JEC Group have brought together the international community of composites leaders and executives in our Composites Circle as an unique networking opportunity to meet with both peers and future partners.
South America is one of the most intriguing composite markets in the world. There were earlier concerns over its stability amongst political and economic woes, but in recent years, the continent has shown relatively solid growth - particularly in Brazil.
(Published on October-November 2006 – JEC Magazine #28)
Years ago, investing in the South American composite market would have been an afterthought. Today, however, that market is becoming increasingly attractive for domestic and international composite companies. Costs are significantly lower than in North America and Europe, and several of the economies have grown consistently in recent years. This trend is widely predicted to remain.
Brazil leads, Argentina catching up
Without question, the largest and fastestgrowing composite market in South America is Brazil. The country creates over 50% of the continent’s demand for fibreglass, with considerable growth of composite applications in its transportation, construction and infrastructure sectors.
Granted, the country does not have a large amount of competition in the region, as poorer countries like Bolivia and Ecuador have very little involvement with the industry. But across the continent - and even in Central America, where Mexico is a market leader - some countries are challenging Brazil’s dominance.
Inflation, which has been a problem for years in South and Central America is predicted to stabilise in the coming years.
Latin America Key Economic Indicators
Source: Global Insight world overview 1Q06
One example is Argentina. After years of political and economic turmoil, the country is starting to catch up: while its GDP is less consistent than Brazil, it has had a higher rate of growth for industrial production since 2004, and is set to outpace its rival through 2008. Its inflation rate (11%) has almost tripled since 2004, but is expected to decrease by half over the next two years.
A sure sign of Argentina’s growing economy is the figure that shows 46% of its fibreglass demand being used for construction projects. Its most utilised product is direct roving, while the rest is well distributed between conventional roving and chopped-strand mat.
The Colombian surprise
Yet, perhaps the most surprising country recently has been war-torn Colombia. Over the past few years, a hard-line conservative president has come down hard on the rebellion, and it could be working. Colombia ranks a close third behind Brazil and Argentina for fibreglass demand, comprising about 10% of the South American market.
Similarly to Argentina, Colombia has a highly concentrated composite demand in one sector. For Colombia, though, this sector is infrastructure. Large parts of the country remain undeveloped, creating numerous opportunities for projects, particularly in the remote countryside.