Abstract
Industry Overview
Mexico’s chemicals industry produces just 4.5% of
the total output in North America and accounts for
just a fraction of the
global US$3.2trn world chemical output. One of the challenges facing the
industry is
the dominance of state-run oil company Petroleos Mexicanos.
The firm has a monopoly in the oil
industry, including sole control over
natural gas production. ANIQ, the national chemical association, has
reportedly said US$34bn needs to be spent through 2023 in order to rekindle
the sector. The group says
Mexico’s trade deficit could widen to
US$25bn by 2023 if problems within the nation’s chemicals and
petrochemicals sector are not tackled. Major players in the industry include
Mexichem, BASF Mexico,
Celanese Mexicana, KUO and Pochteca Materias
Primas.
Business Environment
Mexican legislators have approved energy
reforms that will grant Pemex greater financial autonomy and
will allow it
to hire foreign companies to assist it in oil exploration and development. The
changes,
however, fall short of Mexican President Felipe Calderón' s
initial proposals, and it remains to be seen to
what extent they will
improve Mexico' s business environment. The reforms aim to make service
contracts
more attractive to foreign companies by allowing Pemex to offer
incentives such as bonuses for
contractors that complete projects ahead of
schedule, additional compensation for projects that are more
successful
than expected, and rewards to service providers that pass on technologies to
Pemex.
Industry Trends And Developments
Celanese stopped production of
vinyl acetate monomer (VAM) at its plant in Cangrejera. Mexichem aims
to
spend US$1bn through 2013 acquiring chemical firms in Latin America. KUO sold
its Quimir unit,
which was focused on phosphates, to Mexichem. Brenntag
bought BASF’s distribution centre in
Queretaro. Pemex is inviting
bids to expand production of aromatics at its Cangrejera complex, which
will reportedly boost efficiency of the reformation of naphthas and double
paraxylene output at the
facility. Rohm and Haas began operations at a new
US$20mn emulsion polymer and polyacrylate plant in
Querataro.
Industry
Forecast
Like other chemicals producers around the world, Mexican players
are facing unprecedented challenges
as a result of the downturn, as global
customer destocking is cutting deeply into demand. However,
inventory
levels could become depleted by Q209, which should set the foundation for a
rebound. The
clampdown on credit will play a key role in the recovery, as
firms may run into trouble refinancing their
debt. Demand for materials
such as plastics is expected to grow as the Mexican economy expands. The
dominant chemicals players are expected to benefit from the rapidly growing
Latin American market.
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