MEXICO CITY - A gas pipeline explosion in southern Mexico has cut low density polyethylene resin supplies to Mexican plastics processors already battered by the effects of their nation's economic crisis. LDPE extruders, faced with soaring import bills for foreign resin since Mexico's December peso devaluation, increasingly have turned to the national state oil monopoly Petr¢leos Mexicanos for raw material.
But the national PE resin supply, severely restricted by Pemex's limited capacity, suffered a major new interruption Feb. 16 when two 24-inch gas pipes exploded in the state of Tabasco. The blast left four people dead and 21 injured, according to Mexican news reports.
One of the pipelines supplied ethane gas to the ethylene plant at Pemex's giant La Cangrejera refinery in the nearby state of Veracruz. That unit produces the bulk of the group's LDPE.
Pemex said it lost resin production totaling about 11 million pounds as a result of the incident, but insisted its usual February PE sales of nearly 53 million pounds were down by only about 7.7 million pounds.
After the accident, Pemex forecasted that the lines would be repaired within a week, but almost two weeks after the explosion, repair work appeared to be continuing and resin supplies had not returned to normal. A second explosion occurred Feb. 23, causing minor injuries to three repair workers, according to Mexican news reports.
A Pemex spokeswoman said March 1 she could not confirm that the pipeline had been repaired.
In a bid to support Mexico's national plastics industry, Pemex in October halted its resin exports in favor of local sales.
While some plastics processors have managed to stockpile resin, others have been forced to stop producing through the shortage. Pemex had cut back customer supplies even before the pipeline explosions, because of a capacity shortage. The oil giant has expanded capacity in recent years.
One small processor hit by the latest supply setback is extruder and PE bag producer Rosconi de Mexico SA de CV. Eduardo Skewes, sales director of the Tlalnepantla firm, recalled in a Feb. 23 interview at the PlastImagen trade show in Mexico City that prior to devaluation, his firm received as much as 88,000 pounds per week of resin.
During the currency crisis, he said, Pemex cut supplies to his firm to 11,000 pounds a week, and by the last week in February, the company had to stop production because no more resin was forthcoming. He said other small and medium-sized processors also were suffering from the lack of LDPE supplies.
Film extruder and printed bag converter Polibolsas Mexicanas SA de CV of Atizapan also expected to have to halt production because of a shortfall of resin from Pemex, said Polibolsas President Rafael Vidales.
Vidales, who is also president of the Mexican plastics processors' group Anipac, said in a telephone interview Feb. 28 that he had run out of PE resin from Pemex and expected to lose four to five days of production.
``It's affecting us a lot. ... It is very important for us and the difference between profit and loss,'' he said.
His firm consumes as much as 220,000 pounds of resin per month.
Juan Manuel Alvarez, president of Anipac's PE converters section, confirmed that the La Cangrejera LDPE plant had been closed for two weeks and Pemex supplies were being restricted.
The section represents 50 companies providing 80 percent of Mexico's national output of PE film and bags. His own firm, Poly-Bag SA de CV, consumes about 275,000 pounds of resin monthly, of which nearly 97,000 pounds is imported. Alvarez reported he had a 20-day supply, but his stocks were decreasing.
But he noted that, after the economic crisis, demand plunged. Poly-Bag saw a 40 percent dip, and he estimated that other processors saw demand fall an average of 25-30 percent. This is easing the raw materials shortage, he added.
Alvarez forecast that low demand for processed products could continue for at least the next five months, maintaining a balance with national resin supplies. He pointed out that high resin prices, rather than scarce supplies, is the main problem for processors at present.
Pemex, which bases prices at 5 percent below the dollar rates of the international market, agreed in January to peg its peso/dollar exchange rate to Mexico customers at 4.5 pesos to the U.S. dollar. The exchange rate last week stood at roughly 5.3 pesos to the dollar.