Processors in Mexico will face a tougher year in 2010 than they anticipated, predicts a former president of the country's plastics association.
“We won't have a rebound [after 2009] as strong as we thought,” Eduardo de la Tijera, managing director of plastics industry consulting firm Grupo Texne, based in Mexico City, said in a telephone interview March 29.
“Growth in the plastics sector will be about 4 percent. However, imports will increase and Mexican processors' market share may decrease.
“There's not much good news for 2010,” he added. “The best is Ethylene XXI.”
Ethylene XXI is a $2.5 billion complex in the Gulf of Mexico's port of Coatzacoalcos. São Paulo-based petrochemicals giant Braskem SA (with a 65 percent share) and Mexican conglomerate Grupo Idesa SA de CV (35 percent) agreed to build the complex in mid-February.
The project will include an ethylene cracker and three polymerization plants and is scheduled to begin operating in 2015. Pemex Gas y Petroquímica Basica, a subsidiary of state oil company Petróleos Mexicanos (Pemex), will supply the cracker's feedstock.
De la Tijera presented his company's annual report on the state of the Mexican plastics industry in late March.
Titled “Perspectivas 2010,” it was sponsored by Mexican resin distributor Polímero y Materias Primas Internacionales SA de CV (Polymat) of Mexico City.
“Private consumption will not grow much, due to household spending restrictions, plus low consumer confidence and what is still a high level of unemployment,” he said in his presentation at an event in the Mexican capital.
“Exports of manufactured goods will account for the demand in plastic components and packaging in that market [sector],” while “investment in machinery and auxiliary equipment may pick up … although it won't reach the levels of 2004-06,” he added.
“It's highly likely that imports of plastic will increase again, putting pressure once more on [Mexican] processors' market share,” he warned.
According to de la Tijera, 37 percent of the 4.1 billion pounds of plastics imported by Mexico in 2009 was in the form of bottles and containers; 31 percent was film, tapes and sheet; 8.1 percent pipes and tubing; and 20.1 percent a variety of other plastics.
On the other hand, he said, Mexico exported almost 2 billion pounds of plastics, including bottles and containers (32 percent) waste (31.1 percent); film, tape and sheet (13.3 percent); tableware (3.3 percent); and other plastics (10.9 percent).
In 2009, he said, net profit margins in the processing of almost all plastic products increased. “We had the combined effect of a drop in raw material prices and an increase in the [dollar/peso] exchange rate, which favored manufacturers.
“In 2010, the effect will be the reverse: a rise in raw material prices and a stable exchange rate. A result could be a reduction in net processing profit margins.”
De la Tijera said 70 percent of Mexico's predicted PE deficit of 2.65 billion pounds by 2014 will be covered once Ethylene XXI is operational.
“[The participation of] Braskem and Idesa is a guarantee that the project will meet its deadlines,” he said.
Copyright 2010 Crain Communications Inc. All Rights Reserved.
