BASF de Mexico, Centroamerica y Caribe is about to lay the foundation for its promised new Styrolux styrene butadiene styrene copolymer resin plant in Altamira, Mexico.
The March 14 ceremony will represent a vote of confidence both in the Mexican market and in the Altamira port area as Mexico's chemical corridor, according to BASF executives.
Frank Zeller, spokesman for the global plastics giant, said Feb. 21 that construction of the world-scale plant, planned to have an initial capacity of 90 million pounds per year, is due to be completed in the first half of 2003.
The $75 million investment during the next two years is part of a $450 million investment in Altamira that fits into BASF's strategy of expanding its specialty polymer activities into a global business - even while it trims its payroll and shuts down some operations due to the economic downturn.
``We don't see a Mexican recession. In the U.S. of course it's noticeable, but we don't see a big one here. In fact, Mexico has been a great market in 2001 in the styrene sector,'' Zeller said.
SBS is used for food packaging such as film wrap and drinking cups, as well as injection molded articles such as coat hangers.
Current sales for the whole BASF de Mexico group, which is divided into three companies, is around $700 million to $750 million per year. BASF's target is to reach $1 billion in the next two to three years, Zeller said.
The largest company in the group is BASF Mexicana, which is the plastics unit, representing about 70 percent of the sales. Sales for 2001 were $500 million, and 70 percent of products are exported, mostly to the United States.
The new investment, approved in May last year, shows the growing strategic significance of BASF Mexicana for parent company BASF AG of Ludwigshafen, Germany.
``We see a potential for growth in Mexico and the rest of Central and South America, especially Brazil,'' Zeller said, with the highest long-term growth rates in Latin America.
He said Altamira serves both the North American Free Trade Agreement and South American specialty styrenics resins markets for molding and extrusion applications.
Zeller said Altamira combines a number of favorable aspects.
``There is plenty of water, access to the sea, and it is close to the U.S. and Mexico market,'' he said. The site also is adjacent to existing BASF facilities that began production in 1998, including a plant that can produce 260 million pounds of ABS or acrylic styrene acrylonitrile annually.
Some 50 percent of Mexico's petrochemical production is in Altamira, with other producers including DuPont, Petroleos Mexicanos and GE Plastics.
The Altamira plant is part of a wider program of investment in Styrolux capacity in Antwerp, Belgium, and Ludwigshafen. A year ago, BASF completed a project in Ludwigshafen that raised capacity there to 77 million pounds, up from 44 million pounds. Antwerp will add 66 million pound of capacity in the first half of this year.
BASF announced last summer that it would shut down 24 plants around the world to boost profitability. But despite the downsizing, officials emphasized that the Mexico project is on track.
``In difficult times this investment continues,'' Zeller added. ``BASF has closed certain plants, but this is an ongoing strategic investment, concentrating in the company's four production sites in the Gulf [of Mexico].''
Werner Pratorius, head of BASF's Styrenic division, said he views specialty resins as an important complement to the company's bulk plastics activities, which are more influenced by commodity pricing.