Soap.-There are at least 62 soap factories in Peru, of which 6 are considered important. The local industry supplies about 85 percent of the domestic consumption. According to the Sociedad Nacional de Industrias, the local industry produces around 15,000 tons of laundry soap annually. Production of metal cleaning powders is being started. Despite local output, imports of common soap in the first 10 months of 1937 totaled 3,219 kilograms, valued at 12,633 soles, compared with 2,697 kilograms, valued at 6,949 soles, in the corresponding period of 1936. Fine-quality perfumed soaps imported in the 1937 period totaled 18,802 kilograms valued at 51,753 soles, compared with 12,334 kilograms valued at 39,583 soles in the 1936 period. The United States and Great Britain were the principal suppliers.

PRINCIPAL CONSUMERS

The largest consumers of industrial chemicals are in the textile field, and include 10 cotton, 7 woolen, 8 knitting, and 11 rayon weaving mills. Among other leading consumers are: 8 or 10 concentrating plants, 2 petroleum refineries, 32 cottonseed-oil factories, 12 flour mills, 14 large sugar mills, 62 soap factories, 10 tanneries, 19 candle factories, 140 soft-drink plants, and 7 glass factories.

MONOPOLIES AND TRADE AGREEMENTS

The importation of explosives is by law a Government monopoly, but in actual operation mining companies and other users are permitted to import these products after paying the stipulated monopoly tax. Government monopolies on matches, opium, salt, and denatured alcohol also exist.

In the commercial agreement with the United Kingdom, a number of British industrial chemicals were accorded tariff advantage, but in the agreement with France no chemical products were affected. Under the terms of the agreement with Chile, sulphur in quantities of over 5 tons is admitted free of duty.

FOREIGN TRADE

IMPORTS

In 1935 total chemical imports were valued at 10,662,000 soles, of which value the United States supplied 28 percent, Germany 35, and Great Britain 12; in 1936 imports increased to 11,128,000 soles, of which the United States sold 27 percent, Germany 32, and Great Britain 12; and for the first 10 months of 1937, imports were 11,583,000 soles, the United States accounting for 32, Germany 37, and Great Britain 10 percent.

Industrial chemicals.-Caustic soda, soda ash, and sodium bicarbonate are among the most important chemicals consumed in the industrial market, together with other heavy chemicals used in the mining, sugar, textile, candle, and soap industries. Sodium salts and caustic soda continued to be sold almost exclusively by the British Imperial Chemicals, Ltd., and by a well-known American company on a quota basis; but, despite the quota agreement, Germany and Japan and some independent American factories made occasional shipments. In 1936 the United States was the principal supplier of sulphuric acid, having shipped 529 of the total 766 metric tons. Imports in the 10 months of 1937 totaled 684 tons. During the second half of 1937

imports from the United States dropped to almost nothing, because of increased freight rates which made it impossible to compete in price with German, British, and Belgian quotations.

Coal-tar dyes.-The Peruvian branch of the German I. G., incorporated in Peru under the trade name Compania General Ánilinas S. A., dominates the dye market. Germany supplied 86 and 84 percent, respectively, of the dyes imported in 1935 and 1936, and the United States, 7 and 5 percent, based on quantity figures. It was reported that sales of American dyes were more active in the latter part of 1937.

Naval stores.-The United States is the principal factor in the naval stores market. Imports of rosin were 451 metric tons in 1935, of which 440 originated in the United States, compared with 316 tons in 1936, of which 292 were of American origin. Imports of turpentine and its substitutes decreased from 212 metric tons in 1935 to 205 in 1936; the United States supplied 173 metric tons in 1936 and 178 in 1935.

Fertilizers. As a result of guano conservation and the unprecedented development of Peruvian agriculture, particularly in cotton, imports of fertilizers, including potassium chloride, ammonium sulphate, nitrate, and other natural or artificial fertilizers, increased from 11,049 metric tons in 1935 to 20,323 in 1936, and to 24,541 in the 10-month period of 1937. In 1936, Germany was the principal supplier, with 10,717 metric tons, followed by Chile with 7,247. The United States held sixth place, having supplied only 26 tons.

Insecticides and fungicides. The demand for insecticides continued to be good in 1937. In 1936 imports of insecticides and fungicides, such as calcium arsenate, nicotine sulphate, spraying oil, and others in solid, liquid, powder, or paste form, amounted to 1,415 metric tons, and in the 11-month period of 1937 to 1,319 tons. In 1936 the United States supplied 1,252 tons of the total imported, the principal item having been calcium arsenate. As the cotton crop is the principal index of prosperity in Peru, there is a large demand for insecticides and fungicides to combat the pests that invade the crop. Japanese competition in calcium arsenate was more active in 1937.

There are three manufacturers of insecticides in Lima. The most extensively advertised household insecticides made locally were reported to have advanced in sales in 1937, and a Japanese household insecticide has a fair sale in the market. The majority of household insecticides sold, however, are of American origin.

Explosives. All explosives, consisting principally of those used in mining, are imported. Of a total importation of 1,808 metric tons of dynamite imported in 1936, 71 percent originated in the United States, 24 in Germany, and 4 in Norway. The predominant share of the United States can be attributed to the fact that approximately 85 percent of the total amount of heavy explosives and accessories of American origin were imported by one well-known mining company. Imports of dynamite and similar explosives totaled 1,410 metric tons for the first 10 months of 1937.

