latin america – market for us - canada shale gas based pe
DESCRIPTION
During the 2015 to 2017 period an additional 16 to 18 PE production lines are expected to start up in the United States and Canada with a cumulative total over 6,800 kt/yr. This supply will exceed the local demand and much will necessarily have to be exported. Areas being targeted are Asia, and somewhat lightly Latin America. Achieving substantial sales in Latin America will not be a trivial undertaking. Latin America is far from being a single, monolithic market; there are many markets in Latin America. Some are virtually self sufficient regions or countries, while others import all their plastic resin needs. Some areas source their imports from the U.S.; while others supplement them with regional or Asian imports; and the rest purchase regionally, and from the Middle East and the rest of Asia. Many markets have sophisticated applications, many of which are virtually unknown in the U.S. and Canadian markets. Nonetheless, there are interesting opportunities for U.S. and Canadian importers that are willing to understand the markets.TRANSCRIPT
PetroChemicalConsultinggAlliance
Latin America – Market for U.S. and Canada Shale Gas Based PECanada Shale Gas Based PE
byJ O Bühl Vid lJorge O. Bühler-Vidal
SPE Polyolefins 2014 ConferenceHouston, TX
February 23 - 26 2014February 23 26, 2014
North Brunswick Los Angeles México D F Bogotá São Paulo Buenos Aires
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.comPO 2014 February 23 – 26, 2014
North Brunswick – Los Angeles – México D.F. – Bogotá – São Paulo – Buenos AiresBahía Blanca – Mendoza – Santiago – Porto Alegre – Guatemala – Charleston – Houston – New York
P t Ch i l C lti AlliPetroChemicalConsulting
Provides consulting products and services to clients in the
PetroChemical Consulting Alliance gAlliance
worldwide petrochemical and plastics industries, combininglocal insights with a global perspective
Members
– Dr. Alfredo Friedlander, Buenos Aires, Argentina– INovatius ICS, São Paulo, Brazil – Meem Consulting, Costa Mesa, CA, USA– Multidynamics Ltda., Bogotá, Colombiay , g ,– Pipa Consulting, Mexico, D.F., Mexico– Polyolefins Consulting, LLC, North Brunswick, NJ, USA– Unisouth SRL, Buenos Aires, ArgentinaUnisouth SRL, Buenos Aires, Argentina
Th b d t t k f t h i l lt t i th
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
The broadest network of petrochemical consultants in the American continent
F ti l d hi lPetroChemicalConsultingFunctional and geographical coverage
Highly experienced consultants located throughout the Americas
A ti
Professionals specialized in:– Project planning
gAlliance
– Argentina• Buenos Aires, Bahia Blanca,
Mendoza– Brasil
– Product development and applications
– Development and selection of production technology
• São Paulo, Porto Alegre– Chile
• SantiagoPeru
production technology– Operations– Logistics– Commercialization, marketing – Peru
• Lima– Colombia
• Bogotá
, gand sales
– Technology and technical service for processors
– Guatemala• Guatemala
– Mexico• Mexico D F
Relationships with related and complementary consulting firms• Mexico, D.F.
– U.S.A.• Los Angeles, Houston,
Charleston, New YorkC i l l fi d th t h i l i d t
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Covering polyolefins and the petrochemical industry functionally and geographically
O tliOutlineIntroduction– Regional situation– Regional demand– Regional supplyg pp y– Country supply and demand– Latin American markets
Doing businessDoing business– Territory segmentation– Market profile
Purchasing habits and supply trends– Purchasing habits and supply trends– Plastics industry growth– Business climate
O t iti d b i t– Opportunities and barriers to successOpportunities
An exploration of potential opportunities
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
An exploration of potential opportunities
L ti A i h PE D fi itLatin America has a PE DeficitThe region is short of PE
Mexico, Colombia, Central America, South America’s Pacific coast and have been traditional buyersBrazil has also become an importer
Central America, Caribbean and South America’s Pacific coast ,countries are (almost) not producers
World class capacity in Mexico, Venezuela, Brazil and Argentinap y , , gMore limited capacity in Colombia and Chile
Is it a good destination for excess PE?
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Is it a good destination for excess PE?
