Brazil's plastics industry moves forward

Recently, Larcio Gonarves, chairman of the Brazilian Resin Wholesale Association, said that due to the impact of the conflict between Russia and Ukraine, the price of oil derivatives has soared, and the rise in the price of resin as a raw material and the decline in demand have caused the Brazilian plastics industry to suffer. struggling.

Gonarves said that in recent times, the Brazilian plastics industry has been in trouble due to factors such as inflation, high interest rates and declining real incomes. The decline in domestic demand, rising raw material prices and excess inventory have put more burdens on the Brazilian plastics industry. In the first quarter of this year, the performance of Brazilian resin wholesalers and plastics processors was lower than expected, and profits and demand were difficult to improve in the short term. Rising interest rates and inflation have led to reduced incomes, which in turn have led to stagnant demand for plastics, soaring domestic and foreign raw material prices, rising transportation costs and excess inventory, which have sounded the alarm for the Brazilian plastics industry. In terms of cost, as the international crude oil price is above US$100 per barrel, the resin price rises accordingly. However, there are currently more resin stocks due to the shortage of resin in 2020-2021. To avoid the risk of continued resin shortages, distributors have opted for more than normal inventory levels. On the demand side, despite strong demand from the packaging industry, the decline in demand from the automotive industry was even greater. In addition to lower-than-expected consumption, freight costs have risen and container arrangements have become more difficult.

Currently, the Brazilian plastics industry is shifting costs through price increases. The price of polyethylene in Brazil, which was previously 13,500 reais per ton, has now risen to 14,900 reais per ton. Brazilian chemical giant Brasco and multinational company Dow Chemical recently announced that the price of polyethylene in Brazil will increase by 1,000 reals per ton from April.