Mexico petchems could have more opportunities under Sheinbaum amid nearshoring – Braskem Idesa exec

LONDON (ICIS)–Mexican petrochemicals have much to gain under President-Elect Claudia Sheinbaum as the country taps into the nearshoring trend, which will require large public and private investments, according to an executive at polymers producer Braskem Idesa.

Sergio Plata, head of institutional relations and communications at the mostly polyethylene (PE) producer, added that nearshoring – North American companies bringing back to the region production facilities – will require a large country effort, which the public sector alone now dominates the energy sector, will not be able to provide.

Plata added that the first signs from Sheinbaum towards chemicals were encouraging: even as President-Elect, she has already visited the petrochemicals production hub in the state of Veracruz – the largest in the country. In it, she mentioned specific industry issues such as supply of certain raw materials which were very much welcomed by executives.

Last week, ICIS published the first part of this interview, in which Plata said supply of ethane from Mexico’s state-owned crude oil major Pemex had stabilized after a renegotiation of the contract’s terms, although he added global PE market remained in the doldrums and a recovery may not arrive until the second half of 2025.

Braskem Idesa operates the Ethylene XXI complex in Coatzacoalcos, south of the industrial state of Veracruz, which has capacity to produce 1.05 million tonnes/year of ethylene and downstream capacities of 750,000 tonnes/year for high-density polyethylene (HDPE) and 300,000 tonnes/year for low-density polyethylene (LDPE).

Braskem Idesa is a joint venture made up of Brazil’s polymers major Braskem (75%) and Mexican chemical producer Grupo Idesa (25%).

WHAT SORT OF PRESIDENT SHE WILL BE
Sheinbaum won an overwhelming majority in the Presidential election in June, with 60% of the vote, and her party Morena achieved a ‘supermajority’ in parliament of two-thirds which initially spooked financial markets and brought the Mexican peso down.

Financial analysts have warned that, for Mexico to tap into the nearshoring trend, its infrastructure – transport but also aged electricity transmission lines – will need to be upgraded during the remaining of this decade.

That effort, most analysts agree, will only be possible with large sums of private investment, so the state-owned electricity utility CFE may need to give some way to private players.

Equally, during Andres Manuel Lopez Obrador’s term, Mexico’s emissions rose, in opposition to the country’s commitments agreed in the 2015 Paris Accord and later enshrined into its domestic law.

Lopez Obrador handpicked Sheinbaum to succeed him. Despite not being that apart generationally – he is 70, she is 62 – the President-Elect is a climate scientist who started her career in environmental roles, and most analysts think she may run free from her successor – by personal choice or forced by the circumstances – in issues like climate, if she wants to keep Mexico as a respected economy which fulfils its commitments.

“I think she has a very clear vision in this regard – she knows the commitments [Mexico adhered to]. Something we are liking a lot is the appointments she is making – people with experience to work in the departments they are being appointed to: they have the necessary technical knowledge,” said Plata.

“We have also seen her approaching the private sector and that, without a doubt, for us as an industry that is a very good start. In those meetings, our concerns about compliance with regulations have been raised. Something is very clear: to grasp the opportunities in nearshoring, collaboration with private sector is essential to bring real benefits to all Mexicans.”

Plata said that, while Sheinbaum has not met Braskem Idesa yet, she has had a busy schedule meeting with industrialists, including with the country’s chemicals trade group Aniq as well as the Veracruz industrial trade group, which Plata presides.

“When she visited the south of Veracruz, she talked about reactivating the petrochemical industry, and talked about very specific issues that the industry is worried about, such production of ethane, of ethylene, of ammonia: things that sounded very good to us,” said Plata.

MEXICO, VENEZUELA COMPARISONS
He was asked if, given Morena’s ‘supermajority’ in parliament, Mexico could become a new Venezuela – when the governing party takes over all resorts of power and the country stops being a democracy worth the name.

“I really believe that her vision is constructive, and she intends to work with the private sector so her Administration can work for everyone. We will have to see what decisions she takes along the way. For instance, she has spoken many times about the interoceanic corridor [a project to link Mexico’s east and west coasts by water],” said Plata.

“Precisely, the promotion of the corridor has at its base the chemicals and the petrochemicals industries, because one of the objectives of the corridor is to take advantage of the raw materials in the area, which would benefit petrochemicals but also agriculture, for instance, and give added value. We see plenty of opportunities there.”

Front page picture: Braskem Idesa’s facilities in Coatzacoalcos
Source: Braskem Idesa

Interview article by Jonathan Lopez