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Peruvian Plastics Sector Weathers Latin America's Economic Downturn

Bolstered by growing middle class domestic demand and considerably expanded export prospects, exhibitors and buyers at this year's ExpoPlast Peru were optimistic as to a profitable future for this fledgling – but hugely significant – industry.

Photo: ExpoPlast Peru: Showcasing packaging and plastics equipment from across the globe.
ExpoPlast Peru: Showcasing packaging and plastics equipment from across the globe.
Photo: ExpoPlast Peru: Showcasing packaging and plastics equipment from across the globe.
ExpoPlast Peru: Showcasing packaging and plastics equipment from across the globe.

Despite something of a slowdown across Latin America, business insiders remain optimistic that Peru's plastic sector remains in robust form. Many at this year's ExpoPlast Peru event were noticeably upbeat, maintaining that the country's relatively strong domestic economy was good news for its plastic-product manufacturers and for importers of plastics machinery and parts.

Held every two years, the event's 2016 iteration attracted 180 exhibitors from 25 countries. It also marked the first time the show had been held in conjunction with Pack Peru, the country's largest packaging exhibition. The combination of the two events was largely seen as a logical development, with the joint offering seen as covering the packaging process from plastic pellets through to film manufacture and, ultimately, to the final industrial applications.

Overall, the buoyancy of the show was seen as an apt testament to the relative stability of the local economy. Although Brazil is now in its second year of recession, economic growth has been maintained in Peru, Chile and Mexico, according to figures from the International Monetary Fund (IMF). In line with its Regional Economic Outlook, the IMF is predicting 3% growth for Peru over the course of 2016, with the fall in commodities prices – particularly with regard to copper and gold – being more than balanced out by an expansion in the company's mining sector.

This expansion, although limited, has still led to increased demand for food-packaging products by the country's supermarkets. The export sector, too, has raised its requirements in order to cope with the burgeoning international trade in a number of non-traditional foodstuffs, most notably asparagus.

It was perhaps understandable, then, that one end of the exhibition space was entirely dominated by the giant plastic extrusion machines currently available from Carnevalli (Brazil), Rulli Standard (Brazil) and Noblecorp (Peru). The latter is one of the largest Peruvian importers of machinery for plastics, metal-working, packaging and printing.

Founded by Heinz Cohn in 1942, Noblecorp is now managed by John Cohn, his son, with two of his grandchildren also involved in the business. Explaining the approach taken by this still very much family-run business, John Cohn said: "We have a very different approach to most of the companies in this sector. We don't just sell machines. We have before-sales and we have after-sales. Sales engineers work with the plant engineers prior to installation, ensuring they have the right air supply, water supply and flooring all in place. This heads off a considerable number of future problems.

"Of course when we build up and install a plastics unit, we also take responsibility for any problems. So our own technical service operates as a stand-alone business unit. The customer decides what he wants, but with us he gets a complete solution."

Noblecorp is the exclusive Peruvian agent for a number of overseas companies, including Weima shredding machines, Jinming bubblewrap extruders, Rapid grinding mills, Aoki blow moulders and Sumimoto injectors. As well as Peru, its operations also currently extend to Chile and Colombia.

Overall, Cohn believes that the plastics sector in the country is still very much in its infancy, with massive potential for future growth. He said: "Plastic consumption in Peru is very low, with this industry still in the early stages of its growth. I think a fantastic future lies ahead.

"At present, we have extraordinary Peruvian professionals working all over the world, with such workers always well thought of. I would like to think we will eventually begin to develop our own machinery here. We cannot expect people to build such machines, though, until we have improved the standards of high-school and middle-school education."

Cohn's tempered optimism is matched by that of Hector Touzet, the Director of Plaen, a trade body representing the plastics, packaging and finishing sector. He said: "The packaging industry will inevitably expand in line with domestic consumption. The arrival of a broader middle class has led to increased demand for food and pharmaceuticals packaging. At the same time, a higher level of food exports has driven demand for packaging in that sector. Overall, the future of the local packaging industry is all but assured as it is being driven by a growing population and continuing social and economic development."

