Jorge de Zavaleta, Executive Director of the Argentine Chemical and Petrochemical Industrial Association, recently stated that in 2025, Argentina's petrochemical sector faces challenges of comprehensive decline in both production and sales, primarily affected by weak domestic demand and global oversupply. However, the Vaca Muerta shale gas holds promise for providing long-term development momentum for the downstream petrochemical industry.
Currently, Argentina's economic recovery is concentrated in the service sector, while employment in chemicals and manufacturing has declined, putting the industry in a difficult situation. In the first 10 months of 2025, the production of most products in the chemical industry chain fell by 5% to 7% year-on-year, continuing the downward trend since 2024. In November, chemical and petrochemical production fell sharply by 18% year-on-year, with sales, exports, and trade deficit data all performing weakly. The decline in trade value mainly stems from falling international prices, rather than a significant reduction in supply volume.
The domestic industrial sector as a whole is sluggish, with the footwear, apparel, and construction industries showing significant declines. Government cuts in infrastructure spending have led to prominent infrastructure issues and a sharp drop in cement consumption. Affected by operational difficulties, companies such as Dow Chemical and Petroquímica Río Tercero have shut down polyether polyol and toluene diisocyanate units.
Despite the current poor situation, Zavaleta pointed out that the Vaca Muerta shale gas remains a source of hope for the chemical industry. Its natural gas liquid content reaches 15%, far higher than conventional natural gas, offering the potential to replicate the experience of the U.S. shale gas boom in driving chemical industry prosperity. Due to the current significant gap between domestic urea supply and demand, Argentina plans to first develop shale oil and urea projects. Then, after 2030, when the global chemical market rebalances, it will utilize surplus ethane to develop the petrochemical industry.
Zavaleta believes that the Large-Scale Industrial Investment Regime introduced by the Milei government is key to attracting long-term investment. This policy ensures regulatory and tax stability, provides certainty for investments in upstream oil and gas, infrastructure, and future petrochemical projects, and helps drive Argentina's chemical industry out of its downturn.
