How was 2021 for Grupo Idesa’s petrochemicals businesses?

Fortunately for Grupo Idesa in all of its Business Units, including distribution and logistics, 2021 was an excellent year. Our petrochemical business unit  in particular had an extraordinary year compared to 2020 and 2019. There was a rebound in demand from industries such as construction in the US and other industries, and high oil prices led to price , which helped improve margins for certain products and segments.

What can petrochemical producers in Mexico can do to mitigate the current lack of feedstock from Pemex in the short and medium term?

The feedstock supply in Mexico from Pemex has suffered for many years. In the short term, the industry needs to continue exploring new logistics routes and mechanisms, in order to have a more reliable supply chain in North America. The winter storm in Texas in early 2021 made companies rethink their supply chains, moving towards a more regional version of globalization. The flow of products and raw materials around the world will continue, but companies should pay more attention to ensure a reliable supply that allows them to continue production without being overly reliant on one source, low cost it’s not always the best option.

In the medium to long term, the petrochemical industry participants need to find a way to work together with the government to be able to improve Pemex’s operations at their different gas processing units and their petrochemical sites. Pemex has good  assets, there is a lot of room to make upgrades and also improvements on their maintenance programs which will increase operational reliability. We have made several proposal, but it has been very difficult to have follow up meetings to be able to conclude an initial plan. The private sector can help financially or through many other mechanisms, if Pemex intends to allocate its funds on priorities such as E&P. We want to work together in order for Mexico to have a better situation.

Which areas of Mexico’s chemical industry supply chain do you think would be the most worthwhile targets for investment?

One area which is worth exploring for public, private or a mix of both investments is storage. When there is a lack of local supply, product needs to come from someplace else. In the case of Mexico, this is primarily from the US, via railways, trucks and vessels. Most of these require storage. For instance, vessels offload material into a port, which is then often moved to an intermediate tank inland before reaching its final destination. Logistics is a broad topic which requires long-term investments, be it storage, trucking or distribution, but it is an area that will benefit numerous industries.

Do you think consolidation in the chemical distribution sector is necessary?

I definitely think consolidation in the distribution segment is the way to move forward, to be able to implement best industry standards and practices. This is also linked to sustainability, as consolidation will lead to more professional and responsible distribution. The local distributors are moving towards that direction, a  consolidation led by companies such as Alveg (Idesa’s distribution arm) can raise the level of the segment and make it  happen faster.

Which of Grupo Idesa’s four petrochemicals companies – Petramin, Síntesis Orgánicas, Novidesa and Idesa – do you see as having strong potential for growth in 2022?

In two of our companies – Síntesis Orgánicas, phthalic anhydride, and Petramin, alkylamines – we see strong demand in 2022, but do not have much room to grow, as we are over 96% capacity and utilization rate is ver high. Novidesa EPS (Expanded Polystyrene Foam) is one of the companies we see strong potential for growth in 2022 in many sectors, including Mexican and US construction and packaging. For Idesa’s ethanolamines business we see strong demand, but depends on Pemex for the supply of ethylene oxide. If we receive 100% of the volume in our contract or more we will be able to increase production and sales, locally and exports.

What is your vision for the evolution of Grupo Idesa from a sustainability standpoint?

Grupo Idesa has always been committed to the environment – Idesa was one of the founders of the Responsible Care program in Mexio. Now we have a broader spectrum regarding sustainability, which goes beyond the regulations and laws in Mexico. In 2021, Grupo Idesa produced its first ESG report, which will be launched in February 2022 and will be our baseline for future objectives.

Looking ahead, the two main pillars of Grupo Idesa’s evolution will be sustainability and digital transformation. Even though petrochemical companies are often at the avant-garde of operational technology, I believe there is a lot of room for improvement and investments  in digitalization throughout the chemical supply chain, to become more efficient. Greater efficiency will allow companies to cut emissions and meet sustainability targets in the future.