Dear Reader,

We are delighted to bring you the 2023 edition of our annual Latin America Petrochemicals and Chemicals report, a joint GBR and APLA publication. This year’s edition could not be more different than that of 2022, when the industry boasted record-breaking performance. The following pages paint quite the opposite picture, detailing challenging market corrections that have thrown the industry into what is feared to be a prolonged downcycle. Yet, if we can summarize this report under one theme, it is the truism that where there is challenge, there is opportunity. At this transformative time, our Sustainability coverage has expanded to span every sub-sector and sub-topic including sustainability-driven innovations as a driver of growth; bio-based, recycled products and the circular economy; and renewables as both feedstock and catalyzer of green products like fuels and fertilizers.

This year, we dive into the causes and consequences of the global downcycle, and look closely at how this affects Latin America. The region's chemical and petrochemical producers are particularly sensitive to the supply surplus and the fierce competition that the current oversupply of basic chemicals has created. Imports from both the United States and Asia have eroded the market share of local suppliers, which find themselves in a less competitive cost position. Shortages of feedstock and high prices, as well as a higher cost of energy have threatened the industry’s competitiveness in Latam for years, and resulted in the lack of significant investments and below-capacity production over the last decade. Excess supply has made this worse. How fast this excess is absorbed depends largely on the economic recovery not only in the region, where the main economies seem to be on an upward path, but globally, with the US and China dictating much of the chemical consumption patterns.

To traverse this difficult part of the cycle, players must leverage their best attributes. In Brazil, chemical producers and distributors focus on scale in one of the world’s biggest markets, while Mexico is all about location, as a proxy investment destination to its powerful neighbor. Most people agree that nearshoring could bring a huge boost in investment to the Central American region, which would both directly and indirectly benefit the chemical sector. The availability of renewable generating sources like wind, solar, or biomass is also identified as a significant opportunity for the growth of green chemistries. Meanwhile, the traditional chemicals are not in a bad spot either in the context of the energy transition, as they become a more prominent outlet for oil use. In Latam growth in bio-based, recycled or green-powered products parallels growth in oil and gas production. Most of our interviewees concede both are necessary.

In the following pages, you will also find an assessment of three main countries and their respective industries, economies and politics (Brazil, Mexico, and Argentina), together with up-to-date factsheets on nine countries, dedicated articles for the distribution and logistics sectors, and exclusive interviews with all the main players across the value chain, from producers to distributors, traders, freight forwarders, terminal and tank operators, key ports, consultancies, and market intelligence companies. We thank our 60 participants for taking part in this year’s research, especially as the industry goes through a challenging period. At GBR and APLA, we stay committed to providing the industry with an objective analysis of the trends shaping the region, be they positive or negative, and we hope that the following pages will help to guide the industry through challenging times.