RIO DE JANEIRO, Brazil (ICIS)--Recessions and tight supplies of feedstock have led to a dearth of projects in Latin America, a consultant said on Sunday.
Among the major economies, the drought in projects could most likely end in Argentina, because the country could support a new plant and it may soon have enough feedstock, said Jorge Buhler-Vidal, director of Polyolefins Consulting on the sidelines of the annual meeting of the Latin American Petrochemical Association (APLA).
Argentina has reversed a multi-year decline in gas production. Production increased in 2016 for the first time since 2006, according to the Argentine Ministry of Energy and Minerals.
"Right now, it looks like the additional gas will be available reasonably soon, so I would expect that someone would be making an announcement," Buhler-Vidal said.
If the local producers do not pursue the project, companies outside of Argentina may do so instead, he said. "The raw material will be there and the market will be there, so it's a question of just doing it."
Brazil is just now emerging from one of its worst recession ever, under which GDP shrank by more than 3% each year in 2015 and 2016.
Given the magnitude of the recession, a good portion of the country's polyethylene (PE) had been exported.
As the political and economic situation improves, those exports could be diverted to satisfy domestic demand, Buhler-Vidal said.
Producers may also choose to debottleneck projects if demand continues to increase. These projects would be quick and relatively low cost, Buhler-Vidal said. "I don't think there will be additional greenfield plants being built in Brazil for quite a while, but rather using existing capacity and then doing debottlenecks."
In Mexico, the country has a large PE deficit, but it currently lacks the feedstock to run its own crackers, let alone add new plants to produce ethylene for new downstream resin capacity. "The main thing is the lack of ethane," Buhler-Vidal said.
The APLA annual meeting runs through Tuesday.
Interview article by Al Greenwood