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PRESENTATION AGENDA Latin America paraffins + candles Key questions regarding the Latin American paraffin & candle markets How to add value to your candle business? Conclusions Questions
PRESENTATION AGENDA Latin America paraffins + candles Key questions regarding the Latin American paraffin & candle markets How to add value to your candle business? Conclusions Questions
LATIN AMERICA PARAFFINS + CANDLES Country Paraffins Demand 2010 (Ton) Market Share Total South America 200 ~ 49% I/E Total Central America 210 ~ 51% I Total Latin America 410 IT Country Candles Demand 2010 (Ton) Market Share Kg/ Capita Total South America 131 ~ 51% 0,33 I/E Total Central America 124 ~ 49% 0,74 I/E Total Latin America 255 0,45 IT U$M Latin America 731 U$/kg Latin America 1,78 Internal market U$M Latin America 795 U$/kg 3,11 MB 74,7% Paraffin Demand in Latin America = 62% candles 38% others
LATIN AMERICA CANDLES Latin America candle production 350 1,000 Tons 300 250 200 future trend 150 100 50-00 02 04 06 08 10 12 the future trend in candle production predicts stability there is room to improve and increase production, but this depends on the efforts of the Latin American candle industry
LATIN AMERICA CANDLES vs ECONOMY Latin America 1.000 900 800 700 600 500 400 300 200 100 - U$ Millions U$ Millions Degree of correlation = 99% 00 01 02 03 04 05 06 07 08 09 10 11 12 5.000 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 - Development of candle market demand GDP progress the Latin American economies will grow in the coming years the success of the product candles relies on the populations purchasing power
10% 8% 6% 4% 2% 0% -2% -4% Argentina Bolívia Brasil Chile Colombia Equador Paraguai Perú Suriname T Tobago Uruguai Venezuela LATIN AMERICA ECONOMY Latin America 2010 GDP progress 5,8% source: world bank data South American Average
8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Anguila Antigua Aruba Barbados Belize Costa Rica Cuba Dominica Rep Dominicana El Salvador Guatemala Haiti Honduras Jamaica Martinica México A Holandesas Nicaragua Panamá P Rico LATIN AMERICA ECONOMY Latin America 2010 GDP progress 4,4% source: world bank data Central America and Caribbean Average
LATIN AMERICA CANDLES Latin America candle market demand 350 1,000 Tons U$/kg 3,50 300 3,00 $$$ 250 2,50 200 2,00 150 1,50 100 1,00 50 0,50-00 02 04 06 08 10 12 - candle market demand progress average prices we must define the market sector we wish to have our products in there is room to improve market demand, but this depends on the candle industry s efforts
LATIN AMERICA CANDLES Latin America international candle commerce 35 30 25 20 15 10 5 0-5 -10 1,000 Tons 00 02 04 06 08 10 12 we have to increase our participation in the international scene and their potential markets
LATIN AMERICA CANDLES 3,50 3,00 2,50 2,00 1,50 U$/kg Latin America price correlation future trend If it increases the added value If it looses the added value 1,00 0,50-00 02 04 06 08 10 12 candle price progress paraffin price progress we have to strive to obtain a balance between the cost and the sale price
LATIN AMERICA PARAFFIN products technical support logistics
LATIN AMERICA PARAFFIN potential suppliers logistics flow lead time = 45 to 60 days
Key questions regarding the Latin American paraffin & candle markets
Key questions regarding the Latin American paraffin & candle markets LATIN AMERICA The market will become ever more dependent on imported paraffins and/or substitute products. The need to import opens an excelent opportunity for the candle manufacturer to find new suppliers, larger volumes and better pricing. There are some barriers to be defeated, such as: Language and the beaurocracy related to import documents, etc The candle manufacturer will depend on his own efforts to achieve success. The Latin American economies are generally growing above the world averages. On the macro economic side, a revaluation of Latin American currencies in relation to the U$D is going to occur. On one side this facilitates imports of raw materials such as paraffin wax, but on the other hand, it will pressure exports, forcing a new search for markets that either pay better or that buy larger volumes. In the short and medium time frames, increases in overall market demand will cause a rise in inflation in the Latin American region.
