Brazil Petrochemicals Q4 2019
Brazil is unlikely to return to pre-recession levels of economic performance within the next five years. Key threats includestrong growth in international petrochemicals capacity at a time of a US-China trade war, which will depress prices and squeezeBrazilian petrochemicals margins. Argentina also poses a risk. In the short term, the country's recession is undermining Brazilianexports, but in the long term, there is potential for strong competition from Argentine producers - the only Mercosur country thatcan compete tariff-free in Brazil - with plans to utilise gas reserves for a new world-scale cracker. Upside risks include the possibilityof a weaker real, which would boost earnings.
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