Official Peruvian import statistics covering the year 1936 are published in two sections, the first section for the month of January and a part of February corresponds to the old tariff classification, and the second section for the remainder of the year corresponds to the new tariff classification. Changes in chemical classes were too

great to make satisfactory comparisons with preceding years or with the first 10 months of 1937 (the latest statistics available at time of preparation of this report), therefore the following table covers the January-October 1937 period only.

Imports of More Important Chemicals Into Peru, January-October 1937

Natural products gathered or processed for export in 1937 were cube, condurango, coca leaves, crude cocaine, poor guano, cochineal, ratany root, cinchona bark, and sulphur.

Guano.-Peruvian guano deposits continued to be worked, under the direction of the Government-controlled Compania Administradora del Guano. Since the supply of guano is not sufficient to meet the national agricultural demands, there has been no exportation of rich guano for the past 3 years. In view of this, the company was authorized to import and sell foreign fertilizers of other kinds. During the 3 years ended March 31, 1937, guano collections aggregated 148,256; 127,722; and 136,056 metric tons, respectively. The output of the 1937-38 season, terminated March 31, 1938, was estimated at 152,000 metric tons.

Poor guano may be exported, since it contains only 1 percent of nitrate and 15 percent of phosphoric acid. In 1935, 375 metric tons of poor guano were exported to Costa Rica where it was mixed with other fertilizers for use in the cultivation of coffee. During the first 10 months of 1937 two shipments, totaling 5,000 tons, were made to Great Britain.

Cube.-Cube was used in increasing amounts in 1937 in the local production of cattle dips. Exports of cube in the first 10 months of 1937 totaled 341,505 kilograms valued at 628,147 soles, compared with 303,125 kilograms valued at 671,820 soles in the corresponding month of 1936. Shipments to the United States in the year 1936 were very small, partly because of the poor quality of the roots and partly because of the use of Brazilian timbo instead of Peruvian cube. However, shipments to the United States amounted to 187 tons for the 11-month period of 1937, because of the better quality of the product. The practice of analyzing roots for rotenone content before shipment was begun, with the result that foreign buyers developed more confidence in the product.

Cinchona bark.-Exports of cinchona bark increased from 18,297 kilograms valued at 13,081 soles in 1935, to 66,203 kilograms valued

at 39,196 soles in 1936, and to 73,875 kilograms valued at 42,450 soles for the first 10 months of 1937. Great Britain, the principal buyer in 1935, was superseded by France in 1936 in quantity but not in value.

Cochineal.-Exports of cochineal in 10-month period of 1937 were 52,175 kilograms valued at 44,770 soles, compared with 31,975 kilograms valued at 19,785 soles in the comparable 1936 period. The United States was reported to have been the principal buyer in 1937. Condurango. Shipped regularly to Japan, Germany, and the United States, exports of condurango advanced from 117,374 kilograms valued at 30,358 soles in 1935, to 142,190 kilograms valued at 34,491 soles in 1936, and to 91,182 kilograms valued at 21,019 soles in the first. 10 months of 1937.

Coca. A resolution issued in October by the Director General of Public Health regulates the control of consignments of coca in leaf from the areas of production in the Republic to Lima. The purpose is to differentiate between consignments destined for the manufacture of cocaine domestically or for export and consignments for internal consumption which are subject to taxation. The United States continued to be the principal country of destination of the exports, which amounted to 158,855 kilograms (116,304 soles) in the first 10 months of 1937, and to 159,388 kilograms (119,430 soles) in the corresponding period of 1936.

Cocaine.-Exports of crude cocaine increased from 670 kilograms valued at 70,247 soles in 1935 to 943 kilgrams valued at 109,102 soles in 1936, of which Germany and the Netherlands were the principal purchasers in both years. Exports for the first 10 months of 1937 were 267 kilograms valued at 30,957 soles.

Ratany root.-Exports of ratany root dropped from 24,632 kilograms (3,239 soles) in 1935 to 4,620 kilograms (600 soles) in 1936, rising to 24,501 kilograms (6,831 soles) in the 1937 period.

Sulphur.-Production of sulphur in 1936 amounted to 2,151 metric tons. Peruvian foreign shipments decreased from 2,183 metric tons in 1935 to 1,724 in 1936. Argentina was the largest purchaser in 1935, superseded by Brazil in 1936. Exports for the first 10 months of 1937 were 1,596 tons, 12 percent above the corresponding 1936 period.

PRICES AND FOREIGN COMPETITION

In order to successfully compete in industrial chemicals, prices must be either on a level or lower than those quoted by the British I. C. I., the branch office of which periodically issues what may be considered as the standard wholesale prices. The gold reichsmark percentage increased on German quotations on many products in 1937, and the advantages of the aski mark were not a competitive factor, as in 1936. Åski marks were no longer available for dyes. Increased freight rates brought about a general rise in price on American products. During the first half of 1937, American prices advanced from 10 to 20 percent, and prices on German goods advanced from 20 to 40 percent. The rise in prices reached its peak in November.

In order that the United States may continue to hold its place in the Peruvian chemical market, it is recommended that the usual quality goods be shipped at the lowest prices possible. This is the determining factor and does more to meet competition than any other measure

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adopted. The use of American chemical products also could be notably increased if more companies sent out chemical engineers as salesmen.

OUTLOOK FOR 1938

The outlook for chemicals in 1938 is favorable. As the capital of the chemical-consuming industries generally is limited, materials are ordered as needed, and large stocks are not purchased in advance. Future prospects for the development of chemical-consuming industries are favorable, as the Banco Industrial del Peru started, in 1937, to extend loan facilities with reasonable rates of interest for the development of new industries and for the improvement of those already existing.