Latin america – market for US - Canada shale gas based pe

Petro
Chemical
Consultingg
Alliance
Latin America – Market for U.S. and
Canada Shale Gas Based PECanada Shale Gas Based PE
by
J O Bühl Vid lJorge O. Bühler-Vidal
SPE Polyolefins 2014 Conference
Houston, 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
www.polyolefinsconsulting.comPO 2014 February 23 – 26, 2014
North Brunswick – Los Angeles – México D.F. – Bogotá – São Paulo – Buenos Aires
Bahía Blanca – Mendoza – Santiago – Porto Alegre – Guatemala – Charleston – Houston – New York

P t Ch i l C lti Alli
Petro
Chemical
Consulting
Provides consulting products and services to clients in the
PetroChemical Consulting Alliance
g
Alliance
worldwide petrochemical and plastics industries, combining
local 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
The broadest network of petrochemical consultants in the
American continent

F ti l d hi l
Petro
Chemical
Consulting
Functional and geographical coverage
Highly experienced consultants
located throughout the Americas
A ti
Professionals specialized in:
– Project planning
g
Alliance
– Argentina
• Buenos Aires, Bahia Blanca,
Mendoza
– Brasil
– Product development and
applications
– Development and selection of
production technology
• São Paulo, Porto Alegre
– Chile
• Santiago
Peru
production technology
– Operations
– Logistics
– Commercialization, marketing– Peru
• Lima
– Colombia
• Bogotá
, g
and 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 York
C i l l fi d th t h i l i d t
PO 2014 February 23 - 26, 2014
Covering polyolefins and the petrochemical industry
functionally and geographically

O tliOutline
Introduction
– 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 success
Opportunities
An exploration of potential opportunities
PO 2014 February 23 - 26, 2014
An exploration of potential opportunities

L ti A i h PE D fi itLatin America has a PE Deficit
The region is short of PE
Mexico, Colombia, Central America, South America’s Pacific coast
and have been traditional buyers
Brazil 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 , , g
More limited capacity in Colombia and Chile
Is it a good destination for excess PE?
PO 2014 February 23 - 26, 2014
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
Medium
Low
Source: Polyolefins Consulting
Low
Very low
- None
No data
Th b i t iti i ll t i
PO 2014 February 23 - 26, 2014
There are business opportunities in all countries

U S d C d Will H PE S lU.S. and Canada Will Have a PE Surplus
PE 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
A perfect match?

Latin America PE Supply and Demand
N C itNew Capacity
Company Location Capacity
[kt/ ]
Product Start Up
[ ][kt/yr] [year]
YPFB Bolivia 250 HDPE 2H 2017
Basic Eng.
and
YPFB Bolivia 350 LD/LLDPE 2H 2017
Basic Eng.
Braskem Brazil 450 to 500 Bio Under study
efinsConsulting
Braskem Brazil 450 to 500 Bio
LL/HDPE
Under study
Braskem Itaboraí, RJ,
Brazil
960 PE Post 2018
Under study
ortsandPolyole
Brazil Under study
Ecopetrol Cartagena,
Colombia
1,000 LL/HDPE 2017
Under study
:Companyrepo
Braskem
IDESA
Mexico 1,050 HDPE,
LDPE, EVA
3Q 2015
Some uncertainty Bolivia and Brazil projects very
Source
PO 2014 February 23 - 26, 2014
Some uncertainty… Bolivia and Brazil projects very
likely… Mexico well under way

Latin America PE Supply and Demand
N C itNew Capacity
Company Location Capacity Product Start Upp y p y
[kt/yr]
p
[year]
Braskem
Petroperu
Ilo, Peru 1,200 PE 2018
Under study
and
Petroperu Under study
Polinter Maracaibo,
Venezuela
300 LDPE 2017
Financing
efinsConsulting
Polinter Maracaibo,
Venezuela
300 HDPE 2017
Financing
Polimerica Jose, 400 HDPE On hold
ortsandPolyole
Venezuela 300
430
LDPE
LL/HDPE
Pequiven Paraguaná, 600 HDPE Under study
:Companyrepo
Pequiven Paraguaná,
Venezuela
600 HDPE Under study
Peru and Polinter projects likely to take place
Source
PO 2014 February 23 - 26, 2014
Peru and Polinter projects likely to take place

Polymers Consumption – 2012
[k ][kg per person]
Colombia Venezuela Mexico Chile USA Europep
PE 6.8 5.3 16.9 9.7 59.3 33.2
PP 4.6 3.5 7.6 5.6 32.3 18.1
PS 1.5 0.7 2.6 1.7 9.1 6.2
PVC 4.8 2.9 8.3 4.5 38.9 24.6
Other 1 1 0 7 0 9 1 6 4 8 3 8Other 1.1 0.7 0.9 1.6 4.8 3.8
Total 18.8 13.1 36.3 23.1 144.4 85.9
Source: Multidynamics
Potential for growth
PO 2014 February 23 - 26, 2014
Potential for growth

