by Carlos Roberto da Silva, director of Amino
Polyurethane specialist Amino, based in Diadema, in the southern part of São Paulo city in Brazil, has generally been growing at above average rates for the Latin American polyurethanes market. Amino supplies the Brazilian market and now aims to expand its sales in the rest of Latin America, and further afield, in future.
In fact Amino is confident that such efforts will help our turnover to increase by over 50 percent in 2010 from 2009’s figure, to reach $38.4 million. Some of this growth will come from expanding sales of polyurethane systems, where we will focus on systems for hypersoft and viscoelastic foam. But some growth will also come from wider sales in South America.
As well as supplying systems, Amino offers additives and adhesives, with a strong focus on research and development.
Another central strategy is to meet future concerns over environmental impact. Hence we have been busy developing water-based adhesives, and searching for formulations based on ‘green’ polyols such as soya, since these polyols use less energy than petroleum-based ones, with lower carbon dioxide emissions.
Strategy: growth in Latin America
Amino’s biggest market has always been in furniture, especially mattresses, and we intend to continue this participation, whilst aiming at other segments, such as insulation, construction, automotive, and more.
The company constantly seeks out new technologies and products, and if we cannot develop a product or find it in Brazil to meet customer demand, we look for it globally, and modify it at Amino for sale locally.
Amino is able to change and adapt easily, our size giving us the necessary flexibility. The company has passed through the current crisis without too much effect, and we have used the time to improve internal operations.
During 2009, Amino has gained supply contracts with international companies who collaborated with us to reduce raw material costs — without changing product quality. This approach promoted financial stability in a difficult scenario during the crisis.
Water-based adhesives are a new addition to Amino’s portfolio. These products have the same characteristics as solvent-based types, but with less environmental and health impact.
Such developments show our willingness to comply with worldwide trends in environmental care and health and safety.
Amino saw raw materials demand drop at the beginning of 2009, compared with the same period of 2008, but media reports indicate that prices are rising.
Demand rising in 2010
The company is working to adjust supplier’s contracts because we believe demand will rise towards the end of 2009 and into 2010.
In terms of passing on price increases in raw materials, Amino sees the PU market as having two types of consumer. One is willing to pay for new technologies and efficient products and recognises their advantages. These customers see the need to absorb changes in prices.
But others refuse to pay price increases.
They simply buy on price, without caring about quality. In this case, price increases are regulated by the market.
Amino’s strongest markets in Brazil are the southern states — São Paulo, Minas Gerais and Paraná — and we are improving our presence in Rio de Janeiro and southern states.
Globally, Amino has competition in additives from the multinational suppliers. In systems, the bigger PU companies have their own systems houses in Brazil, but are active in different segments, so we feel our main competitors are Brazilian systems operations.
Usually, the global isocyanate and polyols producers present in Brazil supply raw materials to their own systems houses as well as to independent systems houses such as Amino. But in some cases, to avoid conflict of interest, Amino will look further afield. We aim to get the best product, without the commitment of a strategic alliance with a local supplier.
As a systems house, Amino is trying to gradually substitute petroleum-based polyols with soya-based types. While this technology is still new, we believe in the future viability of soya polyols because Brazil is one of the bigger soya producers in the world. Also, more companies are wanting environmentally acceptable and more sustainable materials, substituting conventional raw materials with products derived from renewable resources.
At the same time, government influences on alcohol and biodiesel consumption in our country may itself raise difficulties for other markets that depend on these products. Sugar cane and soya are examples of crops where end uses in food compete with demand for fuel uses. And we see that prices of such crops have also risen, causing difficulties to other supply chains that depend on these products.
Additives, systems, adhesives
When it was founded in São Paulo in 1985, Amino’s main product line was PU additives, later followed by new lines including PU systems and adhesives.
Amino now has a turnover of $24.5 million, and produces some 5000 tonnes of materials a year at its 3000-m2 plant in Diadema. Its sales breakdown is: 40% systems, 35% additives and 25% adhesives and sealants. The group expects to increase its sales to $38.4 million in 2010, from handling 7750 tonnes of material.
Diadema is a strategic location on the route to the port of Santos, some 65km to the south.
Santos is the main export point for products made in São Paulo state — the biggest industrial centre in South America. From there goods are distributed all around the world.
The company’s 45 employees make products for segments such as automotive, furniture, insulation, physiotherapy, footwear, clothes, construction, surfing and beverages.
Amino has two laboratories, one for analysis and one for R&D and new product development.
