The Five Regions of Latin America

PetroChemicalConsultinggAlliance

The Five Regions of Latin AmericaThe Five Regions of Latin Americaby

J O Bühl Vid lJorge O. Bühler-Vidal

SPE Polyolefins 2015 ConferenceHouston, TX

February 22 - 25 2015February 22 25, 2015

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 2015 February 22 – 25, 2015

North Brunswick – Los Angeles – México D.F. – Bogotá – São Paulo – Buenos AiresBahía Blanca – Mendoza – Santiago – Porto Alegre – Guatemala – Charleston – Houston – New York

Polyolefins Consulting, LLCy g,member of the Petrochemical Consulting Alliance

Provides market, product and process technology selectionconsulting to the global polyolefins industry, from producersto extruders, converters and transformers

Clients are olefins and polyolefins producers; technologylicensors; equipment and additive suppliers; polyethylene andpolypropylene extruders, transformers and converters; endusers; construction companies; investment banks;users; construction companies; investment banks;international organizations; and professional and tradeassociations

Highly experienced consultants located throughout theAmericas and the world

Functional and geographic coverage of polyolefins and sectors

PO 2015 February 22 - 25, 2015


Functional and geographic coverage of polyolefins and sectors of the petrochemical industry

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 ,– Polyolefins Consulting, LLC, North Brunswick, NJ, USA– Unisouth SRL, Buenos Aires, Argentina

Th b d t t k f t h i l lt t i th

PO 2015 February 22 - 25, 2015


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 2015 February 22 - 25, 2015


Covering polyolefins and the petrochemical industry functionally and geographically

O tliOutline Similarities that unite

– Languages– Economic weight– Sustainabilityy

The five regions– Competing trade blocksCompeting trade blocks– Unique polyolefin applications– Project update

PE and PP imports– PE and PP imports– Processors and end users

O t iti Opportunities

Many similarities and many differences

PO 2015 February 22 - 25, 2015


Many similarities and many differences

L f th W ldLanguages of the World

Source: Languages world map - Eric Gaba Note: Blue – Spanish, Portuguese and other romance languages

Largest land mass joined by two major common

PO 2015 February 22 - 25, 2015


Largest land mass joined by two major common languages

Economic Weight of Languages with More Th 100 Milli S kThan 100 Million Speakers

Source: Ethnologue (2013) and World Development Indicators 2013, World Bank

Two major common languages unite Latin America

PO 2015 February 22 - 25, 2015


Two major common languages unite Latin America

Th M t B l d R i f th W ldThe Most Balanced Region of the WorldIndex uses global data on life expectancy, experienced well-being and Ecological Footprint to calculate HPI

Source: HPI - Happy Planet Index (2012)

The region heading to sustainable well living with

PO 2015 February 22 - 25, 2015


The region heading to sustainable well living with relatively low ecological footprint

Countries and EconomiesG D ti P d t 2013 C t US$Gross Domestic Product 2013 - Current US$

Rank Economy GDPMilli

Rank Economy GDPMilliMillions

US$Millions

US$

World 75,592,941 7 Brazil 2,245,673

European Union 17,958,073 8 Italy 2,149,485

1 United States 16,768,100 9 Russia 2,096,777

2 China 9 240 270 10 India 1 876 7972 China 9,240,270 10 India 1,876,797Latin America & Caribbean 5,657,372 11 Canada 1,826,769

3 Japan 4 919 563 12 Australia 1 560 3723 Japan 4,919,563 12 Australia 1,560,372

4 Germany 3,730,261 13 Spain 1,393,040

5 France 2,806,428 14 South Korea 1,304,554

6 United Kingdom 2,678,455 15 Mexico 1,260,915

The Latin America & Caribbean region is the fourthSource: World Bank World Development Indicators Dec. 2014

PO 2015 February 22 - 25, 2015


The Latin America & Caribbean region is the fourth largest economy

G i M ltil ti i P t h i lGrowing Multilatinas in Petrochemicals Alpek – Mexico

– Second largest producer of PET in the Americas, only PP producer in Mexico

– Recently added the PTA and PET business of Eastman Chemical to its U.S. operations

– Operates facilities in 20 sites in the U.S., Mexico and Argentina Mexichem – Mexico

– Produces vinyl chloride monomer (VCM); PVC in Mexico and Colombia; compounds in Mexico, Colombia and U.S.; and PVC pipe throughout region

B k B il Braskem – Brazil– Leader in the thermoplastic resins segment in the Americas, 8th

largest resin producer in the world, largest petrochemical company in Latin Americacompany in Latin America

