The uncertain status of Mexico's domestic resin-producing future continues to cause indigestion among the country's plastics officials. The looming July 2 presidential election only adds to the speculation, as many doubt that progress can be made on a viable action plan until after it is known which of the three candidates prevails.
But it is clear from discussions with resin producers, processors and trade association officials at the recent Plastimagen 2006 trade show in Mexico City that a sense of urgency remains to boost the country's resin-producing capabilities and reduce its heavy reliance on imported plastics materials.
``We need to reduce our raw materials imports to less than half of consumption in Mexico,'' said Eduardo de la Tijera, newly elected president of Anipac, Mexico's national association of the plastics industry. The country currently imports about 70 percent of its polyethylene and polypropylene resin requirements.
Some contend that the lack of dramatic action to boost domestic resin output will lead to financial ruin for many of Mexico's estimated 3,200 plastics processing companies, the majority of which are very small operations. Census data indicates that nearly 1,000 such companies disappeared between 1998 and 2003, according to de la Tijera, whose full-time job until recently was running Grupo Texne, an independent consulting firm that is considered an authoritative source of Mexican plastics industry data.
``We don't see the Phoenix Project as dead,'' de la Tijera declared in a March 29 interview at Plastimagen. ``We insist that we need two Phoenixes, at least. By the time one is ready, we'll need another. The alternate version of the original Phoenix is welcome; the original Phoenix is very welcomed. We need to insist and show with hard data the importance of that project. We need to do it with the new government.''
He projects Mexico's processors will consume 4.4 billion pounds of polyethylene by 2010.
Most industry officials seem to agree that the much-touted, years-old, $2 billion Phoenix Project to build domestic petrochemical and polyolefins capacity eventually will go forward in a vastly scaled-down form. The politically charged project - which collapsed last summer, only to be declared dead by the government and then resuscitated the next day - continues to hang in limbo, awaiting a revised plan that meets the approval of all involved parties and the government.
In its latest iteration, the project took the form of a joint venture that included state oil monopoly PetrÃ³leos Mexicanos (Pemex), Indelpro SA de CV, Grupo Idesa SA de CV, and Pittsburgh-based Nova Chemicals Corp. The project's initial construction was going to include an ethylene cracker and a pair of polyethylene plants in an undecided location in Mexico by 2009. The expensive cracker, at least, no longer seems likely to happen.
``If the project is scaled down, and they don't need to build significant ethylene capacity, it is more doable. But they'll have to have available ethylene in their system to support more polyethylene [resin production],'' said Howard Rappaport, global practice leader for plastics at Houston-based Chemical Market Associates Inc.
CMAI data shows that Mexico imported 3.97 billion pounds of polyolefins last year, up 12.5 percent from 3.53 billion pounds in 2004. That was driven by a huge leap in polypropylene imports, up 27 percent, and despite a 4 percent slide in imports of low density and linear low density PEs. Mexico imported 4.7 percent more in high density PE resins in 2005 from the previous year.
Domestic petrochemicals giant Pemex is busy making its first major polymer investment in several years, pumping $100 million into a polyethylene swing plant in the Morelos petrochemical complex in the state of Veracruz, Mexico. This will add about 660 million pounds of new capacity a year. The plant will begin operating this month, with product hitting the market in June, said Jorge Carrillo Careaga, Pemex's commercial manager.
``The main challenge,'' Carrillo said, ``is to sell a significant share'' of the swing plant's output in Mexico, ``while remaining an international player, as well.'' He defined significant share as ``above 60 percent.''
Carrillo said Pemex is talking to the same partners as before about a scaled-down project that would not involve additional cracker capacity, and he claims that those companies have shown interest. He termed last year's derailment of the project ``an unfortunate setback,'' and acknowledges that a huge challenge still lies ahead, but he says he remains optimistic about Phoenix moving forward.
Former Anipac President Angel Oria Varela, director general of Mexico City-based polymer distributor Polímero y Materias Primas Internacionales SA de CV, lamented that the Phoenix Project has been delayed for six years and that the industry's needs have been discussed, without substantive action, for the past decade.
He insists the project will go forward, in some form, but he worries about how many Mexican processing companies will not live to see the resin that comes from those plants.
Jorge Barreda, who became commercial director for plastics in Latin America for Dow Química Mexicana SA de CV last November, noted that Mexico's ``big deficit in plastics won't be corrected in the next five years.'' He said the original, ambitious version of the Phoenix Project is ``no longer valid,'' but he also remains optimistic that some version of the plan will go forward. In the meantime, he said, resin makers from Asia are moving aggressively to try to fill the void.