Mexico's sole domestic maker of polypropylene resin, Indelpro SA de CV, announced plans April 27 to proceed with its delayed expansion, marking a first step toward addressing a need for more Mexican-made polyolefins.
Additionally, Mexico's government-owned petrochemicals giant Pemex Petroquimica is constructing a polyethylene swing plant in Coatzacoalcos, and it is continuing its yearlong effort to attract investment partners into a polymers and chemicals project known as the Phoenix Project.
Officials discussed the developments at the April 27-30 Plastimagen 2004 show in Mexico City.
Monterrey, Mexico-based Indelpro, jointly owned by Mexican conglomerate Alfa SA de CV and Basell NV of Hoofddorp, Netherlands, will add 772 million pounds of capacity to the 485 million pounds it already has in Tampico, said Indelpro President Raul Millares. Plans call for the new facility, which will use Spherizone technology, to begin production by the third quarter of 2006. He declined to reveal total investment figures.
Jaime Azuara, Indelpro's commercial vice president, said PP demand in Mexico slowed in the past year after averaging 8-12 percent growth annually for the past six or seven years. Millares estimates Mexican PP consumption will increase 6-7 percent a year during the next five years, depending on the U.S. economy.
Millares said Indelpro supplies about a third of Mexico's PP resin via its Profax and Valtec materials.
Azuara said Indelpro has been talking about building the plant for about three years, but ``the market was not right.'' It recently signed a long-term contract with Pemex Refinancón, a unit of PetrÃ³leos Mexicanos, to secure raw materials for the new plant.
Pemex's new plant is to begin production by early 2006 and will give the firm its first grades of linear low density PE, said Gabriel Enriquez, a Pemex PE official. The plant will use Univation technology and also will be able to produce some injection and rotational molding grades of high density PE. It will have total capacity of about 661 million pounds.
Industry consultant Eduardo de la Tijera predicts the much-touted Phoenix Project indeed will come to pass. Pemex will be a minority partner in the initiative, which is targeting $1.8 billion to $2 billion in investment.
Its timetable depends on the progress of Pemex's negotiations with potential private partners, though de la Tijera said a totally integrated petrochemicals complex could be up and running in less than four years. To date, only Saudi Basic Industries Corp. has made its interest public.
By his best estimates, de la Tijera, president of Mexico City-based Grupo Texne, suggested the following likely makeup of a Phoenix Project complex:
* A cracker fed by natural gasoline (a heavier liquid than natural gas) that can yield roughly 2.2 billion pounds of ethylene, 1.1 billion pounds of propylene and up to 550,000 million pounds of butenes.
* Two large PE resin plants totaling about 1.98 billion pounds.
* One large PP resin plant.
* One world-scale styrene monomer plant.
``If you squeeze the lemon, there could be some small specialty chemical plants from the resulting hydrocarbon streams, such as comonomers and specialty aromatics, in minute quantities,'' de la Tijera said.
This project is vital to the physical and mental health of Mexico's plastics industry, he said.
``More PE capacity will boost domestic confidence for [processors'] long-term planning. Historically, every time that a new plant is announced in Mexico, demand [for that resin] goes up,'' he said.
Grupo Texne completed a 120-page report titled ``Mexico's Thermoplastic Resin Markets - 2003.'' (An English version is due out shortly.) It assesses supply/demand, pricing and application trends over the past decade, and offers forecasts to 2010 and 2015.
The study indicates that in 2003, imports accounted for more than 51 percent of Mexican thermoplastic resin consumption, including 77 percent of its HDPE demand; 64 percent of combined LDPE/LLDPE consumption; and nearly 70 percent of PP demand.
De la Tijera said Pemex's PE swing plant and the potential Phoenix Project output will have a dramatic effect on Mexico's domestic resin production. He estimates those two projects alone will boost Mexico's share of domestically produced HDPE to 75 percent of total consumption. And they will give Mexico its first domestic output of LLDPE, and allow it to deliver 80 percent of Mexico's demand for that resin.
He said competition among suppliers of imported resins to Mexico will help domestic processors' balance sheets this year, but said it is a short-term advantage.
``But what if supply/demand gets tight in the U.S. and Canada?'' he said. ``You cannot sustain long-term growth on such a basis.''
Horacio Lobo Zertuche, newly elected president of Anipac, Mexico's national association of plastics processing industries, agreed. Lobo said Anipac wants to help raise private investment for the Phoenix Project.
``When you have a shortage of supply in [North America], the local markets in Mexico have even more problems. Shipping to Mexico becomes a lower priority. So, when the U.S. is short 3-5 percent in resin, we can be short as much as 30 percent in Mexico.
``Having a shortage of domestically produced resin limits our growth. We have to show the rest of the world how we compete, but we can't do that as well if we don't have confidence in the [supply of resin]. That is why the Phoenix Project is so important and why we must help in the investment for that.''
Plastics News senior reporter Joseph Pryweller contributed to this report.