BMI View: Cheaper oil has lowered the cost of naphtha, Braskem's main raw material, thereby improving competitiveness. However, t he Brazilian petrochemicals industry still endured one of the worst years in two decades in 2015 due to the domestic economic recession. Recessionary trends are expected to continue in 2016, severely affecting petrochemicals end markets. Margins will be determined by success in reducing electricity costs and the price of oil, which has a direct bearing on the cost of naphtha. The naphtha-ethane price differential will have a major impact on Brazil's ability to compete with new ethane-based production in the US .
Chemicals accounted for 24% of imports and 7% of exports in the January-April 2016 period. The chemicals trade deficit reached USD6.4bn in the first four months of 2016, down 18.4% y-o-y. Imports fell 14.6% y-o-y to USD10.2bn while exports fell 7.5% to USD3.8bn. In the 12 months to April 2016 at USD24bn, the lowest level since 2010 when it fell to USD20.6bn. Thermoplastic resins exports rose 39.2% y-o-y to USD766.8mn in the first four months of the year, while fertilisers dropped 3.2% y-o-y to USD1.5bn.
In terms of end markets, the domestic market will contract. We remain bearish on the country's vehicle production outlook in 2016 as domestic sales prospects remain weak and worker dissatisfaction over working hours, pay and lay-offs leads to further industrial disputes and production cutbacks. As a major petrochemicals consumer, through the use of polymers and rubber in fittings and trimmings, the industry's decline is a major loss for the petrochemicals market. Brazil's construction sector will remain in recession in 2016, which will negatively affect construction-related polymers, particularly polyvinyl chloride.
Petrobras indicated that it requires an additional USD5.3bn to complete the troubled Comperj project, including USD2.8bn for the refinery and USD2.5bn for the natural gas processing unit. Originally budgeted at USD6.1bn, the complex is now expected to cost USD19.6bn. In March 2016, it was said the project would be completed in 2023, 15 years after construction began.
Brazil remains in third place in our Americas Risk/Reward Index ranking, but its score has fallen 0.8 points this quarter due to the deteriorating market position, putting it at level with Mexico.
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.