International Coatings Scene
LATIN AMERICA
BY CHARLES W. THURSTON
LATIN AMERICAN CORRESPONDENT
THURSTONCW@RODPUB.COM
Brazil bullish on 2010 growth,
chemical investment to rise
ment is expected to be buoyed by both commercial and residential construction increases, which are expected to expand by nine percent this year, GVF predicts.
The Brazilian
paint industry
is optimistic
about growth
prospects in
the year
ahead.
Brazil's paint and coatings industry is bullish on a return to a 3.3% growth rate by early 2010, pinned on hopes that the economy
can heat up by close to nine percent growth by then,
according to Associacao das Fabricantes de Tintas
(Abrafati), Brazil's national paint industry association. At the same time, massive new investments in
the Brazilian chemical industry, pegged at $21 billion by 2014, should help lower costs of feedstocks
for domestic paint and coatings producers.
Abrafati's board of directors president,
Fernando Val y Val Peres, noted in a recent paint
industry forum that while industry sales
dropped 2.1% during 2009, a sales increase of
3.3% is likely this year, which would bring sales
volume for the industry to 1.15 billion liters.
Brazil's paint and coatings industry is comprised
of approximately 300 manufacturers, supported
by some 17,000 workers.
The Brazilian economy overall should hit 8.8%
growth this year, according to the economic think
tank Getulio Vargas Foundation (GVF), in Rio de
Janeiro. And foreign investment could outstrip
the $25 billion invested in Brazil last year, with
some projections as high as $40 billion this year.
This expectation of returned growth parallels plans for $26 billion worth of investment
in the chemical industry at large by 2014,
according to Abiquim, the national association
of Brazilian chemical producers. Most of this
investment, some $9.2 billion, will be directed
to the Rio de Janeiro petrochemical complex,
Comperj, followed by investments of more
than $3 billion each in Sao Paulo and Minas
Gerais, and close to $1.5 billion in investments
in both Bahia and Pernambuco states. Such
new production should help Brazilian paint
companies, which have relied on imports for
feedstocks. Last year, the real, Brazil's currency, was up 23% against the dollar.
Growth in the Brazilian architectural seg-
“[W]hile industry sales dropped
2.1% during 2009, a sales increase
of 3.3% is likely this year, which
would bring sales volume for the
industry to 1.15 billion liters.”
Private investment in housing will be complemented by $20 billion in government spending,
which is aimed at creating one million new low-income homes this year. The architectural segment already represents 77% of total Brazilian
paint and coatings volume consumption. The
industrial segment represents approximately
15% of total volume consumption, and the automotive segment approximately eight percent of
consumption, split about evenly between OEM
and after-market usage.
The Brazilian economy is also being driven
by a resurgence of consumer spending, which
rose 8.7% in November 2009, after a year of
less robust results. An economic forecast at
year's end by the bank Santander Brazil said,
"We expect consumption and investments to
grow by six percent and eight percent respectively in 2010."
Inflation, which has been very problematic in
Brazil in the past, is only expected to reach 4.5%
this year. One key brake for economic overheating is the country's central bank lending rate,
which is predicted to rise to 11.25% by the end
of this year from a current 8.75%. CW
