“Some countries are more advanced than others when it comes to understanding the product and implementing sustainability policies. Indeed, there is not a single answer to this problem. Banning single-use plastics is one thing, but the problem is not the product – it is how you deal with it at the end of the life cycle, which applies not just to plastic, but also to any high volume product.”

- Sergio Marcondes, General Manager

Sergio Marcondes & Emilio Nager

GENERAL MANAGER & COMMERCIAL MANAGER INTERNATIONAL MARKETS, BRASKEM

January 31, 2019

What is Braskem’s background in Argentina?

EN: Braskem arrived in Argentina in June 2005, and since then we have gone through different market periods. 2018 has been a very challenging year from a macroeconomic perspective, while a couple of years ago we also had significant restrictions on imports. Yet, Braskem has always maintained a presence in the country. Initially we had a very lean structure, including operations with local distributors, while today we have increased our local team to focus on serving the Argentinean market directly.

SM: Along the way, Braskem grew through the acquisition of several petrochemical companies in Brazil, such as Petroquímica Triunfo, Ipiranga, Politeno and Quattor. That consolidation led us to establish ourselves in Argentina as a local provider, even if we do not have producing assets in the country. Argentina is a natural extension of Braskem’s participation in the Latin American market. From an economic perspective, Brazil and Argentina have always had strong commercial links. We have a long-term vision and technical personnel that works on developing solutions specifically for the local market.

What are the most important industries for Braskem in Argentina?

EN: The agro industry is very strong in Argentina, with the use of silobags demanding a lot of plastic. We also participate in food packaging, and indirectly in the automotive industry as we serve the plastic converters that work for that segment.

SM: We are constantly looking at what we can do to help advance the local industry. Currently, we are developing solutions for gas pipes and geo-membranes, for instance. Braskem can provide the main plastic products, like polyethylene, polypropylene and PVC. We have a wide portfolio and that is one of our competitive advantages. In addition, in terms of location, our production plants in southern Brazil are well positioned to serve the Argentinean market as efficiently as a local producer.

What is the supply and demand situation for the main products in Argentina?

EN: In 2018 the market has experienced some contraction, but generally, speaking about polypropylene, Argentina has a deficit that is served through imports. In polyethylene, the Argentinean market is larger. There is a deficit of low-density polyethylene, while there is enough capacity in high-density polyethylene and a production surplus of linear polyethylene. Overall, Braskem’s products are necessary to complement the local production. Indeed, during the period when there were restrictions on imports, the local industry suffered because imports are an important source for operational sustainability.

Do you believe the Vaca Muerta deposit could change that market dynamic?

SM: Vaca Muerta can be a game changer, not just to meet the local market demand, but also to change trade flows internationally. Having said that, this has to be treated as a long-term development. Large investments will be required for such structures, such as new crackers. The country’s macroeconomic scenario will also play an important role in the investment decision-making process.

How does your green polyethylene fit with the industry’s move towards more sustainable production?

SM: We have a clear vision that it is important to have a value proposition in terms of sustainability, and products like green PE and bio-based EVA (ethylene vinyl acetate) are part of that. Also, we are working on circular economy initiatives such as Wecycle, and we are part of Ecoplas in Argentina, which works to provide accurate information about plastic products and the correct application by end users.

EN: Countries around the world are limiting or banning the use of certain plastic products, such as single-use plastics, so our bet is on offering new alternatives that are more sustainable. Plastic is under attack worldwide today, and we want to take all possible actions to minimize its impact. This issue is an industry-wide issue, so companies should join forces to devise strong initiatives.

SM: Some countries are more advanced than others when it comes to understanding the product and implementing sustainability policies. Indeed, there is not a single answer to this problem. Banning single-use plastics is one thing, but the problem is not the product – it is how you deal with it at the end of the life cycle, which applies not just to plastic, but also to any high volume product. This is where the other initiatives come in: recycling, circular economy, education of end users and government policies.

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