionomer — are imported from outside the region.
The lack of on-the-ground plastics operations doesn't reduce the importance of Brazil in each firm's global plans, executives with both companies said at Brasilplast 2011, held May 9-13 in São Paulo.
“For us, Brazil is a strategic location, not just for the size of the market, but for the sophistication of converters here,” said Javier Constante, Dow's commercial director of basic plastics for Latin America. “It has better appeal than some other areas.”
Consumer behavior “is different in Brazil” than in other parts of Latin America, Constante added. “It has more middle-class growth. If each family in Brazil would buy a 5-kilogram [11-pound] bag of rice and black beans — just one more bag a month — in a couple years, we would need a new train of polyethylene production.”
Along those same lines, Constante said that an addition of more PE capacity in Bahía Blanca “is possible, depending on how the market evolves.”
Dow also remains interested in producing a bio-based PE for the region. Plans to make such a material in Bahía Blanca were placed on hold when the world economy cooled down, but Dow still owns 17,000 hectacres — about 42,000 acres — of sugar-bearing land in Brazil to source the project. It currently sells the output into the local sugar market.
“We still want to do a bioproject,” Constante said. “But we want to have a partner in the project. We want it to be sustainable and meet the needs of many brand owners.”
At Brasilplast, Dow focused on several applications, including a stand-up pouch made of 100 percent PE. The pouch is being aimed at the food industry, as well as personal-care and cleaning products.
“The main competitive edge here is recyclability,” marketing director Dolores Brizuela said of the pouch in a news release. “Consumers will be 100 percent sure they're acquiring a product whose package will be easily recycled.”
For DuPont, Brazilian sales for its performance products unit — including nylon — have averaged double-digit growth for the last five years. Brazil's rising automotive sector has fueled the growth, said Rogerio Colucci, DuPont do Brasil SA performance polymers marketing manager.
“There's a huge issue with traffic in São Paulo, but in other regions, people are able to buy cars,” he explained at the show. Brazil's use of sugar-based ethanol as a fuel also creates opportunities for DuPont's elastomer materials, since ethanol is an aggressive fuel that can wear out standard fuel lines, Colucci added.
Sales of DuPont's packaging and industrial polymers products — such as Surlyn — into the construction market also have averaged double-digit growth for five years, according to Bruno Bezerra, a marketing manager for that unit.
“We hope that growth will continue with the Olympics and World Cup,” Bezerra said. “We'll be here to help with asphalt-modification polymers and PVC roofing membranes.”