Recently published research from Business Monitor International, "Brazil Petrochemicals Report Q3 2012", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 07/21/2012 -- BMI's Brazil Petrochemicals report for Q312 examines the enormous long-term potential of the local consumer market, but raises concerns over the potential impact of a rapid depreciation of the real against the US dollar over the short term.
We also examine the ways in which Brazil is tackling issues related to competitiveness, which has taken a hit because of the strong real and high naphtha feedstock costs. The report also analyses the growth and risk management strategies being employed by the leading players in the Brazilian petrochemicals sector, as they seek to maximise the tremendous growth opportunities on offer in the local market.
The Brazilian petrochemicals market has considerable potential for growth, with plastics consumption at 32kg per capita, which is less than one-third of the US and Western European level. Growth will be fuelled primarily by the 2016 Olympic Games in Rio de Janeiro and the 2014 FIFA World Cup. The chief concern is the fragmentation of the plastics conversion sector. Braskem is the monopoly supplier of polymer resins, serving over 11,500 converters which produce these at a high cost, which is not helped by a difficult regulatory environment as well as energy supply problems.
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Key views in the sector include:
- Brazil is set to experience continued petrochemicals capacity growth in 2012. Braskem has stated that its PVC expansion project in Alagoas and the new butadiene plant in Rio Grande do Sul will come onstream as scheduled in May and July 2012, respectively. These will add capacity of 200,000tpa PVC and 100,000tpa butadiene.
- The depreciation of the real against the US dollar, coupled with a rise in domestic demand, should help sustain rising output growth through the rest of 2012. Previously, BMI warned that the strength of the real, in conjunction with the increased competitiveness of US producers due to greater volumes of cheap gas feedstock, could undermine investment in the Brazilian petrochemicals industry.
- Brazil is third in BMI's Americas Petrochemicals risk/reward ratings (RRRs), with a composite score of 65.9 points. While it has a relatively large petrochemicals industry, Brazil's score is weighed down by higher levels of risk than most other countries in the region, with its long-term financial market risks a notable cause for concern, although this component of the business environment has improved. Brazil is 6.2 points ahead of Mexico and 11.8 points behind Canada.
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