Photo: Pre-processed plastic raw materials.
Pre-processed plastic raw materials.
Photo: Pre-processed plastic raw materials.
Pre-processed plastic raw materials.
Photo: Noblecorp: Importers of extrusion kit.
Noblecorp: Importers of extrusion kit.
Photo: Noblecorp: Importers of extrusion kit.
Noblecorp: Importers of extrusion kit.

Overall, Peru's use of plastic is notably lower than in the neigbouring countries of Argentina, Chile and Brazil, a least according to the Lima-headquartered National Industrial Society (SNI) Plastics Committee. Latin American countries typically use only 25% of plastics per person compared to their European counterparts, and only a fifth of that used in the US. The local level of consumption is on the up, however, with the importation of plastics raw materials to Peru increasing by 8% per annum since 1995. Over the same period, some US$80 million worth of plastics machinery has been imported to Peru every year.

One of the biggest importers of such machinery is Eco-Tech, a specialist supplier of equipment for the plastics industry. This year, the company's stand featured a huge range of injection moulding equipment, blow moulding sealing systems, plastic bags, plastic tubing, and wrapping machinery.

Introducing the range, Esteban Soto, the company's Business Director, said: "All of these machines are from Asia. At present, we are looking to retain our national leadership, as well as seeking to grow internationally. For us, Peru is a bigger market than Chile, but not as big as Columbia. It is all down to the number of people in our business."

As with many other countries, sustainable packaging has become something of an issue among Peruvian consumers and businesses. One company looking to directly address the problem is Propal, the Colombian division of Carvajal, a multination with a presence in six countries across South and Central America.

Explaining the company's business model, Marketing Specialist Orliana Ruiz said: "We have a lot of sugar-cane plantations in Colombia. After the sugar has been extracted, we recycle the waste to make all kinds of paper and card. This can be used for notebooks, high-quality white paper for printing brochures, or for making boxes. This type of environmentally friendly product is particularly appreciated overseas, so we export mainly to the US and Europe."

Another company playing the green card is Braskem, the Brazilian plastics giant. Explaining its particular approach, Hugo Yep Oka, an Account Manager with the company, said: "We are the largest thermoplastic resin manufacturer in South America. We produce polyethylene, polypropylene, and PVC. We manufacture in 29 plants in Brazil and five in the US, while we currently have a new site under construction in Mexico.

"We make polymers from naptha and natural gas from the oil industry, but we have also developed green polyethylene, a product derived from sugar-cane ethanol. It has exactly the same properties as petrochemical polyethylene and can be used for the same purposes. The key difference is that the sugar cane absorbs carbon dioxide as it grows, ensuring this green plastic has a positive environmental impact."

Although Braskem had a considerable presence at this year's event, the biggest stand had been reserved for Andina Plast, and rightly so, according to Jessy Alarcon, the company's International Sales Director. She said: "We are the largest company in Peru and we are celebrating our 25th anniversary this year. We sell all types of PVC for a range of different applications, including bottles, blister packaging and films. Our single biggest sector, though, is providing PVC for cabling.

"We can adjust the formulation for each customer, tailoring the hardness, temperature resistance and colour to their exact requirements. As the specifications for cables are always changing, we have introduced XLPE cross-linked polyethylene for high voltage cables, as well as low smoke emission and anti-rodent cable coverings.

"At present, we provide PVC for cable manufacturers in Chile, Colombia and Bolivia, as well as in Peru, with our main competitors being based in Brazil and Mexico. To boost our competiveness, we are now looking to provide our own cable testing and are seeking to secure full testing accreditation."

Photo: Andina Plast: A huge thermoplastics player and one of the largest companies in Peru.
Andina Plast: A huge thermoplastics player and one of the largest companies in Peru.
Photo: Andina Plast: A huge thermoplastics player and one of the largest companies in Peru.
Andina Plast: A huge thermoplastics player and one of the largest companies in Peru.

ExpoPlast Peru 2016, the Seventh International Fair for the Peruvian Plastics Industry, took place at the Jockey Exhibition Centre in Lima. The event ran from 3-5 May and incorporated Pack Peru Expo.

John Haigh, Special Correspondent, Lima

Content provided by Picture: HKTDC Research
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