Latin America
Argentine Growth Bodes Well for Coatings
As Argentina’s
economy is
expanding, so too
is its paint and
coatings industry.
by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodpub.com
Argentina led the Latin American pack of major economies in growth during 2010, chalking up an estimated nine percent expansion, compared with an average of
five percent growth for the region. Industrial expansion is up, construction is booming and consumer spending is recovering. As a result, paint
and coatings sales in architectural, automotive
and industrial segments should improve over the
coming year.
Perhaps the strongest growth area in Argentina's economy has been construction activity, which was up 17 percent in November,
buoyed in part by 4. 6 percent growth in the
paint and coatings segments, according to
INDEC, the national statistics agency. While
government projects are moving rapidly, private
sector projects are expanding at a faster pace.
Standard & Poor's recently raised its credit rating to B for Argentina's leading real estate developer, Inversiones y Representaciones S.A.
(IRSA), which is listed on both the Bolsa de
Comercio de Buenos Aires and the New York
Stock Exchange.
While sales of upscale houses and apartments are rising, the national deficit in basic
housing is of increasing concern, following recent confrontations with the homeless in
Buenos Aires, where groups of squatters have
begun taking over parks and other open spaces.
The government of President Cristina Fernandez has built or refurbished some 850,000 new
housing units nationwide since it came into
power, according to the national planning ministry, but the shortage in housing still looms. On
average, Argentine consumers use three or four
liters of paint per year, compared with 20 in
other developed countries.
Industrial production also is up double-digits
in Argentina, rising 12 percent in November,
with sales in the automotive industry up a reported 67 percent. Automotive production is expected to rise to 840,000 units this year,
compared with 730,000 units in 2010, according to the Argentina Association of Auto Manufacturers (Adefa). Auto sales also are being
boosted by rising inflation, which is projected to
be as high as 30 percent this year, as consumers
seek investment hedges.
Growth in industrial sectors is being aided
by recent increases in oil and gas exploration
and development. The national gas agency Enar-gas is expected to open bids early this year for
the construction of the estimated $1.8 billion
Northeastern Pipeline. The 1,000-mile pipeline
will move Bolivian gas to the Argentine
provinces of Chaco, Corrientes, Formosa, and
Misiones initially. And recent discoveries of
large reserves of shale gas in the western
Neuquen Basin also could provider longer-term
energy to the country. At the time of the shale
gas discover, President Fernandez was quoted
saying, "We are very happy because this is going
to keep up the country's growth."
International paint manufacturers like
BASF, Sherwin-Williams and others continue to
supply the domestic demand through imports
and in-country production. Some Argentine
manufacturers, like Sinteplast, also are exporting to surrounding countries, including neighboring Uruguay. CW
