Plastic-ing around

Pandemic economic reactivation to boost demand for plastics.

The plastics industry is difficult for many people to discuss due to its poor environmental credentials. The uncomfortable truth is that plastics are still essential to numerous industries: food, construction, electronics, automotive and medical devices, and there are often no environmentally friendly alternatives. Therefore, plastics remain big business.

To some extent, COVID-19 has shifted the pre-pandemic discourse of the negative environmental impact of plastics to its hygiene benefits. There is wide consensus based on scientific research that plastics are cleaner than recycled and reusable solutions. In the medical industry, ventilators, masks and personal protection equipment have been crucial in the control and treatment of the virus – all made with plastics that are often single use.

According to the executive of a plastics manufacturer in Argentina, “The food and packaging sectors have been trying to reduce their use of plastics but the other sectors are growing – electronics, medical, construction etc. Plastic has advantages in terms of weight, strength and hygiene but we need to educate the user. The environmental problem, as I see it, is not so much about plastic but its final destination.”

“Plastic has advantages in terms of weight, strength and hygiene but we need to educate the user. The environmental problem, as I see it, is not so much about plastic but its final destination.”

Executive, plastics manufacturer, Argentina

As the owner of a wooden toothbrush I can’t help but feel the source is biased on the environmental issue but let’s continue to understand his outlook for the sector!

In terms of risks the plastics executive is most concerned about clumsy regulation and economic damage, “The biggest risk facing my business is regulation, we need to engage with the legislator to ensure that meaningless regulations that stop us operating are not sanctioned. The second risk is economic, many small and medium sized businesses may not be able to afford to replace plastic, especially in Argentina where there is no access to credit.”

According to S&P the outlook for the Latin American plastics market is strong. The reactivation of the automotive sector, particularly in Argentina and Brazil, is expected to increase the consumption of polypropylene. Other key sectors showing strong signs of recovery which are key to an increase in consumption of plastics are infrastructure, construction and medical devices.

“In Brazil, there is a lack of resins to produce polyethylene and the stock of resins is dropping, this may prompt a surge in prices of imported materials.”

Director of Brazil, global chemicals company

This forecast increase in demand has raised some concerns about supply. We spoke to the Brazilian director of a global chemicals company who postulated, “In Brazil, there is a lack of resins to produce polyethylene and the stock of resins is dropping, this may prompt a surge in prices of imported materials. Brazil has approved an exemption of polypropylene import tariffs for the first 77,000 tonnes to encourage greater imports at lower cost.”

The Argentinian plastics executive explained that price forecasting in the plastics business is exceptionally difficult, “The price of plastics is determined by many different variables. On the one hand, on the supply side, in recent years, the greater availability of gas derived from fracking provided a great opportunity for companies to invest in increasing their production capacity, and therefore the price fell. Another variable, logically, is the price of oil, as plastics are derived from oil. It’s very difficult to predict where the price is going to go. China is a very relevant player, and the progress of its economy will somehow determine where demand and prices will go.”

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