Abstract
According to BMI’s latest Brazil Petrochemicals Report, the Brazilian
petrochemical industry is being
adversely affected by the global economic
crisis, with capacity utilisation rates set to plummet to 60% in
2009 and
planned investment projects likely to be delayed by 12-18 months. However,
consolidation by
Brazilian producers in 2008 should ensure their survival
through the country’s worst economic downturn
since the financial
crisis of 1998, with some even planning an increase in investment over the
next five
years.
The fall in both external and domestic consumer
demand will have a serious impact on industries that are
key consumers of
plastics, particularly the automotive sector, which saw output halve in
December. This
is leading to a review of petrochemicals capacity
additions. In an announcement in February, Dow
Chemical has pushed back
its planned US$1bn PE plant based on sugarcane-derived ethanol, with
capacity of 350,000tpa of LLDPE by one year, to 2012. This is in line with
BMI’s belief that construction
projects that have yet to begin, or
are just starting, may be delayed by 12-18 months. As such, these
factors
do not change our forecasts.
Petrobras has said it will invest a total of
US$5.6bn in petrochemicals over the 2009-2013 period, a 30%
increase on a
previous plan calling for investments of US$4.3bn during the 2008-2012 period.
The
company said the revision was intended to take into account the
changes in the international
macroeconomic scenario and its impact on oil
and oil products. Petrobras has committed itself to the
US$9.8bn Comperj
complex, which includes a 1mn tpa ethylene unit and downstream plants. The
project
is also set to raise ethylene capacity by 1.3mn tpa by 2013. A
second phase of derivative plants is set for
completion in 2013, including
600,000tpa of ethylene glycol, 800,000tpa of PE, 850,000tpa of PP,
500,000tpa of PTA and 600,000tpa of PET. Nevertheless, if it is completed on
time, by 2012 Brazil’s PE
capacity should reach just under 3.10mn
tpa, while PP capacity should reach 3.45mn tpa and PVC
capacity 1.05mn
tpa. If the planned second phase of Comperj is completed in 2012, polyolefins
output
would exceed 9mn tpa, making Brazil self-sufficient in
thermoplastic resins and giving it an exportable
surplus of at least 3.5mn
tpa.
Brazil places third in BMI’s Americas Petrochemical Business
Environment Rankings with a composite
score of 64.1 points. Brazil is 5.7
points ahead of Mexico and 16.9 points behind Canada. While it has a
relatively large petrochemicals industry, Brazil’s score is weighed down
by a higher level of risk than
most other countries in the region, with
its long-term financial market risk a notable cause of concern.
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