Director General, Braskem Idesa
Director General, Grupo PetroquÃÂmico BETA
ROBERT BISCHOFF Generally when GDP grows by 2% or 3%, demand for polyethylene grows 1.5 times more. GDP growth and per capita income are the main drivers, because the key applications for such products are related to everyday objects; almost every single piece of packaging is made of polyethylene. If people have more money they will buy more products. These are the key drivers of plastics. Considering the economics of Mexico, we foresee an average annual growth rate of 4% to 4.5%. That is an important level of growth.
RAÃÅ¡L BAZ HARVILL It used to be that oil and gas were coupled in terms of price, but with the advent of technology enabling the release of shale gas, they have become more independent. Here in Mexico, we have an excess production of ethane. Ethane that isn’t used for the production of petrochemicals is turned into natural gas for domestic use. The result is that the price of natural ethane is equal to the price of natural gas, which is around $3.5 per million BTU. We have a very competitive base compared to someone who has a naphtha cracker and is paying around $16 per million BTU.
RB This is the largest petrochemical industrial project in the Americas in the past two decades; by far the largest project the company has ever undertaken. We have participated in larger, integrated complexes in Brazil, but they were built in two separate stages. In the past, to have 1.2 million tons of production, we had to start with half of that capacity and then wait eight to 10 years until the market grew to implement the second stage. To have one line and one single project producing this much is clearly our largest endeavor, and represents a very important investment for Braksem Idesa and for Mexico.
RBH PEMEX supplies the overwhelming majority of raw materials for the petrochemical industry, and PEMEX PetroquÃÂmica, which produces those materials, has not significantly expanded in the last few years. In the past 11 years, its only new projects have been a polyethylene plant in Morelos and a styrene plant in La Cangrejera, which is scheduled to open in early 2012. In the meantime it has shut other plants down, and so the source of raw materials is not there. That’s the problem.
RB Low-density polyethylene is generally produced as a film, composing any flexible bag imaginable. High-density polyethylene is also used for flexible bags. For example, supermarket shopping bags are made of high-density plastics, but it is more commonly used in rigid packaging, like yogurt containers and piping applications (excluding PVC). You cannot differentiate the two by sight; the differentiation is determined by the final application.
RBH There’s going to be an expansion of ethylene oxide production by PEMEX, and we want to make the most of that. We have the capability to manufacture from commodities to specialties. When it comes to raw materials, you have to use them or lose them. Our plan is to buy as much ethylene oxide as possible so as to be able to manufacture specialties in the market. We are a very research-oriented company with an excellent R&D laboratory—one of the best in Mexico—and we dedicate 4% of annual revenue to R&D. We’ve been awarded several grants from Conacyt. All of our plant managers are required to have an R&D background, so we can go from the lab to full-scale production in seven days. That’s usually not easy. Our objective is to ultimately become the major player in the specialty field in Mexico.
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