PE d PP L l A il bilitPE and PP – Local Availability
Argentina Brazil Chile Bolivia Peru Colombia Venezuela Caribbean Central America
Mexico
LDPE - - - -LLDPE - - - - - -HDPE - - - - - -EVA - - - - - - - - -Acrylate cop. - - - - - - - - - -
PP - - - - High
MediumLow
Source: Polyolefins Consulting
LowVery low
- NoneNo data
Th b i t iti i ll t i
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
There are business opportunities in all countries
U S d C d Will H PE S lU.S. and Canada Will Have a PE SurplusPE producers in the U.S. and Canada have announced approximately 6 million tons of new capacity
By 2017 North America capacity would be approximately 25.9 million tons
North America demand would be about 19 million tons by 2017 and 20 million tons by 2019
Surplus will be 5 to 6 million by 2017 – 2018 diminishing by 2025
A perfect match?
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
A perfect match?
Latin America PE Supply and DemandN C itNew Capacity
Company Location Capacity[kt/ ]
Product Start Up[ ][kt/yr] [year]
YPFB Bolivia 250 HDPE 2H 2017Basic Eng. an
d
YPFB Bolivia 350 LD/LLDPE 2H 2017Basic Eng.
Braskem Brazil 450 to 500 Bio Under study efin
s C
onsu
lting
Braskem Brazil 450 to 500 Bio LL/HDPE
Under study
Braskem Itaboraí, RJ, Brazil
960 PE Post 2018Under study or
ts a
nd P
olyo
le
Brazil Under studyEcopetrol Cartagena,
Colombia1,000 LL/HDPE 2017
Under study
: Com
pany
repo
Braskem IDESA
Mexico 1,050 HDPE, LDPE, EVA
3Q 2015
Some uncertainty Bolivia and Brazil projects very
Sou
rce
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Some uncertainty… Bolivia and Brazil projects very likely… Mexico well under way
Latin America PE Supply and DemandN C itNew Capacity
Company Location Capacity Product Start Upp y p y[kt/yr]
p[year]
Braskem Petroperu
Ilo, Peru 1,200 PE 2018Under study an
d
Petroperu Under studyPolinter Maracaibo,
Venezuela300 LDPE 2017
Financing
efin
s C
onsu
lting
Polinter Maracaibo,Venezuela
300 HDPE 2017Financing
Polimerica Jose, 400 HDPE On hold orts
and
Pol
yole
Venezuela 300430
LDPELL/HDPE
Pequiven Paraguaná, 600 HDPE Under study : Com
pany
repo
Pequiven Paraguaná, Venezuela
600 HDPE Under study
Peru and Polinter projects likely to take place
Sou
rce
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Peru and Polinter projects likely to take place
Polymers Consumption – 2012[k ][kg per person]
Colombia Venezuela Mexico Chile USA EuropepPE 6.8 5.3 16.9 9.7 59.3 33.2PP 4.6 3.5 7.6 5.6 32.3 18.1PS 1.5 0.7 2.6 1.7 9.1 6.2PVC 4.8 2.9 8.3 4.5 38.9 24.6Other 1 1 0 7 0 9 1 6 4 8 3 8Other 1.1 0.7 0.9 1.6 4.8 3.8Total 18.8 13.1 36.3 23.1 144.4 85.9
Source: Multidynamics
Potential for growth
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Potential for growth
Approximate Market Size S L ti A i M k tSome Latin American MarketsSOUTHERN CONE NORTH SOUTH
AMERICA
ARGENTINA – 688 LDPE 164
COLOMBIA – 319 LDPE 87
MEXICO – 1,736LDPE 404LLDPE 535
LLDPE 259HDPE 265
LLDPE 100HDPE 132
PERU 343
HDPE 797
CHILE – 345 LDPE 87LLDPE 93
PERU – 343 LDPE 132LLDPE 89HDPE 122 BRAZIL – 2,190
HDPE 165
URUGUAY – 36 LDPE 13
HDPE 122
VENEZUELA – 274 LDPE 35
,LDPE 543LLDPE 825HDPE 822
Approximately 5 931 kt In 2012
LDPE 13LLDPE 9HDPE 14
LDPE 35LLDPE 109HDPE 130 Source: APLA and Polyolefins Consulting
Note: Some figures are estimated
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Approximately 5,931 kt In 2012
Colombia – PE MarketHi t i l D d [kt/ ]Historical Demand [kt/yr]
orld
Fac
tboo
k
Year LDPE LLDPE HDPE Total Growth
ce: C
IA -
The
W
[%]2007 87.3 80.0 90.0 257.3 3.212008 84 5 78 3 93 0 255 8 0 06
Sou
rc
2008 84.5 78.3 93.0 255.8 -0.062009 98.0 89.0 102.1 289.1 13.02010 86.8 92.5 106.3 285.6 -1.212011 83.1 96.2 119.1 298.4 4.442012 87.0 99.5 132.2 318.7 6.80
Only local production is 56 kt/yr of LDPE
2013 e 90.0 102.0 135.0 327.0 2.60
Source: Acoplásticos
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Only local production is 56 kt/yr of LDPE
Not Such a Thing as a Latin American M k t
MEXICOCENTRAL AMERICA & CARIBBEAN
Market
CENTRAL AMERICA & CARIBBEAN(Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, etc.)
