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Juan Pablo Gazmuri Vice President ASIQUIM (CHILEAN ASSOCIATION OF CHEMICAL INDUSTRY COMPANIES)
"The challenge is on the regulatory front. Chile has a long coastline, but sea conditions do not make it easy to build ports, and there is a lot of red tape to advance port projects. We need a master plan to develop green hydrogen."
Could you introduce ASIQUIM?
ASIQUIM is a trade association with 67 years of history. We cover a wide spectrum within Chile’s chemical industry, with 129 member companies that represent more than 90% of the sales of the country’s chemical sector. These companies include producers, distributors, representatives, and service providers to the national chemical industry.
One particularity is that all ASIQUIM members have the obligation to be Responsible Care certified, with the idea of raising the bar industry-wide. We work closely with the government in regulatory matters, and we are very active in education with Responsible Care programs. Over the last years, we have started to have a closer communication with the wider society to explain that the chemicals industry is a fundamental pillar, reaching all aspects of daily life like. How do you read current industry dynamics?
In sales terms, the Chilean chemical industry experienced strong growth in 2022, to the point that the sector represented 14% of all Chilean exports – but that was mainly caused by high prices and the lithium segment. After the pandemic, which was good for local producers as imports became more difficult, we have seen extraordinary inflation, yet demand remained inelastic to high prices, because there was a lot of money in the system. This has already started to change in the current context of high interest rates, a situation that is expected to last.
Today, the prices of raw materials have decreased a lot, if compared to the last couple of years, however the prices of final products remain high. As the economic situation has slowed down, we expect to see an adjustment in the market. Products from both Asia and the Gulf of Mexico are becoming cheaper, because producers need to sell their stocks, but companies are not taking more risks than strictly needed. Which segments are the winners and losers of this scenario?
The construction segment is the most affected by this slowdown, due to the direct impact of high interest rates on construction projects; whereas the lithium segment will remain strong regardless of the economy, due to the energy transition.
Finally, green hydrogen presents an enormous opportunity for Chile – it has the potential to match the size of the mining industry by value over the next years, thanks to the availability of renewable energies in the country. The challenge is on the regulatory front. Chile has a very long coastline, but sea conditions do not make it easy to build ports, and there is a lot of red tape to advance port projects. We need a master plan to develop green hydrogen as a country. How is the REP regulation changing dynamics for plastics recycling in Chile?
In Chile, both ASIQUIM and ASIPLA, as well as many companies and organizations, are part of the global Plastics Pact that originated in the UK. The Pact has strong objectives that go beyond the scope of the recently approved REP regulation. The REP law places responsibility on producers to recover the plastic they put into the market. Unfortunately, the authorities decided not to put additional incentives on recycling to accelerate change, which has acted as a great incentive to recycling in other countries. Would you like to add a final message for other chemical industry leaders in Latin America?
Latin America is going through a moment of political instability, insecurity and uncertainty. After years of growth, the industry faces an uncertain outlook, with a possible slowdown. As ASIQUIM, we have experienced difficult times throughout our country’s history, but we have always moved forward. Political cycles pass, organizations and companies remain, and they are the fundamental pillar of society.
The chemical industry has always supported economic growth and innovation in the different countries’ history. Let us not be discouraged in the face of temporary adversity and look at things with perspective.
The essence of business people and entrepreneurs is to be resilient, optimistic and determined. When things are bad we change them for good with our vision. We need to continue working and increase collaboration with governments and industry associations to share a long-term vision for the good of our society and the planet.