Plastics markets in Mexico and the rest of Latin America may be looking at a year of slower growth compared to 2018, according to one of the region's leading analysts.
"A slower global economy [aggravated by the U.S.-China trade war], uncertainty over future growth potential under new presidential administrations, particularly in Mexico and Brazil, with an important upcoming presidential election in Argentina this year, and the ongoing struggle against the sustainability movement," could all have an impact, according to IHS Markit's Javier Ortiz.
"At the same time, the gradual and yet unstable recovery of crude oil prices has created expectations for higher priced plastic resins, particularly for resins like polystyrene and PET," Ortiz wrote in a March 13 email to Plastics News. "But some products like [polyethylene and polypropylene] are currently experiencing a lower price trend due to their own supply/demand dynamics," he added.
Houston-based Ortiz is IHS Markit's associate director of polystyrene and polyolefins for the Americas. He was a guest speaker at a conference in Mexico City on the plastics industry's prospects in 2019 and expanded on his presentation at the request of Plastics News.
"In the case of PE, the effects of North American ethylene/PE capacity. expansions over the past three years have already been reflected in the form of lower prices offered to the Mexico and Latin American markets since the end of 2018," Ortiz wrote.
"And with more capacity expected to come online this year buyers continue to wonder if prices could drop further — particularly if the Chinese market remains closed to most U.S. PE exports while the U.S.-China trade war is unresolved.
"For polypropylene, we are projecting a much different year in 2019 as domestic production has recently become competitive again on the back of lower propylene prices, while ongoing imports of PP have kept the market more than adequately supplied," he said.
Other longer-term worries include the lack of ethane availability in Mexico to support its petrochemical industry and the potential sale of Braskem to LyondellBasell, he added.
And while sustainability efforts are not new, they have recently become one of the primary concerns for the future growth of the plastics industry as most Latin American countries have seen attempts to ban the use of plastic bags and other single-use plastic products.
Some examples include the ban of plastic bags in the city of Buenos Aires since 2017, incremental fees placed on distribution of some plastic bags in Colombia and a new law in Chile applying a nationwide ban on plastic bags.
"The combined effects of all these factors have placed a significant amount of downward pressure on the prospects of plastics' demand growth both globally and within Latin America, but we still believe that the plastics industry overall will continue to grow at a steady pace throughout the next five years — just not as robustly as previously forecast."
Mexico's national plastics association Anipac (Asociación Nacional de Industrias del Plástico A.C.) organized conference at which Ortiz spoke.