Key questions regarding the Latin American paraffin & candle markets ARGENTINA The petroleum and derivatives export control act established in 2008, was one of the factors that caused the closure of Parafina del Plata refinery. With the closure of the Parafina del Plata refinery, the availability of paraffin wax in the Argentinian market disapeard, affecting the candle manufacturers in the Cono Sur region. There are tallow and soy processing industries that offer hydrogenated products locally. BRAZIL The Brazilian paraffin production is currently on a decreasing tend. The production at RLAM could be impacted by a regional production freeze of paraffinic crudes (quantity and quality). The future production level at RLAM depends on the discovery of new oilfield deposits. The production at REDUC is going to be affected by the initiation of operations of the new lubricant hidro-refining unit (2015). The candle market is extremely dependent (80% a 85%) on local production. As of now, ABRAFAVE could begin to play an important role. There are tallow and soy processing industries that offer hydrogenated products locally.
Key questions regarding the Latin American paraffin & candle markets COLOMBIA Can increase availability of paraffin waxes in Latin America and ECOPETROL has made some efforts. The quality of locally produced paraffin waxes is not very good. MEXICO The locally produced paraffin wax is of poor quality. The lack of investment in PEMEX hinders any future improvement in production and quality of its paraffin waxes. VENEZUELA The quality of locally produced paraffin waxes is not very good. The current dificulties in exporting and importing are severly reducing business flow. Currently, industrial investments posibilities in the country are limited.
Key questions regarding the Latin American paraffin & candle markets Latin America paraffin market 600 1,000 Tons 500 400 300 200 100 0 92 94 96 98 00 02 04 06 08 10 12 capacity production export import market demand
600 500 400 300 200 100 - Brazil Argentina Mexico Peru Uruguai Equador Chile Colombia Bolivia Venezuela Paraguai Costa Rica Cuba Jamaica Nicaragua Trinidad Tobago Honduras Guatemala Rep. Dominicana Mio Tons Produção Latin American Latino beef Americana tallow production de sebo bovino Mio Tons 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 - Argentina Brazil Mexico Paraguai Bolivia Colombia Costa Rica Chile Cuba Venezuela Equador Trinidad Tobago Guatemala Uruguai Barbados Nicaragua Peru Honduras Rep. Dominicana Jamaica Key questions regarding the Latin American paraffin & candle markets examples: Produção Latin American Latino soy Americana oil production de óleo de soja
How to add value to your candle business?
How to add value to your candle business? Dominican Republic Mexico USA China
DOMINICAN REPUBLIC (2009) Example of opportunity 1,000 Tons Dominican Republic candle exports Source: United Nations Statistics
LATIN AMERICA CANDLES Latin America international candle commerce 35 30 25 20 15 10 5 0-5 -10 1,000 Tons 00 02 04 06 08 10 12 we have to increase our participation in the international scene and their potential markets
MEXICO (2010) Example on how to add value to your candle business Mexico international candle commerce Mexico international candle commerce 1,000 Tons U$/Kg Exports Imports Exports Imports source: United Nations Statistics source: United Nations Statistics
USA Example on how to add value to your candle business U$/Kg USA international candle commerce Exports Imports source: United States International Trade Commission
China Example on how to add value to your candle business Beep! Beep!
China Example on how to add value to your candle business 1,000 Tons China domestic candle market demand source: United Nations Statistic Division U$/Kg China candle prices Exports Imports source: United Nations Statistic Division
China Example on how to add value to your candle business 1,000 Tons China + Vietnam candle exports China Vietnam source: United Nations Statistic Division U$/Kg China export prices Candles Paraffin wax source: United Nations Statistic Division
PRESENTATION AGENDA Latin America paraffins + candles Key questions regarding the Latin American paraffin and candle markets How to add value to your candle business? Conclusions Questions
CONCLUSIONS The RM market is unstable but simple. In other words, you must have a lot of flexibility and willpower. Do not depend on a single RM supplier. Produce volume (economies of scale) and reach new markets: export is necessary. Cut costs. Cut costs. Cut costs. and Cut costs. Find the markets that pay a better price. Produce distinct products and those that allow to add value to your business. Decisions must be taken faster, in order not to loose unecessary time. Many times it is not going to be what I would like but, what needs to be done. Must be able to believe that things exist that do not exist.
PRESENTATION AGENDA Latin America paraffins + candles Key questions regarding the Latin American paraffin and candle markets How to add value to your candle business? Conclusions Questions
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