Which segments of Mexico’s chemical sector were the best performers in 2021?

The sector which saw the most growth in 2021 was lubricants, and we expect this growth path to continue in 2022. The industrial gas segment grew by 12.3% due to increased demands from various industries such as oil and gas.

What are the main themes currently impacting Mexico’s chemical industry?

There are two main themes impacting Mexico’s chemical industry, the first being Covid. Markets that were affected by the pandemic in 2020 have not yet completely recovered, however, production has increased, and we have reached levels similar to 2019. We were fortunate that the chemical industry was considered essential, but not all segments of the economy were deemed critical, resulting in great impacts on demand. Figures from October 2021 show a production decrease of 1.4%, but we expect this figure to rise in 2022.

The other major aspect impacting Mexico’s chemical industry is the lack of raw materials supplied by Pemex. There is a shortage of ammonia, which is extremely important for our fertilizer sector, as well as all the derivatives of ethylene. At the moment, the Mexican chemical industry is currently producing at 60% capacity, so ANIQ is working closely with the government and Pemex to increase production to be able to sufficiently supply market demands.

How could public/private partnerships, such as Braskem Idesa’s announcement to build an ethane import terminal with Pemex, improve the petrochemical landscape in Mexico?

The new Braskem Idesa and Pemex investment will significantly increase ethane and ethylene supply in Mexico. However, construction of the required infrastructure will only be finished in two years, and in the meantime, companies must look at the most cost-effective ways of importing feedstock where possible.

Mexico currently imports around 75% of its petrochemicals. Approximately half of these imports come from the US, and we are developing infrastructure to be more competitive in importing these materials, such as increasing port infrastructure. The chemical industry is also able to use gas provided by the new underwater pipeline that connects Houston with Tuxpan, Veracruz.

The price of fertilizers has risen to levels not seen for many years. What potential does Mexico have to expand its production?

The only ammonia producer in Mexico is Pemex. Of Pemex’s three production facilities for ammonia, only one is currently active. Currently, most of the ammonia required by the private industry is being imported. The challenge is that if you have to import, logistics costs increase and you then become less competitive.

To what extent could the proposed electricity reform put forward by the Mexican government impact the country’s chemical sector?

ANIQ did a survey with its members to establish the impact the electricity reform could have on the Mexican chemical sector. One of the proposals of the reform is that the national electricity producer, CFE (Federal Electricity Commission), should hold 56% of total production capacity. Today, CFE only holds 40%. This change would impact the chemical industry by over 2 billion Pesos, as the electricity the industry is consuming is cheaper than the electricity that would be bought from the CFE under the current reform terms. Secondly, the CFE generates power from less competitive sources than the power currently being generated in the chemical industry. This change of source would represent another 1 billion Pesos impact.

Approximately 70% of the Mexican chemical production is based in Tamaulipas, Veracruz and Nuevo Leon. If the bill were to be passed in its current form, it would cause a tremendous impact to the economies of these states. The government wants to pass the bill by April 2022, but we hope to enter into dialogue with them to make the reform less aggressive.

Can you elaborate on how ANIQ is showcasing its sustainability initiatives?

ANIQ’s 2021 sustainability report was launched in November 2021 and aims to highlight what the chemical industry has done over the past years to work towards a better future. We are also currently in the process of producing a special report focused on the circular economy. In November 2021, we opened a virtual museum, which showcases the industry’s sustainability efforts, specifically with regard to plastics. Through these platforms we want to change public perspectives and demonstrate the benefits of the chemical sector and contributions the industry is making towards a better world.