Industry News

Proximity to Brazil, Argentina, and Help from the US Makes Rubber and Plastic Profitable Businesses in Uruguay

By Taiwan Trade Center in Asuncion

In Uruguay, the rubber and plastic industry was considered as an industry that provides necessary materials to other industries. However, this definition also applies to Brazil. For example, almost all the final products of Uruguay’s thermoplastics industry go to Brazil because Brazil’s own high demand and low supply of them.

The population of Uruguay is only slightly over 3 million. Its rubber and plastic industry only grew quickly because its fast-growing economy requires it to provide many packaging materials. If Uruguay could sign a free trade agreement with the US, its rubber and plastic industry would have great potential.

Unlike Paraguay, another small country in the Southern Common Market, Uruguay signed trade agreements with its neighbors Brazil and Argentina in 1975. Therefore, way before the Southern Common Market was formed, products from Uruguay could enter markets in Brazil and Argentina freely. Because of the booming market, industries in Uruguay are always on the cutting edge, and that include the rubber and plastic industry.

The development of Uruguay’s plastic and rubber industry began its development in the 1940’s and was in full swing by 1956. It was then when the Uruguay Plastic Model Association, which later became the Association of Plastic Industry in Uruguay

The Two Main Imports

Uruguay’s rubber and plastic industry mainly imports two products. The first is the plastic and articles thereof for packaging and furniture (H.S. Code 39), and the second is the rubber needed in thermoplastics (H.S. Code 40)

In 2006, Uruguay imported 284.6 billion USD worth of plastic and articles thereof. Close to 60% of that, or 167.3 billion USD, are plastic materials for Uruguay’s packaging and furniture industry.

Last year, Uruguay imported 94.5 million USD worth of rubber and article thereof. Close to 45% of that, or 41.35 million USD, are rubber materials for Uruguay’s thermoplastic industry.

Three Companies Compete in Thermoplastic Rubber Processing Industry

There are three major players in Uruguay’s thermoplastic rubber processing industry: Montelur S.A., Indipex S.A. and Laja S.A. Montelur S.A. is the leader in the market in Uruguay. It is importing 50% of all the imported Styrene-Butadiene Rubber (SBR) and Butadiene-Rubber (BR) in Uruguay. Indipex S.A and Laja S.A. are importing 25% and 7.2%, respectively.

84% of the SBR in Uruguay was imported from Taiwan, while 98% of the BR was imported from Japan. There are only three major companies in the thermoplastic industry in Uruguay, and they require huge amounts of raw materials. In order to maximize their profits, each company has cut out the middlemen and gone straight to the source.

Last year, the thermoplastic industry of Uruguay has manufactured 23,643 metric tons of thermoplastic rubber compositions (TPR), which were mainly used in the shoe industry. The total value of export was 47.95 million USD. Brazil purchased 86%, or 41.32 million USD of Uruguay’s TPR. Argentina purchased 9.3%, which amounted to 4.46 million USD.

Montelur exported 60% of the products, while Indipex and Laja exported 24% and 10%.

Brazil is the third biggest shoe manufacturer in the world, with over 7,500 shoe factories producing 755 million pairs of shoes a year. Therefore, it is obvious that a large amount of raw materials is required. Most of the shoe factories in Brazil are concentrated in Rio Grande do Sul. Specifically, the place with the highest number of shoe factors is Vale do Rio dos Sinos, with 3,192 factories. It is only 930 kilometers away from Montevido, the capital city of Uruguay.

Therefore, Montelur and Indipex are able to produce enough TPR for all of Brazil’s shoe factories. Other than Uruguay, Montelur has also established factories in Brazil and Mexico.

Taiwan is a Major Exporter of Plastic Materials to Uruguary

The main products of the plastic processing industry are hard packaging, flexible packaging, furniture, and pipes. Industries such as beverage, food, agriculture, pharmaceutical and cosmetics all use hard packaging for their needs in plastic containers.

Among plastic raw materials, Uruguay mainly imports Polyethylene Terephthalate (PET). Last year, the total value of PET import was 74 million USD. The main sources of the import were South Korea (33%), Argentina (26%), and Taiwan (17%). The major importers are Cristalpet S.A. and Leb S.A, which imported 78% and 20% of the total import value, respectively.

When it comes to Polyethylene (PE), Uruguay mainly imports the low-density variety. Last year, Uruguay imported 47.3 million USD worth of PE, with PELD and PEHD took up 50% and 28%. The main sources of import are Dapama Uruguay S.A. (18%), Plastico Gepax S.A. (13%), and Torrente-Riolsa S.A. (11%, an affiliate of Montelur S.A.)

In the hard plastic packaging industry, Cristlpet S.A. is the leader in Uruguay. The 100-percent domestically funded company mainly manufactures PET bottles and containers, and imports 70% of Uruguay’s PET material. The size of its factory is 27,000 m², and consumed 4,000 metric tons of raw materials each month. 80% of its products were exported, which amounted to 67 million USD last year. Other than countries in the Southern Common Market like Brazil and Argentina, it also exports its products to Chile, Venezuela, El Salvador, Honduras, Costa Rica, the USA, and Spain.

The Brazilian company Leb S.A. has also established a factory in Uruguay. It is smaller in scale, with a factory size of 7,000 m². It imports 20% of Uruguay’s total PET imports. It imported 19.1 million USD worth of materials last year (75% PET and 21% PE) and exported 21.1 million USD worth of products, with 80% of them going to Brazil.

In countries in the Southern Common Market, PET factories are mainly concentrated in the Manaus free trade zone in the northern Brazil and the Ushuaia free trade zone in southern Argentina. Their output is three to five times greater than that of Cristalpet.

The Rubber and Plastic Industry in Uruguay will Continue to Grow

The rubber and plastic industry in Uruguay will continue to develop along with the flourishing economies in South (or even North) America. In South America, the rubber and plastic industry supply the needs of Uruguay’s agriculture, animal husbandry, and construction industries directly. Therefore, its development is easily affected by these downstream industries.

Uruguay is by no means a big market. However, its excellent geographic location, outstanding logistics management and advanced technology will help Uruguay’s plastic and rubber industry enjoy great successes for a very long time. In other words, they will sell a lot of products to the other countries in the Southern Common Market.

（From TAITRA「國際商情雙周刊」#218, 2007.06.06-06.19）