October 2009 Archives

With all the world's attention focused on Asia and its booming economic growth driven by China and India, Latin America tends to get overlooked. But that would be a big mistake, as the region is making significant strides towards becoming an industrial powerhouse.

The Latin American chemical industry has taken its lumps in the global recession, but will emerge even stronger if the right investment opportunities are pursued.

The region is rich in natural resources, from oil and gas, iron ore and lithium to an agricultural bounty that can provide the basis for a burgeoning biofuels industry. Relative political stability over the years has provided a firm platform for economic growth.

This opportunity cannot be squandered - the time to invest is now! On the chemical front, Brazil is leading the way with several large petrochemical expansions by state-operated energy and chemical giant Petrobras, and chemical firms Braskem and Quattor (who are also studying a strategic alliance or merger).

Mexico, which is hosting the Latin American Petrochemical and Chemical Association's (APLA) 29th annual meeting in its capital from November 7-10, has the opportunity to finally get a major petrochemical project off the ground with its Ethylene XXI venture.

We eagerly await news from the meeting. Look for the November 2 issue of ICIS Chemical Business featuring Latin America.

Image: 3FL

Few have been hit harder by the global financial and economic crisis than Japan. Its export-based economy heavily exposed to automotive and electronic goods came under severe pressure and challenges persist.

However, this economic tsunami will put a charge into the pace of structural reform - it is already happening in Japan's chemical industry with massive restructuring involving plant shutdowns, and a flurry of joint ventures and alliances.

Mergers and acquisitions, while likely to continue on a limited scale, are not the answer to the Japanese chemical industry's structural issues. Rather Japan is ready to begin a new era of strategic alliances to access feedstocks and leverage technologies.

Japanese chemical M&A activity has slowed considerably in recent years, with 10 deals over $25m in size involving a Japanese buyer or seller completed in 2006, four in 2008 and one in the first half of 2009, according to New York-based investment bank Young & Partners.

However, joint ventures and alliances are picking up. In August, Mitsubishi Rayon signed a $1bn JV deal with Saudi Arabia's SABIC to produce methyl methacrylate (MMA) and polymethyl methacrylate (PMMA) in Saudi Arabia for the automotive and electronics industries.

Mitsubishi Rayon also in September formed an alliance with US-based Cytec industries to develop carbon fiber composites for the next generation of aircraft.

But there could be some interesting M&A deals to come. Mitsubishi Rayon, which completed its $1.6bn acquisition of UK-based MMA producer Lucite International, may itself be the target of an acquirer. Rumors abounded this past summer that the company was in talks to be acquired by Japan's chemical leader Mitsubishi Chemical for up to $2bn.

With all the exciting changes in this industry, we are delighted to present the October 26 special issue of ICIS Chemical Business with our esteemed partner, The Chemical Daily, of Japan, whose editors provide invaluable insight into this market.

Photo credit: Syntagma Media