NORTHERN SOUTH AMERICA(Venezuela, Colombia, Ecuador & Peru)
BRAZIL
SOUTHERN CONE(Argentina, Chile, Uruguay, Paraguay & Bolivia)Source: Unisouth
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
There are many markets in Latin America
M iMexico• Belonging to NAFTA, Mexico is very or
ld F
actb
ook
influenced by the U.S. economy
• Local production deficit supplied from the
ce: C
IA -
The
W
U.S. with low barriers and low complexity • Prices reflect similarity to U.S. domestic levels
Sou
rc
• Raw materials are shipped mainly in bulk by rail and road• Plenty of distributors, resellers and agents
N i i l i i• Negotiation style varies across regions• Still influenced by personal relationship, but trend is towards
getting the “best deal” and more cost-driven aggressivenessL lt i i hi• Loyalty is vanishing
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Mexican market becoming even more competitive
C t l A i d C ibbCentral America and Caribbean• Individually, small economies but, seen as a block, they are
relevant for volume adjustment for U.S. Gulf producers
• Very short lead times from U.S. Gulf coast
• Many brokers and agents offering material from Miami or Houston Agents with long term presence have small offices with local• Agents with long term presence have small offices with local representatives
• While this was a natural territory for U S suppliers during the last ctbo
ok
• While this was a natural territory for U.S. suppliers, during the last 10 years customers opened to additional sourcing from Asia
• Broker negotiation style, aiming for low cost and quick service -The
Wor
ld F
ac
g y , g q
Sou
rce:
CIA
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Very interesting customers
N th S th A iNorthern South America
orld
Fac
tboo
k
• Colombia, Venezuela, Peru and Ecuador
• Complex supply situation: U.S., Brazil, Argentina, Asia and Middle East plus local production in some ce
: CIA
-Th
e W
Asia and Middle East, plus local production in some cases
• Prices under continuous pressure due to high offer
Sou
rc
• Logistics cost have a relevant impact depending on sourcing
• Peru and Colombia are stars in terms of growth and stability• While personal relationship is a must to do business decisions• While personal relationship is a must to do business, decisions
are made in a professional manner
• Ecuador and Venezuela uncertain reliability on negotiations, t d i t tpayments and investments
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Logistically simple but competing against everyone
S th CSouthern Cone• Chile, Argentina, Bolivia, Uruguay and Paraguay• The last four together with Brazil and Venezuela or
ld F
actb
ook
The last four, together with Brazil and Venezuela conform Mercosur
• Strong production base in Argentina, largest player, ce: C
IA -
The
W
g p g , g p y ,but mainly focused on domestic market
• Other countries supplied from Brazil, Argentina, U.S., Asia, and Middle East
Sou
rc
• Negotiation styles vary in each country, but strongly influenced by personal relationship and ability to establish trust
ff• Difficult access to hard currency in Argentina is hurting supply
• Chile is the exception, not in MercosurS ll i t l d d ith d ti t• Small internal demand, open economy with productive system structured for export markets
• Negotiation style is direct and clearA h lf d fli ht f H t f t f t t ill
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
A half a day flight from Houston, face to face contact will be appreciated
B ilBrazil• Local production for practically 100 % of the
needs and demand of their plastic industry orld
Fac
tboo
k
p y
• Due to the size of economy, Brazil shows many processors working at world scale
ce: C
IA -
The
W
• However, most industrial sectors are not competitive on a global scale and are protected with high import taxes
Sou
rc
• High domestic prices facilitated an important growth of imported raw materials and finished goods
• Brazilian producers reduced their presence in Southern Cone, with the exception of Argentina (main Mercosur co-member)
• Negotiation styles vary from region to region, in general the ability to establish trust, service and long term commitment are essential
