PVC producers in Mexico have had a good year in 2006. In addition to sound economic growth, running at more than 4%, and a strong construction industry, the presidential election campaign boosted sales, as PVC is the starting material employed for many campaign media. According to a report by the German Office for Foreign Trade (bfai, Cologne; www.bfai.de), PVC producers are expecting overall sales of 410,000 t for 2006, which would represent a 10% increase over the previous year. Despite these growth rates, the full potential has still not been tapped, says the agency.

Despite the favourable development of demand, Mexico´s two PVC producers, Policyd (San Juan Ixhuatepec; www.policyd.com.mx) and Grupo Mexichem (Tlalnepantla; www.mexichem.com.mx), see themselves confronted with a high level of competitive pressure from material imported from the US and, in some cases, from Europe. These two producers supply around 300 companies. Mexico also has some 25 producers of PVC compounds, 20 PVC paste producers and around 1,000 converters.

Imports are generally kept in check by anti-dumping provisions. Customs duties ranging from 12.5% to 34.6% are charged, depending on the producer and the country of origin. This measure is targeted especially at US producers, who would otherwise dominate the Mexican market, the bfai notes. As these rates apply solely to PVC in its pure form, US companies have been able to establish themselves as the key suppliers of blends.

In 2005, Mexican sales of PVC in its primary forms ran at 385,000 t, according to bfai figures backed up by the industrial plastics institute Instituto Mexicano del Plastico Industrial (IMPI). This divides into 61% for rigid PVC, 30% for plasticised PVC and 9% for PVC paste. Roughly half of this went into production of pipes and pipe joints. The second most important application, at 13%, was film, followed by cable insulation (11%).

The construction industry is one of the key consumers of PVC products, including pipes. In 2005, some 196,000 t of PVC were used in Mexico for pipes alone. In the case of pipes and joints, the more stringent requirements on water supply systems in remote areas of the country are also pushing up sales. Worn water pipes also are being replaced by new PVC pipes in a large number of houses. While polyethylene is also being used as a starting material for pipes, experts predict a decline in this segment (particularly for fresh water pipes) due to its less favourable performance characteristics. Altogether, pipe producers sell pipes – manufactured from all types of materials – worth more than USD 1m each year, with PVC accounting for 30% of sales and PE 6%.

PVC also competes with PE in the manufacture of insulation for low-voltage cables. Here again, however, the rule of thumb is that PVC is cheaper and additionally offers superior flame retardant properties. Moderate growth is being seen in cable sales on the whole. Growth rates for artificial leather, by contrast, can be as high as 12% per year. This is an exceedingly popular material, not only for clothing and accessories, but also for toys, office products and dust jackets for books, for example.

Robust growth rates are predicted for PVC profiles in future, given the favourable economic outlook for the main consumer sectors, which include the construction, furniture, electric domestic appliance and automotive industries. Some of the highest growth potential lies in joinery (window frames, parts for doors, blinds and other window coverings). The shoe industry is able to save immense costs by using PVC – particularly against the background of increasing cheap competition from Asia. Here, however, PVC is up against competition from thermoplastic elastomers, which have a better performance profile when used for shoes. International designer companies, however, are making frequent, increasing use of PVC as an additional fashion element for their shoes.

The future looks less rosy for paste producers. Apart from the 20 merchant producers, other companies are now also producing these materials for captive use, which has led to a decline in market demand. The resulting price wars have caused margins to shrink to a minimum, according to the bfai. What´s more, the toy industry – one of the key customers – has virtually ceased using PVC paste altogether. However, it is still being employed to a major extent for production of automotive filters (oil, diesel, air) and metal coatings.

PVC bottle production has also long since passed its peak. Since the mid-1980s, PVC bottles have been gradually substituted by PET. In the food and cosmetic industries especially, PVC is no longer used as the starting material for containers.

Production of thermoplastic elastomers in Mexico (in 1,000 t)
Products	2004	2005	Change (%)
PVC	444.0	443.5	-0.1
Polystyrene	381.1	360.7	-5.4
Polypropylene	676.8	701.3	3.6
HDPE	679.6	698.8	2.8
LDPE	692.6	691.0	-0.2
PET	570.4	629.1	10.3
Total	3,444.5	3,524.3	2.3

Source: ANIQ Chemical Industry Association