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New Market Research Report: Brazil Petrochemicals Report Q1 2013

New Energy market report from Business Monitor International: "Brazil Petrochemicals Report Q1 2013"


Boston, MA -- (SBWIRE) -- 02/23/2013 -- The Q113 Brazil Petrochemicals report examines the extent to which the domestic industry will benefit from the expected recovery in demand in 2013 in the context of external competitiveness. We also examine the ways in which Brazil is attempting to stimulate industrial growth in the chemicals segment, which has taken a hit because of the strong real and high naphtha feedstock costs. The report also analyses the growth and risk management strategies being employed by the leading players in the Brazilian petrochemicals sector, as they seek to maximise the tremendous growth opportunities on offer in the local market.

A slowdown in the Brazilian economy is impacting the local naphtha-based petrochemicals industry, which is struggling to compete with foreign imports. The situation was exacerbated in 2012 when Brazil became a net importer of oil, making it more vulnerable to external prices and prompting an influx of cheaper imports. In 9M12, processed plastic production fell 1.3% y-o-y, although apparent consumption in the industry grew 6% over the period. Higher rates of consumption led to a 20.4% rise in the trade deficit of processed plastic to US$1.6bn, largely due to the deterioration in the competitiveness in the national industry. This has a number of causes, including the fragmentation of the plastic processing sector and the relatively high cost of Brazilian petrochemicals due to reliance on naphtha feedstock, high electricity and labour costs and the strength of the real, although this last factor eased in H212.

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Key views in the sector include:

- BMI estimates that polyethylene (PE) and polypropylene (PP) capacity will grow by up to 5% over 2013, compared to 1% and 3% respectively in 2012, driven by the country's automotive, consumer goods and durable goods segments.
- Based on BMI's core scenario of 2.5% industrial growth and 3.7% GDP growth in 2013, up from -2.4% and 1.8% in 2012, respectively, we believe polyolefins consumption should exhibit a strong recovery over the coming quarters. However, the US is likely to be the chief beneficiary of the expected recovery in the Brazilian petrochemicals market in 2013 due to cost advantages. - Growing volumes of imported PE from the US could threaten the Brazilian industry by lowering domestic demand for ethylene, leading to reduced cracker output and in turn tightening derivative supplies.
- Investment continues to be healthy with new polyvinyl chloride (PVC) and butadiene capacity coming online in 2012. Braskem plans to start up the ethane-fed 1.2mn tonnes per annum (tpa) steam cracker in 2017, feeding downstream units for polyolefins, styrene and monoethylene glycol (MEG).

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