– PE, PP and PVC producer in Brazil, U.S. and Germany

L ti A i t h i l i l b l

PO 2015 February 22 - 25, 2015


Latin American petrochemical companies are global competitors

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 2015 February 22 - 25, 2015


There are many markets in Latin America

Mercosur and Pacific Alliance Trade BlocsE i P f F Diff t A hEconomic Performance From Different Approaches Mercosur – Argentina, Brazil,

P U d V l Gross Domestic Product –Paraguay, Uruguay and Venezuela Combined purchasing power parity

GDP over US$ 3.4 trillion a year Fifth largest economy in the world

Gross Domestic Product –Latin America and Trade Blocs[Percent Year on Year Variation]

Fifth largest economy in the world

Pacific Alliance – Chile, Colombia, Mexico and PeruMexico and Peru

Combined purchasing power parity GDP over US$ 3.1 trillion a year

Sixth largest economy in the worldSixth largest economy in the world Member nations share several

decades of positive growth, stable macroeconomic foundations, Source: BBVA Research,stable governance and openness to global integration

Many Latin American countries in virtuous circle others

PO 2015 February 22 - 25, 2015


Many Latin American countries in virtuous circle, others perceived as more turbulent

U i P l l fi P d tUnique Polyolefin Products Consumer Products

– Flexible packaging for fruit export – grapes and papaya – Chile later Peru

– Bags with colorful stripes – Central America and Andean countries

– Water bags – Central America and Colombia

Industrial Products– Banana bags – Central America, Colombia and Ecuador– Silo bags – Argentina g g– Rotomolded water tanks – Initiated in Mexico, now in Argentina– Large diameter PE-100 pipe – Initially demanded in Chile– Hot water PP pipe – ArgentinaHot water PP pipe Argentina – PE flower packaging – Ecuador

While many products are globally uniform many are

PO 2015 February 22 - 25, 2015


While many products are globally uniform, many are uniquely local

I d t i l P d t M t i l H dliIndustrial Products – Materials Handling

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ArgentinaLocal solutions for common problems

PO 2015 February 22 - 25, 2015


Local solutions for common problems

I d t i l P d t O tdIndustrial Products - Outdoor

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Silo bags - Argentina and exports

Large solutions for critical applications

PO 2015 February 22 - 25, 2015


Large solutions for critical applications

M i H h ld d CMexico – Household and Consumer

Source: Rotoplas Source: aba

A liti l d ti i b l t i 150 kt f

PO 2015 February 22 - 25, 2015


As more political advertising becomes electronic, 150 kt of plastic will be reduced

D i P d tDairy Products

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U.S. Colombia, Ecuador, Peru Argentina Brazil

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Peru, Argentina, Brazil, parts of C. America

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Dairy products are consumed in many different ways

PO 2015 February 22 - 25, 2015


Dairy products are consumed in many different ways

C P d tConsumer Products

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Unusual? Colorful?

PO 2015 February 22 - 25, 2015


Unusual? Colorful?

R t t bl Fl ibl P k iRetortable Flexible Packaging A flexible package in which

prepared food is hermetically sealed for long-term unrefrigerated storage

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U.S. markets still dominated by metal cans and glass bottles

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Booming specially in Central America, Ecuador and Mexico

El Salvador

Packaging innovations sometimes flow in unexpected

PO 2015 February 22 - 25, 2015


Packaging innovations sometimes flow in unexpected ways

F it P k iFruit Packaging Sliced papaya in stand up p p y p

pouch

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A ready to eat treat!

PO 2015 February 22 - 25, 2015


A ready to eat treat!

Chil GChilean Grapes First quarter of the year in the

U S E t C t Well protected, all grains

ld d d li iU.S. East Coast– Chilean grapes, deliciously

perfect, start showing in the market

are sold and are delicious

Result of synergy between growers plastic processors

Quality superior to California or Mexico grapes at end of northern hemisphere summer

growers, plastic processors, transportation, supermarkets and consumers

northern hemisphere summer

Each year brings an advanceInitially loose bunches in– Initially loose bunches in cardboard box

– Later strong, clear, ventilated PE bags with zipper

– Now carefully printed PP bags

Chile Peru Colombia and Mexico partnering to sell grapes

PO 2015 February 22 - 25, 2015


Chile, Peru, Colombia and Mexico partnering to sell grapes to China year round

YPFB – Bolivia Olefins and Polyolefins C lComplex

Capacity Start Up InvestmentLocation Capacity[kt/yr] Product Contractor Start Up

[year]Investment

[US$ million]

