BMI View: The depreciation of the Brazilian real had a positive effect on the share of local petrochemicals production sold on the Brazilian market in 2016, leading to an increase in domestic output. Although growth is expected from 2017 with stronger economic growth, it will be tempered by the stabilisation and expected appreciation of the real. As such, the industry will lack the stimulus needed to significantly raise petrochemicals consumption to pre-recession levels. The industry will need to improve competitiveness if it is to survive going forward, which will entail maintaining low feedstock prices and ensuring an attractive business environment. Producers will be looking for greater political stability to ensure certainty.
The level of petrochemicals capacity utilisation stood at 80% in 9M16, one percentage point higher than in the same period in 2015. In the first nine months of 2016, the index of production increased by 3.5% y-o-y and domestic sales increased by 1.9% y-o-y. The installed capacity utilisation rate was 80%, one percentage point higher compared to 9M15. Consumption increased 3.4% y-o-y, reinforcing the improvement in the domestic economic environment. In terms of exports, there was a significant improvement with growth of 16.6% y-o-y, while imports grew 10.7%.
The industry has, however, seen a raft of project cancellations including the shelving of Petrobras' second refinery train at Comperj, which has also seen Braskem end the petrochemicals plan in the troubled mega-project. Styrolution and Braskem have also suspended a joint venture that would have built an acrylonitrile butadiene styrene and styrene acrylonitrile copolymers plant.
Improved feedstock flexibility is Braskem's main focus at Bahia with ethane use targeted to rise to up to 15%. This would be supplied by an export terminal at Mont Belvieu, Texas. Braskem also plans to double the capacity of its Duque de Caxias gas cracker in Rio de Janeiro to more than 1mn tpa with ethane feedstock supplied by Petrobras, which is developing Brazil's offshore pre-salt reserves. It is unclear whether there are plans to expand derivatives at the site, although BMI does not envisage developments on a scale of Comperj.
Total capacities over the next five years will include 4.2mn tpa of ethylene, 3.1mn tpa of propylene, 3.8mn tpa of polyethylene, 2.4mn tpa of polypropylene and 1.2mn tpa of polyvinyl chloride.
Brazil remains in third place in our Americas Risk/Reward Index ranking, with its score rising by 1.2 points to 64.5 points.
The Brazil Petrochemicals Report has been researched at source, and features BMI Research's market assessment and independent forecasts for key petrochemicals sub-sectors. The report also analyses the impact of regulatory changes, recent developments and the background macroeconomic outlook and features competitive landscapes comparing companies by products and services, sales, market share, investments, projects, partners and expansion strategies.
BMI's Brazil Petrochemicals Report provides industry professionals and strategists, sector analysts, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Brazilian petrochemicals industry.
- Benchmark BMI's independent petrochemicals industry forecasts to test other views - a key input for successful budgetary and planning in the Brazilian petrochemicals market.
- Target business opportunities and risks in the Brazilian petrochemicals sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Brazil.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis, covering the petrochemicals markets, regulatory changes, major investments, projects and company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the petrochemicals sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Energy: Oil production (‘000 b/d), oil consumption (‘000 b/d), net oil exports (‘000 b/d), gas production (bcm), gas consumption (bcm), net gas exports (bcm), oil refinery capacity (‘000 b/d).
- Petrochemicals: Ethylene capacity (‘000 tpa), ethylene production (‘000 tpa), ethylene consumption (‘000 tpa), polyethylene capacity (‘000 tpa), polypropylene capacity (‘000 tpa), polyvinyl chloride capacity (‘000 tpa), polyolefins consumption (‘000 tpa).
- Oil Products Prices: Price forecasts for all major oil-based products (USD/bbl) at major global energy trading hubs.
- Economic: Nominal GDP (USDbn), real GDP growth (%), GDP per capita (USD), population (mn), unemployment (%), exchange rate (against USD).
BMI’s Petrochemicals Risk Reward Index
BMI’s Risk Reward Indices provide investors (both corporate and financial) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Structure, size and value of the industry sector; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Industry Trends & Developments
Evaluation of company and sector-wide developments, including key projects (as well as expansion plans), latest company financial details and proposed international ventures.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Global & Regional Market Overview
Analysis of the key trends driving the global industry, including worldwide output/capacity and demand analysis across ethylene, polyethylene, polyvinyl chloride, polystyrene, polyethylene terephthalate and polypropylene. The regional analysis looks at the implications of local and global trends on specific company activity.
Sub-sectors covered by the Petrochemicals Reports include:
Oil & Gas, Oil Refining, Olefins (ethylene, propylene), Polyolefins (polyethylene, polypropylene), Polyvinyl Chloride, Polystyrene
Please note – not all country Reports cover all sub-sectors – see website for details.
The Petrochemicals Market Reports are based on a network of primary sources, such as multilateral organisations (ACC, APLA, Cefi c, ICCA, ICMA), national chambers of commerce and industry, national statistical offi ces, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.