Recently, the profit pressure faced by the chemical industry in Latin America has attracted widespread attention. Industry insiders generally point out that excessive imports have become a key factor dragging down the industry's profitability. Under the dual impact of oversupply and low-price trends in the global chemical market, Latin America's petrochemical industry is trapped in a vicious circle of "shrinking local production capacity, continuous surge in imports, and compressed profit margins". Its path to breaking the deadlock requires both short-term protection and long-term transformation.

The predicament of Latin America's petrochemical industry has long been evident and is showing a trend of widespread spread. Hermann Torres, CEO of Brenntag Latin America, a global chemical distribution giant, pointed directly to the core in his judgment: the persistence of global oversupply and low-price trends has cast a heavy shadow over the prospects of Latin America's petrochemical industry. Miguel Benedetto, Director General of the Mexican Chemical Industry Association, provided specific explanations from the perspective of local supply-demand imbalance - while the output of local petrochemical products continues to decline, imports have surged sharply. This contradiction has become one of the most severe challenges for the regional industry development. Torres even bluntly pointed out that Latin America has become a dumping ground for various chemical products that "have nowhere to go". Trade restrictions have led to the restructuring of global chemical product flows, which has further squeezed the profit margins of the entire distribution chain. The current situation that "Latin America has the lowest chemical product prices in the world" has completely deprived local enterprises of their competitiveness.

Behind the surface of the import surge lies the interplay of both internal and external factors. From the external perspective, the "spillover effect" of global chemical overcapacity has severely impacted the Latin American market. Torres explained that low prices and oversupply are global issues, but due to insufficient local supply capacity, the Latin American market has become a major recipient of surplus capacity from North America, Asia and other regions. The influx of a large number of imported products has directly lowered regional market prices. From the internal perspective, the shrinkage of local production capacity is the core cause of import dependence. Taking Mexico as an example, the petrochemical sector of Petróleos Mexicanos (Pemex), the state-owned energy giant and major industrial chain supplier in Mexico's chemical industry, has seen its output drop by nearly three-quarters in the past few years. The sharp decline in supply has forced Mexico to make up for the gap through massive imports. Brazil is also in a difficult situation, facing multiple predicaments such as "sluggish demand, falling prices, and profit squeeze from both local production and imports". Even in segmented fields such as specialty chemicals and intermediates, Asian suppliers have already occupied a considerable market share by virtue of their capacity advantages.

More worrying is that the restoration of local production capacity faces multiple rigid constraints and cannot be reversed in the short term. Insufficient energy supply is the primary bottleneck. Benedetto revealed that Mexico's natural gas output has dropped by one-third in the past 15 years, and 70% of its natural gas consumption depends on imports from the United States. However, the pipeline infrastructure for imported natural gas has reached full capacity, which directly restricts the expansion of energy-intensive industries such as chemicals. Infrastructure bottlenecks have further exacerbated the predicament. Ports on Mexico's Pacific and Atlantic coasts are saturated, and the railway and highway networks are overloaded. More than 1 million chemical industry transactions each year face logistics blockages. Regulatory complexity has added an additional burden. In the past three to four years, the inspection rate of Mexican chemical product transportation has soared from the global average of 10% to 60%, resulting in severe logistics delays. In the import process, some chemicals require up to 4 different approval documents, and low administrative efficiency has hindered the operation of the industry.

Faced with the severe situation, trade protection has become the main short-term response measure in Latin America. Benedetto introduced that Mexico has adopted aggressive trade protection measures. Under the United States-Mexico-Canada Agreement (USMCA) signed by Mexico, the United States and Canada, a 35% tariff is imposed on chemical products imported from regions such as Asia with an import growth rate exceeding 300%. Products with an import growth rate of 200% are also subject to similar tariff treatment, and products with a growth rate of 100% will be included in the tariff scope at the beginning of next year. This policy has bought breathing space for local enterprises. Benedetto stated that Mexico can now obtain natural gas and its derivatives at competitive prices, and its current goal is to gradually achieve independent production of raw materials and improve the self-sufficiency rate of petrochemical raw materials.

However, trade protection is not a long-term solution, and industry insiders have a clear consensus on the effectiveness of such policies. Torres clearly pointed out that trade protection policies cannot solve all problems. The global situation of overcapacity will not last indefinitely, and the key to industry development still lies in the improvement of local production capacity. He sharply pointed out that the core shortcoming of Latin America lies in the insufficient supply of basic raw materials. Except for a few enterprises, most enterprises still rely on imports for the production of intermediates. This fundamental industrial chain problem cannot be solved by trade barriers.

From the perspective of industry development logic, breaking the deadlock for Latin America's petrochemical industry requires building a three-dimensional path of "short-term protection - medium-term upgrading - long-term independence". In the short term, it is necessary to rely on trade policies to resist external dumping and reserve market space for local enterprises; in the medium term, focus should be placed on infrastructure upgrading and regulatory optimization to break through bottlenecks such as energy supply and logistics transportation, and reduce production and operation costs; in the long term, it is necessary to increase investment and R&D in the field of basic raw materials, improve the industrial chain, and enhance the independent capacity of core links. Only in this way can Latin America's petrochemical industry truly get rid of excessive dependence on imports and build sustainable competitiveness in the global market.