"COVID-19 has been a global crisis, affecting all countries in different ways, but polyethylene is a very flexible product serving different sectors of the economy. It is a very relevant product for the food packaging, hygiene and medical segments, which have been doing very well, while demand from construction and automotive has been hit."

Stefan Lepecki

CEO, BRASKEM IDESA

August 11, 2020

 

 

What was the state of the polyethylene market before COVID-19, and how have you adapted to the pandemic?

Before COVID-19 we were already experiencing a low cycle in the petrochemicals industry due to a large amount of new investments, mainly in the USA and Asia. Globally, new capacity growth during 2019 was higher than demand growth, so that narrowed the spreads between ethane prices and polyethylene prices, directly impacting our business. Luckily, Braskem Idesa is a very competitive player; we are a low cost producer with a world-scale complex, and we have flexibility to take advantage of Mexico’s strategic location and its free trade agreements with other countries. We export to more than 40 countries and, as of August 2020, polyethylene prices have already recovered, increasing price spreads as well.

COVID-19 has been a global crisis, affecting all countries in different ways, but polyethylene is a very flexible product serving different sectors of the economy. It is a very relevant product for the food packaging, hygiene and medical segments, which have been doing very well, while demand from construction and automotive has been hit. It is very difficult to predict how the economies will recover, but we continue to be optimistic with respects to our capabilities and the advantages of our polyethylene.

How are you complementing Pemex’s ethane supply with imports to increase utilization rates?

At Etileno XXI we have a production capacity of 1,000,050 metric tons of polyethylene per year (mt/y). To reach that rate, we need 66,000 barrels per day of ethane (bpd). Previously, we were only receiving 74% of that amount from Pemex, so this year we started a temporary ‘fast-track’ initiative to import ethane. The ethane arrives in a cryogenic ship to a temporary facility in the port of Coatzacoalcos and we transfer the ethane to a carousel of trucks between the harbor and the Braskem Idesa facility. We are now importing 10,000 bpd and we plan to increase that to reach full capacity at the plant. Because Pemex’s recovery will take time, the long-term solution should be a large-scale import terminal, and we expect to implement this in 2.5 years. Through ANIQ, we maintain a dialogue with the government and with Pemex to design structural solutions like this for the country’s petrochemicals industry.

How has COVID-19 changed the day-to-day dynamics at Braskem Idesa?

First and foremost, we had to protect our collaborators. Very quickly, we sent our office people home to work remotely, and we plan to continue working like this for a while. At the industrial site, we reduced the number of employees and contractors, with a very strong focus on safety and production. We are very happy with the results we are having on both fronts.

How has Braskem Idesa’s been supporting the Coatzacoalcos region during the pandemic?

There are many large companies supporting Mexico, but we feel our responsibility is with the Coatzacoalcos region. Moreover, our approach is that we do not want to simply donate money, but provide tailor-made programs. For that, we are in close touch with the population and the authorities to really understand their needs and support in the best manner possible. We operate in a poor region so there are not enough hospitals to deal with COVID-19, thus we decided to strengthen medical support in the region with new doctors and nurses. We have also supported hospitals with infrastructure and with the donation of materials. We also have education programs, and we have run some support programs together with APLA and our clients as well.

How do perceive APLA’s role over the last 40 years in providing a framework of collaboration for the industry?

APLA plays a key role, not only to understand dynamics in the chemicals industry in Latin America, but also to build relationships. The initial idea by Braskem and Grupo Idesa to work together and build the Etileno XXI plant in Mexico came up during an APLA meeting. So, APLA’s 40th anniversary and Braskem Idesa’s 10th anniversary are very much connected.

Would you like to add a final message?

We are in a difficult time for the industry and 2021 will probably be very challenging as we will see the real impact of the pandemic in the economy. The role of the petrochemical industry is clear: we support society with our products and services and, as an industry, we need to strengthen our actions toward the circular economy. Besides, with the pandemic situation, our social development initiatives are now more relevant than ever.

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