Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Plastics News China
  • Rubber & Plastics News
logo-pn-color
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • End Markets
    • FYI Charts
    • LSR World
    • Multimedia
    • NPE2021
    • K Show
    • Special Reports
    • Top materials of injection molders
      Recycled PET use by product category
      US PET, flexible packaging desintations
      Global fluropolymers additives market: CAGR
    • NPE exhibitors question handling of deposits for canceled trade show
      Exhibitors back NPE cancellation: ‘We couldn't take that risk'
      NPE2021 canceled as in-person event
      NPE reviews its options as pandemic prompts exhibitor to exit
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • What Keeps You Up At Night
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Polymer Points Live
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Videos
    • Galleries
    • Podcasts
    • CEO Issue
    • Best Places to Work
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • Heavy Metal
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • Perspective
    • Mailbag
    • Getting back on the road
      How long will it take for EVs to replace internal combustion engines?
      Watching, and hoping, for progress in 2021
      COVID-19 stories dominate 2020 headlines
    • Kickstart: More toys for your collection
      Kickstart: Microchips, masks and US manufacturing
      Kickstart: Bringing plastics, sustainability to the construction site
      Kickstart: Making more US beds
    • Heavy Metal: Coronavirus edition, plus the work of working from home
      Don't put off succession planning
      What's a good gift for your cobot? Batteries?
      Here's some big ideas to mull over the holidays
    • Plaskolite wins 3M supplier award
      Green feet: Braskem partners with Dansko on bio-based clogs
      Curbell donates plastic sheet for prosthetics project in Ecuador
      Covestro volunteers build ramp for Ohio veteran
    • There was no choice but canceling NPE still a big deal
      The business case for producer responsibility
      Think divided government stalls plastics legislation? Think again
      ACC, NAM eye economic priorities in Biden presidency
    • Thermoformers: Would you believe a 12 percent gain?
      Just how big is thermoforming in North America?
      Changing names for compounders embracing corporate branding
      Diversity the key to outperforming the market
    • Thermoformers: Would you believe a 12 percent gain?
      The benefits of getting social
      Rising Stars shine bright future on industry
      Getting back on the road
    • Perspective: Plastics manufacturers — a surprising contribution to sustainability
      Plastics industry business owners: Listen to your future workforce
      Perspective: ‘Fake news' of a different sort?
      Perspective: Making products in the USA is good for the planet
    • Mailbag: Additional fees for electric vehicles ‘unfortunate'
      Mailbag: Where's the plastics industry's response to critics?
      Mailbag: Manufacturers struggling to follow COVID-19 safety rules
      Modernizing recycling infrastructure will benefit businesses as well as the environment
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
    • Maintenance can ensure efficient blender operation
      Dosing: Perfect for adding color
      Blending vs dosing: What you need to know
      Going low or high: Comparing volume
    • Colors and custom compounds
      In the laboratory: Compounding solutions
      Recycling content: Resins going ‘green’
      Compounding: Glass and other fillers
    • Dryer maintenance: Don’t err with air
      Dryers: Options for a shop’s process
      Dryer installation: Going central?
      Resins: Hygroscopic or non-hygroscopic
    • Electric injection molding presses: Efficiency is key
      Hydraulic injection molding machines
      Proper maintenance can prevent downtime
      Hybrid injection molding machines
    • Purging Hot runners: Open or closed methods
      Purging extrusion machinery
      Purging extrusion blow molding machines
      Purging: Chemical, abrasive and non-abrasive
    • Controls, special applications boost production, profitability
      Robot maintenance key for smooth operation
      High-speed robots: A rapid way to increase efficiency
      Robots: Every shape and size
    • Maintenance: Key for efficiency
      Shredders: Plastic in pieces
      Safety first for size reduction
      Granulators: The right fit
    • Structural foam molding: Flexibility for processors
      Video: Structural foam molding
    • Mold inventory: How many molds does a shop have?
      Molds: Innovation
      Mold changeover: Saving time and money
      How molds work
    • Labor: Apprenticeships may provide answer
      Internships: Solving the skills gap in-house
      College training, programs
      Lean Six Sigma: Transforming business operation
  • Events
    • Plastics News Events
    • Industry Events
    • Livestreams/Webinars
    • Ask the Expert
    • Polymer Points Live
    • Reifenhäuser Technologies Livestreams
    • 2020 Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
    • Polymer Points Live - February 2021
      Polymer Points Live - January 2021
      Polymer Points Live - December 2020
      Polymer Points Live - October 2020
    • Plastics in Healthcare 2020
    • Plastics News Executive Forum
    • Plastics in Automotive
    • Plastics News Caps & Closures
    • Plastics in Healthcare
    • Women Breaking the Mold Networking Forum
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Data Store
  • Directory
  • More+
    • Classifieds
    • Digital Edition
    • Newsletters
    • Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Processor of the Year submissions
    • Sponsored By Mitsubishi
      Innovative new technology from Mitsubishi Engineering-Plastics Corporation helps reduce emission footprints
      Canon Virginia, Inc.
      Sponsored Content By Canon Virginia, Inc.
      Canon Virginia Inc. brings collaboration to the table
      Sponsored By CDS MACHINES
      Facing medical equipment shortages during COVID-19 outbreak?
      Sponsored Content By Canon Virginia, Inc.
      Transform your molding capabilities with the Canon Shuttle Mold System
    • KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei Retools in US with investment from Parent Ownership
    • Sponsored By ENGEL Machinery
      Tailored maintenance for injection molding machines and robots
      Sponsored By ENGEL Machinery
      Improve maintenance efficiency with e-connect.monitor
      Sponsored By ENGEL Machinery
      Maximum precision for lowest shot weights
      Sponsored By ENGEL Machinery
      Even more cost effectiveness for small precision parts
    • Sponsored By Conexiom
      Use Sales Order Automation to free up time for CSRs to focus on customers, not manual entry
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. Viewpoint
September 06, 2013 02:00 AM