2 247 t/d LPGLiquids separation plant

Yacuiba, Tarija, Gran Chaco

2,247 t/d1,658 bpd3,144 t/d1,044 bpd

LPGGasolineEthane

Iso-pentane

Técnicas Reunidas 1H 2015 680

Olefins and polyolefins complex

Santa Cruz

~1,000200200

EthyleneLDPE

LLDPE

Tecnimont (conceptual engineering)

2022 3,000complex 350 HDPE engineering)

Olefins and polyolefins Tarija, Gran

Ch~400 Propylene Tecnimont

(conceptual 2018 1,800polyolefins complex Chaco 350 PP (conceptual

engineering)2018 1,800

Ethane available while olefin and polyolefins locations

PO 2015 February 22 - 25, 2015


Ethane available while olefin and polyolefins locations still being determined

M i S l d D d PE d PPMexico Supply and Demand – PE and PPPolypropylenePolyethylene

Opportunity for additional capacity

Time to start planning even more capacity p y

C3 expansion under studymore capacity

Importers will not give up on this market

Additional local supply will

The large supply deficit provided an obvious incentive

Additional local supply will bump demand

PO 2015 February 22 - 25, 2015


The large supply deficit provided an obvious incentive for additional PE capacity

Ethylene XXI by Braskem IDESA JVL di N th A i E i WLeading North American Expansion Wave Coatzacoalcos, VC, Mexico

– 1,050 kt/yr cracker – Technip– 400 kt/yr HDPE – Ineos

Innovene S– 350 kt/yr HDPE – Ineos

Innovene S– 300 kt/yr LDPE/EVA –

urce

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Lyondell Basell Lupotech T

~ US$ 4.5 billion investment

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Pre marketing portfolio of 320 clients

Construction reached 88% completion by end of 2014

PO 2015 February 22 - 25, 2015


Construction reached 88% completion by end of 2014, commissioning planned by end of 2015

S f PE d PP S lSources of PE and PP Supply A highly dynamic situation but in general sources areg y y g

– Mexico: U.S.

– Central America & Caribbean: U.S., Korea

– South America (Pacific Coast): U.S., Korea, Argentina, Brazil

– Southern Mercosur: Argentina, Brazil, Korea, China, Middle East

PO 2015 February 22 - 25, 2015


Geography and logistics matter

Lik l F t S liLikely Future Suppliers Still a highly dynamic situation, but importers for each area g y y p

will be

– México: U SMéxico: U.S.– Central America and Caribbean: Mexico and U.S.– South America Pacific Coast: U.S., Argentina, Brasil, later

Per and Boli iaPeru and Bolivia– Southern Mercosur: Argentina, Brasil and later Bolivia

Imports from East Asia will be displaced by U.S. imports Local producers will have regional competitors

PO 2015 February 22 - 25, 2015


Geography and logistics still matter

S P d E d U NSome Processor and End User News Borealis Brasil – Expands PP compounding – € 45 million Brazil's Cutrale and Safra acquire Chiquita Brands – US$ 1.3

billion

MAUSER and SAI launch Intermediate Bulk Container venture in Monterrey, Mexico

Cardia Bioplastics sets up film and bag production in Sao Paulo

Tetra Pak completes € 65 million upgrade in Ponta Grossa, B ilBrazil

EBIH building HDPE pipe, fittings, agricultural film and geomembranes facility in El Alto, Bolivia

ADS and Tigre double HDPE pipe capacity in Maceio, Brazil

P i it d ti i t dil

PO 2015 February 22 - 25, 2015


Processing capacity and consumption growing steadily

O t itiOpportunities Critical elements for success

T ki d t f th ti f t– Taking advantage of the connecting factors• Languages• Trade agreements• LogisticsLogistics

– Tailoring products – resins and processed products • Local traditions• Local circumstances

L l li ti• Local applications

Recognize that business practices are not uniform– Even within a country!Even within a country!

Acknowledgements– Information and many photos from Braskem IDESA, Grupo y p p

Texne, Mondelez, PlastiChem LatAm Consultants, Plasto International, Unisouth and IPA Polyolefins course students

M b i t iti th h t th l h i

PO 2015 February 22 - 25, 2015


Many business opportunities throughout the value chain

PO 2015 February 22 - 25, 2015


C t tPetroChemicalConsultingContact gAlliance

Jorge O. Bühler Vidal

Polyolefins Consulting, L.L.C.22 Hidden Lake Dr.

No Brunswick NJ 08902No. Brunswick, NJ 08902U.S.A.

Telephone: 1 (732) 951 8710Telephone: 1 (732) 951-8710e-mail: [email protected]

PO 2015 February 22 - 25, 2015


Engineering

The Five Regions of Latin America