Fast Market Research recommends "Brazil Petrochemicals Report Q2 2014" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 04/11/2014 -- Producers claimed they are seeing benefits, with an increase in capacity utilisation expected in the short term and an increase in investment in the medium term. While tax cuts on raw material purchases should help competitiveness, they will be insufficient to resolve bottlenecks in the sector, according to BMI's latest Brazil Petrochemicals Report.
Domestic demand for thermoplastic resins, based on apparent consumption recorded a significant increase of 10.9% y-o-y to 6.5mn tonnes in 2013, according to the Brazilian Chemical Industry Association (Abiquim). While growth was strongly pro-cyclical, it came after three years of stagnation; between 2010 and 2013, consumption rose just 3.6% per annum. In spite of efforts to improve competitiveness, petrochemicals plant utilisation was increased by just one percentage point in 2013 to 81% and production rose by just 2.9%. Exports declined 13.1% y-o-y in 2013, even though the real began to weaken against the US dollar. However, output growth was above the 1.6% forecast by BMI as production began to climb towards the end of the year.
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- In the medium-term, the focus will be on the capacities planned for Comperj, which is set to begin operations in 2018. Capacities will include 1.2mn tpa of ethylene and 880,000tpa propylene capacity feeding units with capacities of 800,000tpa of polyethylene, 850,000tpa polypropylene and 600,000tpa of polyethylene terephthalate (PET) as well as a range of other derivatives. However, BMI cautions that the configurations could be changed when Braskem confirms the project in 2014, with the possibility of scaling back should projected costs of feedstock and market trends fail to justify some operations.
- BMI projects a rise in Brazilian petrochemicals consumption of 5% in 2014, up from 3% forecast in previous quarter due to improved economic fundamentals going forward. The strengthening trend will be assisted by the restocking trend in the chain, the strong inflow of imported resins benefiting from tax incentives and stronger performance in the agribusiness, automotive and infrastructural sectors.
- Brazil is third in BMI's Americas Petrochemicals Risk/Reward Ratings, with a composite score of 68.0 points, down 0.3 points since the previous quarter due to the decline in country risk caused by deteriorating long-term external risks. While it has a relatively large petrochemicals industry, Brazil's score is weighed down by a higher level of risk than most other countries in the region, with its long-term financial market risk a notable cause for concern, although the situation has improved recently. Brazil is 6.0 points ahead of Mexico and 10.5 points behind Canada.
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