Economies in India, Brazil disappointing

Frank Esposito
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Rich Williams

    Materials and energy giants Braskem SA of Brazil and Reliance Industries Ltd. of India are holding their own, in spite of economic turmoil in their respective countries.

    I've visited both countries on behalf of Plastics News — India in 2006 and Brazil in 2011. Based on what I saw during those visits, I would have thought both economies would be more developed by now. So although it's good to see two companies so important to their native economies hanging in there, it's a bit worrisome that those economies remain unsteady.

    São Paulo-based Braskem is more visible in North America through its position as one of the region's largest polypropylene suppliers. The firm attained this position by purchasing the PP business of Sunoco Inc. and Dow Chemical Co. in 2010-11.

    Mumbai-based Reliance long has been rumored to be a buyer in North America — and the firm came close to buying polyolefins giant LyondellBasell Industries in 2010 — but as of now has no major North American presence.

    Braskem posted sales of almost $4 billion in the second quarter of 2013, an increase of 6 percent vs. the first quarter of the year. The firm's pretax profit grew 12 percent to $462 million in the same comparison.

    Braskem reported Aug. 8 that operating rates at its petrochemical complexes reached 94 percent in the second quarter, up four percentage points vs. the first quarter. The firm's second-quarter resin production also grew 19 percent in the same comparison, reaching almost 2.1 billion pounds.

    This growth played out against a backdrop of a plunge in value for the Brazilian real. The currency was at 2-to-1 vs. the dollar in April, but recently had fallen to more than 2.4-to-1 — its lowest level since 2008. Brazil's Bovespa stock index also has lost 15 percent of its value since January. Braskem shares have fared better on the New York Stock Exchange in 2013, up almost 12 percent through late August.

    Brazil's economic growth is expected to be only 2½ percent this year, well below the rates seen in recent years. As a result, Brazil's central bank said in August that it would inject $60 billion into the economy, in the form of currency swaps and loans, over a period of several weeks in an attempt to halt the slide the value of its currency.

    I recently exchanged emails with PN's Brazil-based correspondent Bob Moser on these topics. He said residents have been feeling the effects of inflation for the past six to eight months.

    "We've seen our cost of daily food staples rise, items produced both domestically and those with imported ingredients," Moser added. That, to me, sounds like Brazilians might have less to spend on non-necessary items, such as electronics equipment, and might be less willing to make larger purchases such as appliances. Both of those moves would affect plastics consumption.

    As if that weren't enough, Brazil also is contending with social unrest surrounding the Confederations Cup soccer tournament held at numerous sites there earlier this year. Residents tangled with police while protesting inadequate living conditions, even as Brazil spends large amounts in preparation for the 2014 World Cup soccer tournament and the 2016 Summer Olympic Games.