Amino’s portfolio includes:
PU performance additives
• Amine catalysts
• Silicone surfactants
• Liquid pigments
• Special additives – cell openers, hardness additives, and more
• Viscoelastic all-MDI for injection and blocks
• Rigid systems
• Flexible moulded
• Semi rigid
• Integral skin
• Microcellular Polyurethane adhesives
•One-part for cork, rubber, PU flakes, wood.
• Two-part for EPS panels
• Water-based for foam
BRAZIL SUFFERING LESS
Brazil, with the biggest PU market in Latin America, has suffered less than other countries and regions in the global economic crisis. There have been clear signs of recovery and growth in its domestic economy, and in China also, according to indicators such as consumer confidence, economy credit volume, job offers and retail sales increase, besides non-pressure inflation.
All these indicators are promoting price recovery and higher international demand for commodities such as petroleum and steel.
In financial terms, Brazil is well placed: it is one of four major growth markets for foreign investment, along with China, Russia and India.
Brazil was one of the last countries to see the effects of the crisis. It adopted various financial controls including fiscal incentives (tax exemption in some manufactured products) with tax reduction also promoted by its central bank, and with dollar valorisation (revaluing) compared to the local currency, the Real. All of these measures helped promoted economy stability.
Nowadays, Brazil is recognised as the biggest polyurethane market in Latin America (see IAL report summary below — Ed).
Companies in the PU segment are increasingly prominent in the Brazilian market, making white goods, shoes and furniture, for example. Also, almost all the automotive multinationals have plants in Brazil.
For Amino, the crisis was useful to indicate that many products were over-priced. Petroleum, for example, was at $150 a barrel at one stage last year, plummeting at the peak of the crisis to $40. This clearly shows that speculation in all markets had pushed prices above their true level.
Brazil’s measures to deal with the crisis —tax exemption for industrial products and lower interest rates — had an immediate effect, and also made consumers more confident, which meant less effect on the economy.
Historically, the second half of the year is always better in our sector than the first, and we expect the second semester this year to be close to normal.
In Brazil, personal income is improving in many families and government incentives mean that demand for products as shoes, mattress, furniture, insulation, automobiles is still on the increase.
Such rising demand will further the country’s growth — albeit with lower rates than projected previously.
SOUTH AMERICA STRUGGLES
Brazil continues to massively dominate the market for polyurethanes in South America, accounting for about two thirds of the continent’s total consumption. But after a period of rapid growth from 2003-2008, the region is now finding things difficult.
Nevertheless, some growth is expected in the coming few years, according to the report, Polyurethane Chemicals and Products in South America, available from IAL Consultants.
Although Brazil’s per capita consumption, at almost 2 kg, is only about a third that of Western Europe, the country is ahead of the other countries in the region, according to data in the report. (Table 1)
IAL comments that South America remains one of the most traditional regions of the world, so the longestablished markets continue to dominate, and the region is slower to adopt innovative products and ideas. As a result, flexible foam is by far the single most important market for polyurethane chemicals in South America, accounting for 65 percent of production in the region, whilst rigid foam accounts for almost 20 percent. Also, the market is sensitive to a number of factors, particularly cost.
Nevertheless, on the back of a booming economy between 2003 and 2008, rising affordability has put high-quality polyurethane goods such as mattresses and pillows within consumers’ reach for the first time. IAL comments that the global economic crisis has put this growth on hold at present, but estimates show some growth in the coming years (see Table 2).
Although, as noted, flexible foams dominate the business with rigid foams some way behind, the region has a broad base for CASE products (coatings, adhesive, sealants and elastomers), largely because of Brazil’s importance in the global footwear business (see Table 3).
Brazil accounts for the majority of the CASE output, at 75 percent of the more than 80 kt total.
Although footwear is the largest sub-segment of use, IAL says it will have the slowest growth to 2013, with coatings showing the most rapid growth touching 4 percent a year.
IAL observes the following: • Although Brazil is the world’s third-largest footwear producer, demand for PU from the sector has been static in recent years. However, tightening health and safety regulations are expected to increase demand for safety shoes, bringing some growth.
• Chile is witnessing rising demand for insulation products as the effects of global warming on climate are becoming more noticeable. This bodes well for all insulation, including polyurethane types.
• In Colombia, as with many other countries in the region, a buoyant second-hand car market is boosting the automotive refinish sector.
Environmental awareness in Colombia is quite high, which affects choice of paint formulations.
• Strong growth is expected in Peru, stemming from both refrigeration and construction, making rigid foams a key growth area.
Polyurethane Chemicals and Products in South America is available from IAL Consultants, priced €5000 (about $7350) for a single hard copy edition.
Please contact [email protected]
• Separately, IAL has published a directory of producers of sandwich panels in South America and Mexico, with profiles of more than 60 firms in the region. It costs €1000 (about $1470).