In 2015, Mexico was the second largest destination for U. S. exports of plastic products. In total Mexico represents a USD 29.8 billion market for the chemical sector, which includes cosmetics, paints, rubber, plastics and other items (ITA).
Plastics were among the five top U. S. export categories to Mexico, with U.S. exports totaling almost USD 17 billion (exhibit 1). A 2016 study from ITA’s Industry and Analysis considers Mexico to be:
Mexico’s economy grew 2.92% in 2015, while the plastic sector grew 3%, indicating that the plastic sector is growing at approximately the same speed as the country’s economy. Today, Mexico provides 2 percent of the world’s plastic production and produces 5.3 million tons annually for a wide variety of industries.
Recently Mexico’s plastic industry’s annual growth is moderate in comparison to those rates shown in past decades. However, Mexican manufacturers see an opportunity to achieve higher growth rates as Mexico continues to negotiate additional free trade agreements with some of the world’s leading economies.
Almost fifty percent of plastic resins currently used by Mexico’s manufacturing sector is imported. Mexico’s existing production capabilities are unable to satisfy current national demand. Therefore, consuming sectors continue to rely on imports to meet their needs.
Two major players dominate Mexico’s plastic industry. First, the petrochemical industry, which has two major resin manufacturers: one in Tampico with capabilities for PTA, PET, PE fibers, PP, EPS and CPL; another newer facility in Coatzacoalcos, which is manufacturing BPA free LDPE and HDPE.
The automotive and aerospace industries are attracting investments in newer plastic technologies, like the recent foreign direct investment made in Salinas Victoria, Nuevo Leon, by a Japanese manufacturer to increase Mexico’s ability to produce SKC polyurethanes.
Manufacturers in Mexico face serious challenges, such as low profitability, an unfavorable dollar exchange rate and buyer cost-cutting measures. Mexican plastic manufacturers have the lowest margins in the supply chain and are desperately seeking to increase their productivity in order to increase margins.
Another challenge facing the industry is Mexico’s low recycle rate for plastics. Although there is no verifiable figure, it is estimated that Mexico recycles only about 15% of total production in 2015; that is, only 1.2 million tons were recycled from their total production of almost 5.3 million tons.
Mexico’s challenges in its plastic industry become the best opportunities for U.S. suppliers. As Mexico’s plastic manufacturers’ require increased productivity, more high tech machinery will be required. By the end of 2015, Mexico’s imports of capital equipment amounted to $2 billion and fully forty percent of that total was represented by processing machinery and equipment. By the same token, as new processes and materials are developed in other countries, they will be quickly adopted by Mexico’s plastic manufacturing sector as a way of maintaining their leadership in attracting FDI to Latin America.
High-Tech Packaging. In the last several years, the Mexican plastic sector has seen an increase in demand for of high-tech equipment used for processing and packaging products in the food and beverage sector as well as for storage and supply of plastic resins.
Recycling. Almost 65% of Mexico’s recycled PET is sent to China where it is then transformed and sent back to Mexico as synthetic fibers. This is a clear indication of Mexico’s need for recycling technologies that could efficiently allow Mexico to produce their own fibers instead of sending PET to China to be recycled.
Plasticulture. Plasticulture is a fairly new segment in agriculture which promises greater consumption of plastic products in that sector. New uses of plastic include combining plastics with nutrients, which helps farmers to harvest healthier and more natural products. This technology also frees their crops from insect problems and therefore frees them from the use of pesticides.
Mold-making and Tooling Materials. A growing number of international mold-making companies have established operations in Mexico to more efficiently supply their Mexican clients. Nevertheless, even with national producers and FDI in the sector Mexico still imports sixty percent of their needs for these products. Another weakness in Mexico, and opportunity for U.S. exporters, is Mexico’s inability to supply locally produced high-quality alloys of machine grade steel for tooling and molds.
Bioplastics. A key component of the new packaging trend in the Mexican food and beverage industry is bioplastics. It will soon become a standard and, although in development, experts forecast the national consumption of bioplastics to be at least 12,000 tons in 2016.
3D Printing. Estimates are that 3D printing will be the largest segment in the plastic industry by 2020. Though few Mexican companies currently use this technology, its applications in the automotive, healthcare, aerospace and defense will increase demand for their base component of polyamide resins.