    These issues weren't addressed by Braskem officials in an Aug. 8 news release that focused on the firm's growth. CEO Carlos Fadigas did, however, ask that Brazil's congress approve a presidential decree reducing taxes on raw materials.

    Fadigas said in the news release that the reduction is needed to allow Braskem to compete with U.S. petrochemical producers who are benefiting from the competitive advantage provided by shale gas.

    When I returned from Brazil in 2011, I wrote that the country's plastics market seemed similar to what I had heard about the U.S. market of the 1980s, with many basic applications moving into plastic for the first time, allowing for annual demand growth of at least 5 percent.

    I suggested that Brazil's plastic market should "enjoy the here and now … [because] the road might not be this smooth in the future." Here in 2013, I hope Brazil's plastics firms can delay that moment for a few more years at least.

    Reliance — which has major oil, gas and retail holdings, as well as plastics and petrochemicals — has seen similar conditions in India. The country's rupee currency has hit record lows vs. the dollar and currently is at levels of almost 70-to-1. India's Mumbai Sensex stock index also lost 11 percent of its value between late July and late August. Reliance's own per-share stock price was near 810 rupees recently — almost 15 percent lower than its 52-week high.

    The Reserve Bank of India announced in late August that it would inject more than $1 billion into financial markets in an attempt to improve the nation's financials.

    For Reliance, the first quarter of its fiscal 2014 — the three months ended July 19 — saw sales fall almost 5 percent to $15.3 billion vs. the same quarter in fiscal 2013. The firm's petrochemicals sales fared better, falling only 1 percent in the same comparison. The unit's pretax profit also was basically flat.

    Nationwide, India's plastic demand was fairly robust in the first quarter, with domestic demand for polypropylene resin growing 14 percent, polyethylene demand up 8 percent and PVC demand surging 29 percent. In a news release, Chairman and Managing Director Mukesh Ambani said robust growth in petrochemical- product demand "augurs well for our biggest-ever expansion program."

    But, with inflation starting to take its toll in India as it has in Brazil, can this growth continue?

    In a recent email, PN's India-based correspondent Satnam Singh said imported goods already are becoming more expensive there.

    The increased expense has led General Motors' Indian division to lower prices on some vehicles and prompted automaker Maruti Suzuki to slow production. As in Brazil, those actions don't sound like a recipe for continued increases in Indian plastics consumption.

    Tightly contested political elections in India also could lead to gridlock, which could worsen the situation, Singh said. India's ruling party has proposed increased spending on food for the poor, but without indicating how it would fund such action.

    "As per poll predictions, India is heading for a hung parliament, which means no free hand for the next government to take steps to make the economic correction," Singh added.

    "All of this would adversely affect [gross domestic product] growth."

    New York Times columnist Paul Krugman tackled the economic problems of Brazil, Russia, India and China — the so-called BRIC countries that have led emerging markets in recent years — in an Aug. 23 column. He described the current challenge as "a variant on the same old story."

    "Investors loved these economies … and have now turned on the objects of their former affection," he wrote.

    Krugman stopped short of saying that the BRIC turmoil was a threat to the world economy, claiming instead that the bigger threat is the possibility of those nations' central banks overreacting and raising interest rates — which would make the situation worse.

    Upon my return from India in 2006, I wrote that "it's going to be difficult not to make money in plastics in India for at least the next decade."

    For the sake of all involved, I hope the recent economic speed bumps hit by India and Brazil both are smoothed out in the near future.

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    logo-pn-color
    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber & Plastics News
    • Urethanes Technology
    • Plastics News China
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • What Keeps You Up At Night
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
        • Polymer Points Live
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • FYI Charts
        • Current FYI
      • LSR World
      • Multimedia
        • Videos
        • Galleries
        • Podcasts
      • NPE2021
      • K Show
      • Special Reports
        • CEO Issue
        • Best Places to Work
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
    • Opinion
      • The Plastics Blog
      • Kickstart
      • Heavy Metal
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • Perspective
      • Mailbag
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Plastics in Automotive
        • Plastics News Caps & Closures
        • Plastics in Healthcare
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Livestreams/Webinars
      • Ask the Expert
      • Polymer Points Live
      • Reifenhäuser Technologies Livestreams
      • 2020 Caps & Closures Library
      • Plastics in Healthcare Library
      • Women Breaking the Mold Networking Forum Library
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Data Store
    • Directory
    • More+
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified
      • Digital Edition
      • Newsletters
      • Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Processor of the Year submissions