• Strong preference for local regional suppliers
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
g p g ppNeed strong local presence
O ll M k t P filOverall Market ProfileWith some exceptions, today's customers are less loyal to their traditional suppliers than in the pastUrgent need to gain competitiveness, specially in open-market economies
Most countries and customers show a lower or similar risk than customers in the rest of the world
A high proportion of the processors are family owned, with the decision making in the hands of very few peopleOverall trend to consolidation into large corporations (multilatinas)Overall trend to consolidation into large corporations (multilatinas)
In general, customers give high value to long term supplier presence and to the personal relationshipp p p
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Opportunistic sales will not earn loyalty
P h i H bitPurchasing HabitsCustomers had to adapt themselves to the continuous changes
Depending on the activity, they avoid continuous product changes
Customer “would” pay some premium if supplier can give good technical support
In countries with no local production customers prefer quarterlyIn countries with no local production, customers prefer quarterly volume negotiations
Strong rejection to the request of L/C´s prefer direct credit withStrong rejection to the request of L/C s, prefer direct credit with terms according to transit times
I t i ith t l l d ti
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
In countries without local production processors are very flexible and creative
S f S lSources of SupplyA highly dynamic situation but in general sources are
Mexico: U.S.
Central America & Caribbean: U.S., Korea
South America (Pacific Coast): U S Korea Argentina BrazilSouth America (Pacific Coast): U.S., Korea, Argentina, Brazil
Mercosur Countries: Argentina, Brazil, Korea, China, Middle East
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Geography and logistics matter
Pl ti I d t G thPlastics Industry GrowthTraditionally, this industry has grown at 2 points above GDPThe main markets for plastics are “recession proof” as they respond to basic human needs: agriculture, food, beverages, clothing, housewares, housing and furniture
We’ve seen an impressive 25% annual growth in applications related to infrastructure (i.e.: piping for water, gas and communications) in some countriescommunications) in some countries
Top per capita consumption is found in Argentina and MexicoThe biggest potential is found in Brazil combining market sizeThe biggest potential is found in Brazil, combining market size, growth of the economy and a lower starting point
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Follow the growth
B i Cli tBusiness ClimateLatin America presents a very good business climate in generalDespite differences among countries, economies look healthy and stable
Many countries have entered into or remain in a virtuous circle (Mexico, Peru, Colombia, Chile, Uruguay, Brazil), while others with more turbulence, like Argentina and Venezuela are managing to keep the plastic industry healthykeep the plastic industry healthy
No racial or religious problems, wars, nor economic collapses are expected in any country of Latin Americae pec ed a y cou y o a e ca
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Speak the customer’s language!
O t itiOpportunities
C iti l l t fCritical elements for success are:– Deciding to maintain long term presence– Committing only to realistic market possibilities– Establishing local or regional presenceEstablishing local or regional presence– Having local inventory when possible– Providing technical support and stable product portfolio– Reasonable credit risk
H i titi l i ti– Having competitive logistics
Acknowledgements– Many ideas and concepts from:
• Kevin Allen – PlattsO L R b G d J G l• Oscar Lopez, Roberto Guzman and Jorge Gonzalez –PetroChemical Consulting Alliance
M i t t t iti th h t th l h i
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Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com
Many investment opportunities throughout the value chain
PO 2014 February 23 - 26, 2014
Polyolefins Consulting, L.L.C.www.polyolefinsconsulting.com