Chile’s Petroquim navigating better than peers pressure from Asian material – exec

SANTIAGO (ICIS)–Polypropylene (PP) producer Petroquim is also facing pressure from lower-priced material sent from Asia, but the company’s “dedicated” service to customers has kept its sales spared from a larger hit, according to the commercial manager at the Chilean company.

Veronica Masjuan said that, as the sole PP producer in Chile, Petroquim will always be able to have a pool of potential customers larger than its actual production, a key element allowing the company to protect its “small market share” in a country where PP imports have always played a key role to supply the market.

Founded in 1998, Petroquim operates a PP plant in Talcahuano, near the city of Concepcion, 500 kilometers south of Santiago.

It has the capacity to produce 120,000 tonnes/year, according to the ICIS Supply & Demand database, although in 2023 it produced 61,000 tonnes.

ASIAN PRESSURE
Across Latin America, producers of polymers have in the past two years been under intense pressure from lower-priced Asian material, especially Chinese material, which has been sent, on occasion, at below cost-of-production prices.

Masjuan said it was not for her to say if China’s exports constituted an example of dumping – “that would be for policymakers to do” – but said that lower prices in the past two years had indeed put pressure on Petroquim’s margins.

“The truth is that their [China’s] prices are very economical compared to the global PP prices, when you add the costs associated with production or delivery, for instance,” said Masjuan.

“Given that our market share is small, we have managed to protect it quite well: my sales capacity is much larger than what I produce, so to speak. But it is true that lower international prices have also affected our margins.”

However, Masjuan said Petroquim has always managed to return a profit, even in 2023, which is considered the hardest year amid the downcycle the global petrochemicals sector is going through.

RECYCLING
Masjuan said that Chile is more ahead than other countries in Latin America in tackling the plastic waste issue, as regulations in that regard started decades ago.

Asked whether a true circular economy in which everything is 100% recycled could put polymers producers such as Petroquim out of business, she said that is unlikely because total circularity would be very difficult to achieve.

“Chile was one of the first countries to adopt mandates about plastic carrier bags, for instance. We have some experience on this front, and at Petroquim we have a person exclusively dedicated to circularity issues,” said Masjuan.

“Who is to blame for the plastic waste pollution? I think that first and foremost the responsibility falls with the consumer, the user of the final plastic product. Meanwhile, I do agree that producers, for sure, need to be in constant search for new methods to make the products more recyclable.

“But, overall, I believe not 100% of all polymers will be recycled, ever, and especially those for food contact. For instance, in the EU, one of the most advanced regions in that regard, they don’t allow 100% recycled content for food contact either.”

Front page picture: Petroquim’s PP plant in Talcahuano
Source: Petroquim 

Additional reporting by Bruno Menini and Thais Matsuda