What are the main challenges currently faced by the Latin American chemical and petrochemical sector?

Firstly, there is an oversupply in certain product lines originating from China, as well as from India. This situation will persist for some time due to the nature of our sector, in which growth is discrete rather than continuous. When demand rises, companies build new plants, which usually add more capacity than the market can immediately absorb. Chinese manufacturers are still investing in new projects, and thus, we can expect this period to last at least two or three more years. Latin America is experiencing difficulties because of the import of these products, which forces the sector to lower prices and improve efficiency.

Another challenge for the Latin American sector is weak internal demand, which is not going to help compensate for a fall in sales volume. Next comes tariffs; some countries levy them to protect their industries against Chinese products, while the US applies them also to the region. The Trump administration, for instance, has complicated the export of Brazilian products. This impacts not only the chemical and petrochemical sector but also has a cascading effect all the way downstream. The situation in Argentina is no easier, with companies focusing on efficiency, reducing costs, and improving logistics. It is worth mentioning that in our region, sometimes logistics costs are proportionally higher than in other regions.

The solution to the problems outlined above is technological efficiency, and the implementation of AI and data, which will help lower costs. APLA is trying to cooperate with the sector in this regard by organizing panels at our meeting in Cancún addressing these topics. From geopolitics and the situation in China to technological innovation, our goal is to provide the most relevant information on how these can impact each country so as to allow our members to make informed decisions. How is the sector capitalizing on this context?

If Latin American industry can be described as anything, it is resilient. It has always been able to transform problems into opportunities. Mexico is currently doing so, although we will have to wait for the USMCA renegotiation to see whether nearshoring bears fruit. Specialty chemicals are also an opportunity for the industry, particularly as the mining industry is growing.

Argentina is attracting numerous mining projects under the RIGI, an instrument designed to promote foreign investment. Moreover, the development of Vaca Muerta is also expected to be a major catalyst for the chemical and petrochemical sector. Right now, it is generating foreign currency for the country. In three to four years, once LNG exports ramp up, additional opportunities will emerge for the petrochemical sector to capitalize on the byproducts generated. Both the government and the sector are generating the bases for this to happen, with effects cascading across the country’s entire economy.

At the APLA conference, we will host panels on all these topics, including a presentation by ANIQ’s Miguel Benedetto on the USMCA renegotiations and a session co-hosted by Evonik’s Martín Toscano with Vaca Muerta specialist Daniel Gerold. How are energy and technology transitions developing in the industry?

The sector is investing heavily in renewable energies, with Colombia also placing great emphasis on decarbonizing industrial processes. This is a critical topic, which we will be addressing too at our annual meeting. Tackling challenges through collaboration, but with a vigilant eye on sustainability, will be a differentiating factor in the future.

AI will also play a crucial role, driving cost reductions through better access to information, promoting sustainability by minimizing unnecessary resource use, and boosting efficiency by increasing output. What are the future expectations for the sector?

Unfortunately, the immediate future will not differ much from today’s situation, with demand still weak, impeding a quick rebound for the industry. Thus, improving efficiency and reducing costs by using more cost-effective feedstocks and looking for new markets will be critical. There is a significant change in trade flows, and we will have to see how this settles next year, particularly regarding logistics costs, which could present an opportunity for the industry.

Nonetheless, the current transformation undertaken by the sector regarding efficiency, consolidation, and sustainability will leave it stronger looking ahead. Latin America’s management quality is world-class, which is an asset in charting the way forward.