APLA ´08: Brazil Q4 chem output to drop sharply

16 November 2008 14:53  [Source: ICIS news]

RIO DE JANEIRO (ICIS news)--Brazil’s fourth-quarter chemical output will drop sharply due to weaker demand and widespread inventory burning, a Brazilian producer said on Sunday.

“People are using up old inventories because of an expected reduction in local naphtha prices,” the source said on the sidelines of the 28th Latin American Petrochemical Annual Meeting (APLA) in Rio de Janeiro.

According to the source, state-run oil company Petrobras, which supplies naphtha to the local petrochemical industry, has not yet adjusted down its prices to reflect the latest plunge in international naphtha values.

“They [Petrobras] may reduce prices in December, depending on contracts,” the source said.

The producer said some downstream Brazilian companies were opting to cut operating rates or halt production altogether instead of buying raw material at current prices.

“And demand for chemicals in December is typically slower so it is unlikely that we will see any pick-up in activity before 2009,” the source said.

The producer said small chemical producers in Brazil were also hurting because of the latest squeeze in credit markets.

“If you are one of the big guys it is not as bad of a pinch because there are more [credit] options available,” the source said.

But the producer said large players in Brazil, including cracker operators, were not escaping completely unscathed.

“They are also said to be reducing their rates,” the source said.

The 28th edition of the conference opens on Sunday and ends on Tuesday.

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By: William Lemos
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