"In the past, we diversified into the fuel market with a company called Exxia. Today, we have the new specialties company, Ion."

Alfredo Ison

PRESIDENT, QUÍMICA DELTA

February 26, 2024

Can you update us on Química Delta’s activities over the past year?

In 2024 we will have our Química Delta’s 50th anniversary. It will be an important year because it highlighted how we have consolidated ourselves as the largest distributor in Mexico in petrochemicals, chemicals, and lubricants. We have been through a lot over the past 50 years. In 2016, Química Delta hired a general director who has helped to organize the company in a more professional and institutional way, enabling us to grow our market share. Another focus this year has been increasing the safety of our operations. We have been working together with a multidisciplinary team to reinforce our internal safety culture, including modifying processes and reducing operational risks within the plant. 

Química Delta also launched a new company dedicated to the sale of specialty chemicals called Ion Specialties. 

How has regulation been a challenge this year?

The most significant challenge this year was a new regulation which took effect in December 2022, which has to do with LDA permits at the ports where we operate. The government tried to block everything to do with the entrance of illegal fuels into the country, with the intention of ensuring that fuels do not avoid taxes. For fuels, a terminal requires volumetric controls, which ensure that every liter that enters and leaves is notified to the authorities, similar to an electronic invoice. This year, the government decided that many petrochemical products required volumetric controls. These caused complications for the importation of products. It was challenging to obtain the permits. The benefit is that those of us who do receive the permits gain market share. Nonetheless, the policy increases the complexity of importing petrochemicals.

In May of this year, we were able to resolve the situation, but it generated a supply problem in the market and made it challenging to import products into the national territory.  

How have petrochemicals performed in terms of price?

There was a disruption in supply chains after COVID. With the start of the war in Ukraine, the prices of petrochemicals went through the roof, which provided us with excellent revenues. However, inventories have increased, so now petrochemicals are selling at a lower price. Another issue is that clients, worried about the shortage of production and supply chains, had built up too much inventory, and now they are trying to reduce inventories which has led to a reduction of sales. However, lubricants are growing at the same pace as the Mexican economy, which has been growing in recent years. 

What sectors are growing?

We see growth in the automotive sector. It has had a boom in recent years, and in recent months we have broken production records. Tesla is coming to Mexico, and other brands will come and consolidate themselves here in the Mexican market. We are the country with the largest number of free trade agreements, facilitating exports from Mexico to these countries. The construction sector is mildly impacted by high interest rates, but success in the automotive area is compensating for this slowdown. 

What are Química Delta’s priorities?

A major focus of ours is diversification and consolidation. In the past, we diversified into the fuel market with a company called Exxia. Today, we have the new specialties company, Ion. And then, of course, we have Química Delta. These companies serve the same markets where we have expertise. For example, Ion and Delta both have the same markets in terms of rubber, plastic, paints and inks, but with completely different product offerings. Besides our diversification in terms of products, we have diversified our culture to attend markets in a different way, developing completely new but complementary businesses to consolidate our competitive position. 
Química Delta is strengthening our footprint in the north because we foresee an important growth with our new companies in that region. We are already present in Monterrey, Guadalajara, and in Mexico City. I also expect a boom for the south east of the country once the Interoceanic Corridor opens. The Panama Canal is having significant challenges with a lack of fresh water, generating tremendous queues of ships waiting to cross. Eventually, companies are going to set up in the south of Mexico where the new logistics corridor will be. We are looking in that direction to capture the opportunities that arise in the region. 

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