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Brazil Petrochemicals Report Q2 2010
Market |
Energy and Utilities |
Report Type |
Market Research |
Country |
Brazil |
Published |
10 March 2010 |
Number of Pages |
59 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The Brazilian petrochemicals industry is poised to complete a period of consolidation with the proposed merger of the country’s two largest producers Braskem and Petrobras to create a world leader, while the domestic petrochemicals market will continue to post strong rates of growth led by consumer spending, according to our latest Brazil Petrochemicals Report.
In January 2010, Braskem’s parent company Odebrecht and Brazil’s state oil company Petrobras announced an agreement to merge Braskem with Petrobras’ thermoplastics firm Quattor. The new company, Nova Braskem, requires regulatory approval. If granted, it will have resins production capacity of 5.4mn tonnes per annum (tpa) with control of all of Brazil’s PE, PP and PVC capacity, making it the world’s eighth largest polymer producer. The move will make Braskem Latin America’s third largest polymer producer after Exxon Mobil and Dow Chemical.
Investments in the production of industrial chemicals in Brazil are expected to total at least US$26bn in 2010-2014, according to the Associação Brasileira da Indústria Química (Abiquim, Brazilian Chemicals Industry Association). It states that approved and current projects account for US$10.9bn, with another US$11.9bn for projects under study and US$3.3bn for maintenance, process improvement, safety and the environment. Under Abiquim’s proposed national chemical industry plan, released in December 2009, the sector will require US$132bn in investments up to 2020 in order to continue growing in line with the country’s GDP and eliminate the trade deficit. This would make Brazil one of the top five petrochemicals producers in the world, as well as creating an exportable production surplus and making it a leader in the production of ‘green’ chemicals. The strengthening of productive chains, increasing innovation and technological development and boosting productivity and sustainability are some of the commitments made by the chemical industry.
The Brazilian recession now over, but robust performance of private consumption throughout the cyclical downturn has helped sustain the domestic petrochemicals market. A government stimulus plan aimed at the automotive, construction and consumer goods industries has mitigated the effects of an external market downturn. We believe that restocking and a modest recovery in demand in both domestic and external markets should help lift capacity utilisation rates to 90% in 2010, raising output by around 10% compared with an estimated -5% in 2009. But uncertainties remain and margins will be placed under pressure by increased global capacities, as new plants start up in the Middle East and Asia. Brazil places third in our Americas Petrochemicals Business Environment Rankings with a composite score of 64.2 points, up 0.1 points from the previous quarter due to improved country risk scores. Brazil is 7.6 points ahead of Mexico and 14.7 points behind Canada.
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