Market Report, "Mexico Petrochemicals Report 2014", published
Fast Market Research recommends "Mexico Petrochemicals Report 2014" from Business Monitor International, now available
[UKPRwire, Fri Jan 10 2014] In our view, growth in the Mexican petrochemicals sector could be stimulated by liberalisation of the upstream energy sector. President Enrique Pena Nieto's reforms would allow more private sector participation within the petrochemical sector and the broader downstream industry. Under Nieto's plan, new constitutional and contractual arrangements could reverse the decline in oil and gas observed in recent years owing to a bar on foreign investment in upstream resources.
In 2013 Mexico's olefins capacities included 1.58mn tonnes per annum (tpa) of ethylene and 660,000tpa of propylene. These fed downstream capacities of 875,000tpa polyethylene, 590,000tpa polypropylene, 667,000tpa polyvinyl chloride (PVC) and 310,000tpa polystyrene. It is widely recognised that this is not enough to cover domestic demand, let alone take full advantage of Mexico's strategic position as a supplier to the US market.
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Pemex says it expects petrochemical production to rise 25% to 10mn tpa if reforms are approved, from 8mn tpa in 2012. This would put the country on course to reach the government's target of 22.6mn tpa by 2026. Reaching the goal is contingent on the full development of the country's shale gas reserves as well as a reliable source of raw materials and greater private sector participation.
* The Ethylene XXI project is due on stream in H215. The project will create 1.05mn tpa ethylene capacity, 750,000tpa high-density polyethylene capacity and 300,000tpa low-density polyethylene capacity. Work was 50% complete by the time of writing in December 2013. However, Ethylene XXI alone will not bring down Mexico's rising net imports of polymers over the long term, as supply will be outstripped by demand.
* Pemex and Mexichem have entered into a joint venture that will create value in the chlorine-vinyl chain, with Pemex's vinyl chloride production (VCM) output set to more than double to 400,000tpa. The expansion of VCM, a precursor to PVC, will reduce Mexichem's dependence on supplies from other VCM producers and improve the cost effectiveness of its PVC operations.
* The domestic market is expected to pick up throughout forecast period, with growth in construction, the automotive sector, retail and agro-industrial all helping to create an environment that will be stimulated by exports and local consumption. The autos sector will be a particularly strong source of demand for engineering plastics and synthetic rubbers. Meanwhile, Mexico's construction industry continues to progress along a robust growth path.
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