Engineering plastics gradually substitute traditional materials in diverse applications in Brazil

31-Oct-12

Traditional materials such as commodity plastics, metal, and glass are slowly giving way to engineering plastics, as consumers demand more sophisticated products. The growth of the middle class has considerably aided the development of this market and made Brazil one of the most attractive consumer markets in Latin America. As per Frost & Sullivan, the market earned revenue of US$1 bln in 2011 and estimates this to reach US$1.6 bln in 2017. The engineering plastics market has gained considerably from the expansion of various end-user sectors such as automotive, building and construction, and electrical and electronics. These sectors have higher growth rates than the country's Gross Domestic Product (GDP), which translates to significant potential for engineering plastics. "Engineering plastics, like many other markets, was affected by the global economic downturn, but it bounced back quickly to post high growth rates," said Frost & Sullivan Research Analyst Mariana Guercia. "Nevertheless, it is vulnerable to competition from low-cost Asian products, as domestic manufacturers cannot compete against Asian companies with large-scale production units." Tariff barriers to imported products do not inhibit Asian engineering plastics sales in the Brazilian market because the prices of imported plastics are still lower than those of locally made products. The competition is likely to be more intense in the short term because the economic downturn discourages global consumption. To survive in this environment, domestic manufacturers have to make the most of the government ordinance that favors vehicles that have higher amounts of local content. Besides, the offer of local technical support to customers also makes domestically produced engineering plastics more competitive than imports. "However, it is important not to depend exclusively on government incentives," noted Guercia. "Manufacturers should invest substantially in research and development to find more applications for engineering plastics; this way, they do not have to compete head on against traditional plastics and instead, can cater to niche markets that require more innovative products."