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South America: Argentina

12.01.2012  |  Quijada, R.,  IntelliChem, Inc., Coral Gables, FloridaFriedlander, A.,  Instituto Petroquimico Aregentino, Buenos Aires, ArgentinaCarvalho, O.,  MaxiQuim Assessoria De Mercado, Porto Alegre, Brazil

Keywords: [petrochemicals] [refining] [natural gas] [economics] [trade]

For nine consecutive years (2003–2011), the Argentinean gross domestic product (GDP) continued to increase at an impressive annual rate of 7% to 8%. However, this trend was expected to change in 2012 with the domestic GDP only increasing at 3% to 4%. The world economic crisis will affect the Argentinean economy, but it will not be the sole reason for the sharp decrease. A severe drought is affecting the harvest of main export products (soybean and corn), and a reduction in the commodities international prices is expected to reduce the balance of payments. The government is limiting imports to improve the balance, but these measures are raising fears among local producers.

The local industry is strongly dependent on imported supplies, and the new regime of nonautomatic imports may jeopardize some strategic sectors such as the automotive and electronic industries. The petrochemical sector may also be affected, since many intermediate chemicals are not produced locally and are required for the manufacture of final products.

Table 1 shows domestic petrochemical production over the last 20 years. A peak of about 7 million tons was reached in 2006. Since then, annual production has declined by 1 million tons each year. The main reason for this trend has been the lower availability of oil and, especially, natural gas, which is the main raw material for Argentina’s petrochemical industry.

Fig. 1 shows the location of Argentina’s main petrochemical sites. Bahía Blanca (south of Buenos Aires) is the largest complex for basic petrochemicals (ethylene and ammonia) and polymers (HDPE, LDPE, LLDPE, PVC and urea) products. The largest refinery is located at Ensenada (La Plata); this site has the largest benzene, toluene and xylene (BTX) capacity. A third important location is San Lorenzo (Santa Fe province, north of Buenos Aires); this complex has aromatics capacity, as well as styrene monomer (SM) and styrene-butadiene rubber (SBR) capacity. Polypropylene (PP) is produced by two sites (Ensenada, Luján de Cuyo) close to the two largest refineries, which are fluid catalytic cracking units supplying propylene.

  Fig. 1.  Location of Argentina’s major
  petrochemical and refining complexes.

Table 2 shows the fluctuations of the Argentinean petrochemical trade balance since 1990. For most years, it has been negative. Only in 2002 did the petrochemical balance become positive. This was possibly due to new capacity that came onstream in the Bahía Blanca area. Since then, no new capacity additions have occurred.

The increasing trade balance deficit over the last few years is the result of two combined factors. From the demand side, there is the already-mentioned increase in GDP and, consequently, of petrochemicals consumption. The other factor results from lower utilization rates of local capacity due to raw materials restrictions and, thus, less local product is available, as shown in Table 1.

In 2010, imports increased to their highest level ever in volume, surpassing $3 billion and creating a –$1.9 billion trade imbalance for Argentina. Tables 3 and 4, respectively, list the “top 10” 2010 exports and imports. Several products, mainly thermoplastics (PE, PVC, PP and PET), appear in both tables. This reflects the fact that, thanks to Mercosur, there is fluent commerce between Argentina and Brazil, with no import tariffs. Table 4 also shows that the other main imports are fertilizers not produced locally (MAP and DAP) and urea, since their producing units are not operating at full capacity due to raw material shortages. The first 10 products represent around 60% to 70% of the total volumes and sales for both imports and exports.

Natural gas reserves continue to decrease. In 2002, natural gas reserves represented 17 years of production—now, this figure is reduced to 7.5 years. Oil availability is more stable and has not changed significantly over the last 10 years, with present reserves representing 10 years of production.

However, since most of the Argentinean petrochemical industry is based on natural gas, no new plants or significant expansion of existing units is immediately foreseen. All indicators show that the petrochemical trade deficit may increase. The main risk may be new government-imposed import restrictions. This could strongly affect the petrochemical industry, as well as other strategic sectors of the economy. But there is one hope in the middle term, as Argentina looks to become a country with very large shale gas reserves. Shale gas exploitation will require significant investment. For such resource development, it is imperative that clear signs are given by local authorities to attract domestic and foreign capital.


DAP    Di-ammonium phosphate 

High-density polyethylene 


Low-density polyethylene 


Linear-low-density polyethylene 


Mono-ammonium phosphate 


Methyl tertiary butyl ether 

PE    Polyethylene

Polyethylene terephlate 

PP    Polypropylene 

Polyethylene terephthalic acid 


Polyvinyl chloride 


Styrene-butadiene rubber 

SM    Styrene monomer

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