Argentina Petrochemicals Report Q1 2012
Business Monitor International, November 2011, Pages: 49
Business Monitor International's Argentina Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Argentina's petrochemicals industry.
The Argentine petrochemicals industry is in competition with the energy sector for gas resources, with winter months seeing a slowdown in output, according to BMI’s latest Argentina Petrochemicals Report. This was true of the 2011 winter, when Argentine petrochemicals companies suffered from natural gas shortages that forced them to cut output. Nevertheless, for the whole of 2011, BMI estimates that Argentine chemicals output was up 3.5% y-o-y following 25% growth in 2010. The removal of tax subsidies and a slowdown in economic growth has limited consumer-led growth in plastic consumption.
BMI believes that Argentina will continue to lag Latin America's other major economies, which will, in turn, drag on its growth prospects over the medium term. In spite of feedstock issues, petrochemicals production has remained competitively priced, which should enable it to stand up to market volatility going forward. Access to gas supplies is crucial to sustaining and growing the Argentine petrochemicals industry.
Fortunately for Argentina, the country's gas prospects have risen substantially in the past year, as a result of rising investment in the country's Neuquén shale gas play. Argentina has the world's third-largest technically recoverable shale gas resources, with estimated gas-in-place of almost 22trn cubic metres.
This could transform the fortunes of the Argentine petrochemicals industry, although shale gas production is at least several years away and therefore Argentina will remain import-dependent in the short term. As such, LNG should plug the gap in the market over the medium term, offering the opportunity to sustain petrochemicals output at full capacity during peak periods of gas demand.
Whether the gas reserves can support extension of cracker facilities is a different matter. Electricity generation will remain the country’s overriding concern and BMI is doubtful that the government would wish to devote domestic shale resources to a worldscale cracker, at least at competitive prices. As such, BMI does not envisage any olefins or polyolefins output beyond existing capacities, including Dow Chemical’s 700,000tpa ethylene plants and 600,000tpa HDPE, LDPE and LLDPE facilities in Bahia Blanca. Nevertheless, stable year-round ethane feedstock supplies should limit the country’s imports of petrochemicals and support the investment environment in downstream industries.
The country’s combined ethylene plant capacity adds up to just one contemporary-sized cracker facility. Argentina also possesses 355,000tpa of propylene that feeds 310,000tpa of PP capacity. Total polyolefins capacity is just over 1.49mn tpa, including 636,000tpa of polyethylene capacity located at PBBPolisur’s complex in Bahía Blanca. Bahía Blanca is also the location of Solvay Indupa’s 220,000tpa PVC plant, which is fed by an associated 240,000tpa VCM plant. PET production capacity totals 245,000tpa.
Argentina also hosts three small-scale polystyrene plants with a combined capacity of just 81,500tpa. Benzene capacity of 140,000tpa supplies feedstock for the production of a number of aromatic hydrocarbon compounds, including ethylbenzene (185,000tpa), styrene monomer (160,000tpa) and toluene (170,000tpa). In the fertiliser sector, Argentina has capacities of 1mn tpa of ammonia and 1.31mn tpa of urea with Profertil dominating the sector.
Apart from TFEQ’s planned 547,000tpa ammonia plant at Tierra del Fuego, BMI does not expect any new capacity additions over the forecast period due to the country’s natural gas shortages and a relatively unfavourable investment climate. Investment will remain subdued until producers can secure their feedstock supplies in the long run. However, some expansion work on existing plants is likely, as suppliers would be keen to expand their operations, helped by the country’s improved credit rating.
Executive Summary
SWOT Analysis
Argentina Petrochemical Industry SWOT
Argentina Political SWOT
Argentina Economic SWOT
Argentina Business Environment SWOT
Global Petrochemicals Overview
Petrochemicals Market Overview
Table: World Ethylene Production By Country, 2011 And 2015 (‘000 tonnes capacity)
Financial Results
Table: Financial Results Of Major Petrochemicals Companies, 2010
Global Oil Products Price Outlook
Latin America Overview
Argentina Market Overview
Table: Argentina’s Olefins Facilities, 2009
Table: Argentina’s Polyolefins Facilities, 2009
Table: Argentina’s Aromatics Facilities, 2009
Table: Argentina’s Fertiliser Facilities, 2009
Market Structure
Table: Argentina Petrochemicals Sector – Cracker Capacity Data (‘000 tonnes)
Regulatory Structure
Industry Trends And Developments
Upstream Investment
Downstream Developments
Petrochemicals Business Environment
Limits To Potential Returns
Risks To Realisation Of Returns
Industry Forecast Scenario
Table: Argentina's Petrochemicals Sector, 2008-2015 ('000 tpa, unless otherwise stated)
Macroeconomic Outlook
Company Monitor
The Dow Chemical Company
Petrobras Energía Participaciones (PEPSA)
Repsol YPF
Solvay Indupa
BMI Methodology
How We Generate Our Industry Forecasts
Chemicals And Petrochemicals Industry
Cross Checks
Business Environment Ratings
Table: Petrochemicals Business Environment Indicators And Rationale
Weighting
- The Dow Chemical Company
- Petrobras Energía Participaciones (PEPSA)
- Repsol YPF
- Solvay Indupa
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