After a difficult year, caused by the new coronavirus pandemic, the question remains: how the polymer market in 2021 will be? Although Latin America was one of the most affected regions in the first half of 2020, it had a rapid recovery in the second half, and the trend is to continue like this.
The pandemic affected several companies that work in the plastic manufacturing processes, which had to create new plans to survive. That being so, the economists have been revising the sector throughout the year, as governments have taken steps to mitigate the impacts of the crisis.
The good news is that plastic consumption in 2021 indicates a strong demand already in the first half of the year. Do you want to know more about the polymer industry and the expectations for this new year? Keep reading our article!
Expectations for the polymer market in 2021
According to the IMF (International Monetary Fund), the growth estimate of Brazil’s GDP in 2021 is 3.6% to 2.8%. However, when compared to the first half of 2020, this rate showed a great result, since the estimate was 9.1% to 5.8%.
Although other regional economies, such as Chile and Argentina, also had a slower economic recovery, they must start 2021 with improvement in consumption. It is worth remembering that the IMF also estimates that Latin America’s GDP may fall from 8.1% in 2020 to grow by 3.6% in 2021.
These perspectives are a great positive point for the polymer production in Brazil, as it can increase sales in this sector. In addition, the automotive industry in Latin America can boost the consumption of polypropylene, since vehicle production has been normalized since August last year.
The civil construction sector also suffered from the impacts of the beginning of the pandemic, but soon recovered. From this recovery, the trend is that, with the resumption of infrastructure projects, there will be an increase in plastic consumption during the first quarter.
Higher demand, lower stock
The difficulty of the Brazilian polyethylene manufacturers with the lack of raw materials was expected until the beginning of 2021, before the market normalized. This is due to the increase in demand in the second half of 2020, which was in conflict with the decrease in resin stocks, raising the prices of imported materials.
Nevertheless, this scenario should not remain for long, as according to S&P Global Platts Analytics, polyethylene prices in Brazil are expected to fall. This situation may be favorable, bringing the polymer manufacturing in Brazil closer to what it was pre-pandemic.
It is worth remembering that the polyethylene import sectors from Brazil and West Coast of South America point to a “V” shape recovery. This means that the trend is that prices decrease, and the demand for production and application of polymer products in the industry grow further.
Expectations of stability
In November last year, resins reached record prices in Brazil, reflecting the prices of the import sector and the devaluation of the Brazilian currency. The good news is that, despite this difficult moment, the expectation for the polymer market in 2021 is that the values become more stable.
This positive expectation for the new year comes through the Central Bank of Brazil, which predicts a fall in the exchange rate of the Brazilian real. According to studies made by the institution, the currency should end 2021 at US$ 5.20. It is also expected that the local annual interest rate will rise by one point, that is, from 2% to 3%.
Although the uncertainties of the pandemic have contributed to the devaluation of the real, the Brazilian currency was not the only one to face this situation. After all, Argentine peso was devalued by 30%, and Colombian currency by 17%.
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