Approximate Market Size
S L ti A i M k tSome Latin American Markets
SOUTHERN CONE NORTH SOUTH
AMERICA
ARGENTINA – 688
LDPE 164
COLOMBIA – 319
LDPE 87
MEXICO – 1,736
LDPE 404
LLDPE 535
LLDPE 259
HDPE 265
LLDPE 100
HDPE 132
PERU 343
HDPE 797
CHILE – 345
LDPE 87
LLDPE 93
PERU – 343
LDPE 132
LLDPE 89
HDPE 122
BRAZIL – 2,190
HDPE 165
URUGUAY – 36
LDPE 13
HDPE 122
VENEZUELA – 274
LDPE 35
,
LDPE 543
LLDPE 825
HDPE 822
Approximately 5 931 kt In 2012
LDPE 13
LLDPE 9
HDPE 14
LDPE 35
LLDPE 109
HDPE 130
Source: APLA and Polyolefins Consulting
Note: Some figures are estimated
PO 2014 February 23 - 26, 2014
Approximately 5,931 kt In 2012

Colombia – PE Market
Hi t i l D d [kt/ ]Historical Demand [kt/yr]
orldFactbook
Year LDPE LLDPE HDPE Total Growth
ce:CIA-TheW
[%]
2007 87.3 80.0 90.0 257.3 3.21
2008 84 5 78 3 93 0 255 8 0 06
Sourc
2008 84.5 78.3 93.0 255.8 -0.06
2009 98.0 89.0 102.1 289.1 13.0
2010 86.8 92.5 106.3 285.6 -1.21
2011 83.1 96.2 119.1 298.4 4.44
2012 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
Only local production is 56 kt/yr of LDPE

Not Such a Thing as a Latin American
M k t
MEXICO
CENTRAL 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
There are many markets in Latin America

M iMexico
• Belonging to NAFTA, Mexico is very
orldFactbook
influenced by the U.S. economy
• Local production deficit supplied from the
ce:CIA-TheW
U.S. with low barriers and low complexity
• Prices reflect similarity to U.S. domestic levels
Sourc
• 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 aggressiveness
L lt i i hi• Loyalty is vanishing
PO 2014 February 23 - 26, 2014
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
ctbook
• 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
-TheWorldFac
g y , g q
Source:CIA
PO 2014 February 23 - 26, 2014
Very interesting customers

N th S th A iNorthern South America
orldFactbook
• Colombia, Venezuela, Peru and Ecuador
• Complex supply situation: U.S., Brazil, Argentina,
Asia and Middle East plus local production in some
ce:CIA-TheW
Asia and Middle East, plus local production in some
cases
• Prices under continuous pressure due to high offer
Sourc
• 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
Logistically simple but competing against everyone

S th CSouthern Cone
• Chile, Argentina, Bolivia, Uruguay and Paraguay
• The last four together with Brazil and Venezuela
orldFactbook
The last four, together with Brazil and Venezuela
conform Mercosur
• Strong production base in Argentina, largest player,
ce:CIA-TheW
g p g , g p y ,
but mainly focused on domestic market
• Other countries supplied from Brazil, Argentina, U.S.,
Asia, and Middle East
Sourc
• 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 Mercosur
S 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 clear
A h lf d fli ht f H t f t f t t ill
PO 2014 February 23 - 26, 2014
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
orldFactbook
p y
• Due to the size of economy, Brazil shows
many processors working at world scale
ce:CIA-TheW
• However, most industrial sectors are not
competitive on a global scale and are
protected with high import taxes
Sourc
• 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
g p g pp
Need strong local presence

O ll M k t P filOverall Market Profile
With some exceptions, today's customers are less loyal to their
traditional suppliers than in the past
Urgent 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 people
Overall 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
Opportunistic sales will not earn loyalty

P h i H bitPurchasing Habits
Customers 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
In countries without local production processors are very
flexible and creative

S f S lSources of Supply
A 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
Geography and logistics matter

Pl ti I d t G thPlastics Industry Growth
Traditionally, this industry has grown at 2 points above GDP
The 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 Mexico
The 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
Follow the growth

B i Cli tBusiness Climate
Latin America presents a very good business climate in general
Despite 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
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 – Platts
O 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
PO 2014 February 23 - 26, 2014
Many investment opportunities throughout the value chain

PO 2014 February 23 - 26, 2014

Latin america – market for US - Canada shale gas based pe

Recomendados

Recomendados

Mais conteúdo relacionado

Semelhante a Latin america – market for US - Canada shale gas based pe

Semelhante a Latin america – market for US - Canada shale gas based pe (20)

Mais de Jorge Bühler-Vidal

Mais de Jorge Bühler-Vidal (6)

Último

Último (20)

Latin america – market for US - Canada shale gas based pe