Polypropylene producer Indelpro SA de CV is investing $40 million to build a plant to purify Mexican propylene to make it suitable for polymer applications.
``The plant will take refinery-grade propylene and bring it to polymer grade,'' administration director Rodolfo Garcia said in an April 22 telephone interview.
Being able to use Mexican raw materials, instead of importing propylene from the United States as the company has since it started operations in 1992, will result in ``important savings,'' he added.
Indelpro is co-owned by Montell Polyolefins, which holds 49 percent, and Alpek, the petrochemical branch of Monterrey, Mexico-based holding company Grupo Alfa.
On Oct. 29, Monterrey-based Indelpro signed a 10-year propylene supply contract with Mexico's state-owned oil corporation Petroleos Mexicanos. Pemex makes only refinery-grade propylene.
The purification plant is going to be near Indelpro facilities in Altamira. Garcia is optimistic that the plant will start operations in the first quarter of 1999, ahead of the scheduled July opening.
Indelpro continues to study the possibility of building another PP plant, or expanding its Altamira facilties, where it produces 440 million pounds of PP per year.
``If the expansion were to go ahead, we will have assured raw material supply with this new [purification] plant,'' Garcia said.
In September, Indelpro officials said they were considering lodging a complaint with the Mexican government, charging that U.S. companies were dumping PP into Mexico at below-market prices.
Garcia said the company has not ruled out filing the complaint, but new government regulations have made it more difficult.
Mexican regulations dictate that dumping complaints cannot be made against one or two companies, but need to be against an industry. Of the nearly 15 PP producers in the United States, the majority export to Mexico, and about half at dumping prices, he claimed. In the meantime, Indelpro's investigation is on hold, he said.