Restrictions on single-use plastic boom in LatAm; almost 100 million live in cities with existing bans

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Restrictions on single-use plastic boom in LatAm; almost 100 million live in cities with existing bans

June 25, 2019 - 17:02

SAO PAULO, June 25, 2019 (PPI Latin America) -Latin American legislators are increasingly acting to reduce single-use plastic consumption in the region. Considering national, state and municipal laws in different countries in the region, current bans are already affecting the lives of around 100 million inhabitants, according to data collected byPPI Latin Americawith local governments and in the press.

Dozens of new laws were approved in 2019 and there are many others currently in discussion. The bans are driving investment from the local paper industry, as producers are increasing investments on alternative packaging and biodegradable solutions.

The most important restriction affecting the region is the ban on plastic bags in Chile. Distribution of those bags in big retail stores was banned in the country in early 2019, and it will soon reach smaller businesses.

To serve its local market, Chilean pulp and paper producer CMPC already approved and is moving on with an investment to increase production of paper bags, taking advantage of paper availability on its PM 20, installed in Puente Alto mill. The company hasn't disclosed startup dates yet, but told investors and analysts in June that the project will add three new bag

conversion lines in Chile with combined capacity of 115 million bags/year. Following demand for paper packaging, the company also sees growth potential with the modernization of its Laja mill and the installation of a new conversion line in Peru to produce 60 million sacks/yr.

In Mexico City, a ban on single-use plastic will become effective by 2021. The country's capital intends to get rid of cups, plates, forks and coffee capsules made of plastic. The region will only allow distribution of items made of compostable material.

A series of other Mexican states have already installed some kind of plastic ban, with most of them intended to reduce or completely ban the use of plastic bags, cups and drinking straws.

In Brazil, different cities and states have bans on single-use plastic. The main target of such bans in Latin America's biggest country are drinking straws. There are laws banning them in at least 12 Brazilian cities and five states. Local media reports the approval of a new municipal ban almost every week.

The most populated Brazilian state, however, has yet to approve such a law. In São Paulo, local representatives voted in favor of a ban on drinking straws but the rule is not effective until the governor concedes his approval.

Drinking Straw.Different companies are increasing marketing efforts on paper solutions for substituting single-use plastic. Asia Pulp & Paper (APP) announced in April the launch of a paper alternative to plastic straws across Latin America. Ahlstrom-Munksjö also said it is already in negotiations with potential clients in Brazil and Colombia.

In June, Brazil's Suzano announced its entrance on the paper for drinking straws market. The company intends to sell not only in Brazil, as it is prepared to export. "Since we benefit from our own eucalyptus pulp production, this is going to be a very competitive product to be sold abroad," the company's paper unit director Leonardo Grimaldi told PPI Latin America.

Even in regions where plastic bans have not yet gone into effect, there is increasing demand for paper alternatives. Converters of paper cups and straws say they are overwhelmed with customer requests.

"Demand is growing month after month; I believe my sales will increase up to 300% by the end of the year," said Carolina Viana Weber, commercial director for Touche, a paper straw converter located in the southern Brazilian state of Paraná.

Cupstock.There is also increasing demand for cupstock. In Brazil, although there are still very few cities that ban plastic cups, converters report that the food service industry is moving fast.

"We get consultations all the time, there are many brands concerned with sustainability and the paper cup also brings additional benefits because of printability," said Fernando Comparini, operations director for converter Nazapack. The company, located in São Paulo, started operations 18 months ago. The founders already own a packaging business in the country and started the new company as they anticipated demand for paper cups should surge.

Until very recently, the Brazilian cupstock market was entirely based on imports, but several local players adapted equipment to locally manufacture cupstock, aiming to substitute imports and offer higher added-value products. Suzano, Ibema and Klabin are offering the product.

Comparini believes the local industry could have an additional boost with a potential growth in sales of the Brazilian biodegradable solutions for cupstock. Klabin and Suzano have already developed their own products in which a resin substitutes the polyethylene. Ibema said it has studies for the application of the biodegradable resin.

--Bydsousa@fastmarkets.com