| Latin American petrochemical industry has been impacted by the global economic recession, with some countries facing a deeper crisis and a slower recovery. Though the lowest point of the global recession has been passed, recovery seems to be a long drawn process. Brazil, Chile, Colombia and Peru fared better than other countries in the region during the crisis, so recovery in these countries is expected to start earlier. Peru may lead, while Colombia, with its persistent guerrilla problem, may be the laggard. Brazil and Chile, thanks to their long-term responsible economic policies will form the solid core according to Jorge Buhler-Vidal in ICIS. Brazil seems set to get out of the crisis by taking advantage of the financial environment to implement ambitious growth plans, probably leading the Latin American petrochemical industry out of the economic crisis. Because of its’ energy supply capabilities, Venezuela will suffer less than many countries, although their dependency on fossil fuel exports will make them vulnerable. Erratic economic policies will cause more problems for Argentina, Bolivia and Ecuador, with recovery expected to take longer. But Argentina, because of its agricultural strength and commercial ties to Brazil, may lead this weak group out of the recovery. Mexico, because of its strong interdependence with the US, will be dragged down with its northern neighbour and recovery will take even longer. From a global perspective, the Latin America and Caribbean region continues to be the most active area for petrochemical projects after Asia and the Middle East, with growth stirred by Brazil’s Braskem and Petrobras. Petrobras and Braskem have very ambitious objectives. Petrobras, the fourth-largest publicly traded corporation in the Americas, plans to be among the world's five largest integrated energy companies. Braskem, the third-largest resins producer in the Americas (after US-based Dow Chemical and Dutch giant LyondellBasell), expects to be among the world's top five petrochemical companies by enterprise value by 2020. Braskem is looking to acquire polyethylene (PE) and polypropylene (PP) assets in the US. Petroquimica Triunfo has been incorporated into Braskem consolidation of petrochemical firm Quattor is underway, and Braskem and Quattor are now studying a strategic alliance. A combined Braskem/Quattor would become Brazil’s sole PP and PE producer. The economic outlook for Brazil is among the most positive for the region. The economy appears to have stabilized and has started to improve. Demand from China, the success of tax reductions for autos and consumer appliances, and the huge promise of Petrobras's pre-salt hydrocarbons program, have inspired confidence. Braskem is building its "green" PE facility, processing sugar cane ethanol to supply feedstock to an existing plant at the Triunfo complex by the end of 2010. The Quattor olefins expansion at the former Petroquimica Uniao (PQU) site is expected to be completed by the end of the year. The project will increase ethylene capacity from 500,000 tpa to 700,000 tpa. The new 230,000 tpa PE unit was completed in February and is awaiting the available ethylene. The ethylene expansion project was originally scheduled to be finished in 2007, and expected to cost US$450 mln rather than the current estimated US$1.2 bln. Meanwhile, Petrobras is keeping to the timeline for its Comperj project, the largest single petrochemical investment in its history, at a budgeted $8.5 bln. It is expected to process 150,000 bpd of heavy oil from the Campos Basin by 2012, producing olefins and downstream products such as PE, PP, purified terephthalic acid (PTA), polyethylene terephthalate (PET), monoethylene glycol (MEG) and styrene. For many years the potential for Latin America's petrochemical players to rank among the world's leaders has been thwarted by seemingly complex and impenetrable rules and political uncertainty. This has made it difficult for producers, both local and those from outside the region, to develop meaningful and cost-effective production facilities. However, in recent years political and economic stability has come to many of the regions' countries, and with that a desire to develop industries and generate wealth. Brazil is considered to be the Latin American country setting the pace in terms of the development of petrochemical capacity and new international alliances. New oil and gas discoveries have put the petrochemical sector and the country on a path toward strong growth and development. According to a study published by Business Monitor International (BMI), called "Brazil Petrochemical Report Q2 2010", the strong performance of private consumption throughout the downturn has helped Brazil's petrochemical market. A government stimulus plan aimed at the automotive, construction and consumer goods sector has mitigated the effects of the external market downturn. BMI believes that restocking and a modest recovery in demand both domestic and external markets should help lift [the] capacity utilisation rate to 90% during 2010, raising output by around 10% compared with an estimated -5% in 2009. But uncertainties remain and margins will be placed under pressure by increased global capacities as new plants start up in the Middle East and Asia. There maybe uncertainty, but Brazil is not holding back on developing its petrochemical sector. During 2008 local company Petrobras announced it was building a petrochemical complex in the nation. The project is said to be the single largest petrochemical investment in the company's history. Known as Comperj (Complexo Petroquimico do Rio de Janeiro), the planned facilities are set to produce 1.3 mln tpa of ethylene, 880,000 tpa propane, 600,000 tpa benzene, 700,000 tpa paraxylene and 157,000 tpa butadiene. Downstream units will also produce a range of materials including 500,000 tpa styrene, 600,000 tpa ethylene glycol, 800,000 tpa polyethylene and 600,000 tpa of polyethylene terephthalate. The US$8.5 bln complex is slated for completion during 2013. Petrobras says that with the Comperj in place, Brazil will be able to reduce its import requirements, saving the country some US$2 bln in foreign exchange and US$200 mln in taxes. The Brazilian recession now over, but robust performance of private consumption throughout the cyclical downturn has helped sustain the domestic petrochemicals market. A government stimulus plan aimed at the automotive, construction and consumer goods industries has mitigated the effects of an external market downturn. BMI believes that restocking and a modest recovery in demand in both domestic and external markets should help lift capacity utilisation rates to 90% in 2010, raising output by around 10% compared with an estimated -5% in 2009. But uncertainties remain and margins will be placed under pressure by increased global capacities, as new plants start up in the Middle East and Asia. Brazil places third in BMI’s Americas Petrochemicals Business Environment Rankings with a composite score of 64.2 points, up 0.1 points from the previous quarter due to improved country risk scores. Brazil is 7.6 points ahead of Mexico and 14.7 points behind Canada. Venezuela's new petrochemical law, which went into effect in July, only allows private companies to hold up to 50% of state-private companies. The start-up of the two Braskem/Pequiven joint ventures (JVs) has been delayed. Propilsur, the future PP producer, will start up in early 2013, rather than in 2011. Polimerica, the future PE producer, will start up in 2014, rather than in 2013. The delayed start-ups are to coincide with the expected upswing in petrochemical sales by 2013. Mexican chemical producers Alpek, IDESA, Mexichem, along with Brazil's Braskem are attempting to secure feedstocks from state energy firm PEMEX at competitive prices with an assurance of continuous supply for the US$1 bln Ethylene XXI cracker and downstream plants planned for the Gulf coast. The project has a tentative 2014 start-up date. The Braskem, Petrobras and Petroperu project to build a petrochemical complex in Peru is being delayed. The initial start-up date of 2014-2015 has been pushed to 2016. The project to produce ethylene and 700,000-1.2 mln tpa of PE requires the availability of 40 mln ft3 (1.1 mln m3) of ethane-rich natural gas to become viable, which is only expected to happen by 2016. The PetroPeru and Petrobras US$1bln, 750,000 tpa ammonia project also has been delayed because of a lack of feedstock.
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