“Part of Oxiteno’s 2022 global vision to consolidate the Americas. We are building a position in the region that is quite unique: our footprint across the Americas gives us the capability to respond to customer needs very quickly.”
Have you noticed an improvement in market conditions since the downturn in 2016?
Oxiteno has seen the industry improving, but we went through a very severe downturn in 2016. This means that even with the improvements, Brazilian GDP grew only 1.5% in 2017/2018. This growth is not enough to recover from the significant drop we experienced in 2015/2016, when GDP dropped approximately 8%. We are fortunate that the mood is now starting to become more positive and everybody is looking forward to the new government’s reforms. There has already been a slight recovery, and we believe that the country can now start growing again.
In terms of volume in Latin America, Oxiteno has seen mild growth over the last two years. 2018 was a good year in terms of price, as most of the prices for chemical and petrochemical products in the international markets where quite strong. The company experienced a better 2018, but the main reason was the margins rather than the volumes.
In 2018 Oxiteno opened a new plant in Pasadena, Texas. Can you elaborate on what capabilities this new infrastructure gives the company?
Oxiteno’s Pasadena plant was commissioned in September 2018, and so far we have produced more than 30 different products at the site. Contrary to Latin America, the U.S. market has grown vigorously, and Oxiteno has found many new opportunities in this market. We did two years of pre-marketing for the Pasadena plant, importing products from Mexico and Brazil to start developing a customer base and putting in place the new sales plan. From September 2018, we started to produce locally, and currently we are in a transition phase in which we are reducing the inventories of imported products and increasingly introducing the locally produced products to the market. We are also continuing to obtain important certifications for the new operations, and we are stabilizing our internal processes.
Regarding Oxiteno’s footprint and market share in the Americas, is Brazil still the company’s biggest market?
Brazil is still Oxiteno’s largest market, accounting for approximately 70% of the business. We have ambitious plans for the United States, and we aim to sell more than 100,000 tons in that market within a four-year period. We currently have a small market share in that region, but believe that there is room for significant growth. Part of Oxiteno’s 2022 global vision to consolidate the Americas. We are building a position in the region that is quite unique: our footprint across the Americas gives us the capability to respond to customer needs very quickly.
Which countries and markets in Latin America have driven growth for Oxiteno?
Countries such as Colombia, Chile and Peru are currently performing well in the region – the hotspots are more on the Pacific side of Latin America. Countries such as Mexico and Brazil, despite their size, have only seen slight growth over the last two years, due to political and economic turmoil. Argentina has been through a very difficult period in the last year, and we believe that 2019 will still be challenging for the country.
Regarding the industries Oxiteno serves, Brazil is a very big consumer market. This is one of the reasons why personal care is an important industry for Oxiteno. In terms of agrochemicals, Brazil is the largest single market in the world and is therefore key to our business and holds huge potential. Paints & coatings and the oil & gas industry are also significant in the company’s business portfolio.
In 2018, Oxiteno won the Kurt Politzer prize for technology and innovation. What were the factors behind this recognition?
Oxiteno has a very clear strategy on innovation, and the backbone of this innovation is sustainability. We have worked very closely with our customers to develop solutions that are more sustainable in all areas. For example, in the detergents area, companies are searching for concentrates where one can reduce packaging and the transportation of water. In all markets, there are sustainability initiatives, and companies are looking for solutions that are more environmentally friendly where they can reduce the use of resources such as water and energy. Oxiteno introduced the Greenformance concept to encourage the use of renewable raw materials. Currently, approximately 26% of the raw materials Oxiteno uses are from renewable sources.
What are Oxiteno’s principal objectives moving forward?
Oxiteno’s main target is to consolidate the US$200 million investment made at the Pasadena plant in the United States. This level of investment in North America is uncommon from a South American chemical company, and it is an indication of the company’s ambition. We intend to serve customers and execute the business plan that we have created. Oxiteno is prepared for and looking forward to the recovery of Latin America as a region. We have not only invested in the United States, but also invested heavily in Brazil and Mexico to expand capacities. We are ready, willing and able to perform as the economy recovers.