How did the Chilean chemical industry perform in 2023?

In 2023, Chile's chemical exports saw a 5% decrease in terms of total amount compared to 2022, mainly due to price fluctuations, totaling approximately US$13 billion. Despite this decline, the chemical sector still accounted for 14% of all Chilean exports. On the import side, the decrease was even more pronounced, with a 30% drop, totaling around US$13.3 billion, and an 8% decrease in volume.

How would you assess the current economic landscape of the global chemical industry and, more specifically, Chile's situation?

I think time is split between pre- and post-pandemic, explaining the current economic scenario. Before the pandemic, prices were rising, but then everything plummeted rapidly. From July 2020 until the end of 2022, there was a price rally driven by global inflation and economic stimulus, leading to widespread consumer purchasing. By 2022, prices began to fall, but due to the value chain and inventory process, this decline was delayed until it fully manifested between 2022 and 2023. Our sector anticipated these changes earlier as the effects of price drops reached the end-consumer. Although the industry predicted a global recession, we do not see it materialized yet, leading us to believe we are experiencing a soft landing. 

In 2024, prices appear more stable, but logistical challenges persist, especially in regions like Asia and Europe. In Latin America, the Panama Canal initially faced issues and broader disruptions, which continue to cause delays, reducing the capacity to meet standard transit times. This increased demand and decreased shipping capacity have driven freight costs, particularly for Asian products. In Chile, the economy is mainly driven by mining and construction. This last sector has started 2024 slow due to high interest rates and credit restrictions. In contrast, the mining sector remains more stable. We anticipate a challenging yet stable year ahead, with tighter economic conditions but no severe downturns.

What work lines has ASIQUIM focused on recently?

One of our main focuses at ASIQUIM this year is promoting Responsible Care among our partners and the broader community. This global initiative celebrated its 30th anniversary of implementation in Chile. For us, it is crucial to mark this occasion by setting higher standards for our partners while also communicating its benefits. We are making Responsible Care mandatory for our members in 2025 to benefit ourselves and enhance community perception, improve customer understanding, and strengthen the entire value chain.

Another line we are working on is highlighting the role of chemistry and communicating where it intersects with daily activities. There is often a disparity in understanding; if everyone understood the impact and importance of chemistry, matters would be simplified significantly. Our mission is to reach out to people and demonstrate the positive effects of good chemistry.

Additionally, we actively participate in developing regulations alongside the government and authorities to support new projects. Chile's future is envisioned in the green hydrogen and lithium sectors. However, achieving this vision depends heavily on a long-term state policy that facilitates permit approvals and the development of large-scale projects. Without such a framework, despite optimistic projections, Chile's potential as a green hydrogen powerhouse remains a distant dream.

What are some synergies between the Chilean mining and chemical industries?

Mining is crucial for transitioning to sustainable technologies, although not everyone grasps this. The same misunderstandings apply to the chemical industry ⎯ I often say that chemistry is the "operating system" of modern life, something few people grasp, but everyone relies on. Without the chemical and mining industries, modern existence as we know it would be impossible; they are the backbone of all technological advancements and everyday products. 

Chile is a mining country, and the top copper producer, and our lithium is closely linked to the growth of electromobility. All mining projects require chemical solutions ⎯Even a slight improvement in efficiency can make a significant difference, given the large production volumes. Moreover, as major mining operations deplete their ore grades, chemistry becomes essential to keep mines operational. 

Due to mining's long-term nature, they are often more advanced in sustainability than society realized. By collaborating closely with the mining industry, we, the chemical industry, have several synergies to leverage. 

How can Chile benefit from nearshoring or friendshoring?

Many countries have become aware of China's aggressive export policies, and we have witnessed the US imposing tariffs on Chinese goods, because its currency policies and export incentives create asymmetric opportunities. 

Despite incentives, a quarter of mainland China's listed companies are unprofitable, flooding global markets with excess capacity and undercutting competitors. This predatory pricing devastates value-added industries in heavily regulated countries, where governments demand more from businesses but fail to protect them from unequal competition.

As a result, many countries are protecting their jobs and industries from these threads. Meanwhile, Mexico has begun imposing anti-dumping measures on various chemical products, and Brazil has also been taking proactive actions. In Chile, after many requests they are now making timid moves with steel regarding Chinese dumping prices.  

The escalating trade wars have led the West to reassess its supply chains, looking not only to neighboring countries but also to alternative trading partners in order to reduce its reliance on any single provider, which now probably has an extra duty or tariff and also reduce supply and geopolitical risk.

The concept of nearshoring has gained momentum, with industries relocating to the US, benefiting Mexico. Although Chile may seem geographically distant from these dynamics, our practical proximity is evident in shipping terms. Being a major exporter of copper and lithium, Chile imports numerous products, often leaving ships departing without full cargo. 

Despite the distance, our logistical proximity to many countries, due to return freight rates, positions Chile as an attractive friendshoring option. 

Moreover, Chile stands out as a historically stable country, and it has an open economy with over 33 free trade agreements, enabling competitive sourcing of raw materials and access to the global market at competitive prices. Chile is well-positioned to supply countries protecting themselves from less regulated competitors.