The steady decline in hydrocarbons production in Argentina led to a shortage of feedstock in recent years with a lack of both ethane and methane. As the Vaca Muerta shale reserves become more available, there is potential for rejuvenating the petrochemicals sector. This should resolve domestic shortages.
Petrochemicals growth in Argentina will not happen immediately and new infrastructure will be crucial. Only in the next two to three years will Argentina be at a point where it can even start thinking about new petrochemicals projects. The new administration of Mauricio Macri is set to shake up the business environment, making it more attractive to investors with the potential for lower feedstock costs as well as market liberalisation.
The Argentine government is hoping a new generation of fields in the southern region of Tierra del Fuego will help to offset falling gas output from the mature basins in the west and northwest of the country. Argentina similarly has high hopes for offshore acreage. While worries over the regulatory environment, tensions with the Falkland Islands and the region's resource potential had previously largely stymied investment, things are beginning to look up.
The success of the development of the Vaca Muerta formation would secure the competitiveness of the Argentine petrochemicals industry at a time when shale-based petrochemicals from the US are due to swamp the local market. However, the industry is at least two to three years from a decision point on any new shale-based plant and it would take another three to five years before additional capacity is built.
Argentina's petrochemicals capacity remains small, with olefins nameplate capacity at 700,000 tonnes per annum (tpa) of ethylene and 355,000tpa of propylene. Polyolefins capacity is just over 1.2mn tpa. There are no plans for major additions to olefins and polyolefins capacities, so the scope for production growth will be limited. As such, there is no movement in its rewards score.
Given the depreciating currency, falling export demand and weak domestic demand, we maintain our downbeat production forecast for the automotive industry, which will undermine consumption of polypropylene, polyurethane and synthetic rubbers used by the automotive parts industry.
Argentina's construction industry started a recovery in 2015 following a three-year slump, but as much of this growth is concentrated in infrastructure, it will have a more limited impact on the consumption of construction-related polymers, such as the polyvinyl chloride segment as well as polymer tubing.
Dow and other producers will be unable to expand capacity as long as natural-gas production is constrained in Argentina. Dow itself expects no growth in ethylene capacity over the next five years, in spite of the growing shortfall in PE.
Argentina's Risk/Reward Index is 48.2 points, down 0.7 points since last year due to declining market and country risk scores. A poor business environment, falling hydrocarbons reserves and poor economic fundamentals contributed to the downgrade. However, it its fifth place in BMI's regional ranking, ahead of Colombia and behind Mexico.
The Argentina Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's Argentina Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Argentinian petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Argentinian petrochemicals market.
- Target business opportunities and risks in the Argentinian petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Argentina.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.