Mexico’s biggest private petrochemical producers Alpek and Orbia have seen surging revenue so far in 2021 while state oil company Pemex continued to see its petrochemical production decline.

An Alpek plant in Mexico. Image courtesy of Alpek.

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Mexico City-based Orbia, known as Mexichem until it changed its name in 2019, has seen strong sales across most of its markets, most notably South America. The company operates in about 60 countries and its products include plastic pipes and polyvinyl chloride (PVC).

Monterrey-based Alpek is the biggest PET (polyethylene terephthalate) and PTA (purified terephthalic acid) producer in the Americas. It has seen record-high output at a time that coincided with rising demand as the world recovers from 2020 lockdowns.

Meantime, state oil company Pemex saw in early 2021 more of its long continued decline in petrochemical production. The country’s government has outlined goals for the next five years that include efforts to try to reverse declines and increase production, particularly of ethane and ethylene.

Orbia sees earnings soar

Orbia, formerly Mexichem, on April 28 posted $1.9 billion net revenue for the first quarter of 2021, or 18% more than last year thanks in part to strong PVC demand, the company said.

Orbia saw strong quarterly financial performance despite the lingering impacts of the global pandemic, and challenges resulting from extreme weather in the Gulf Coast region in February and raw material shortages, said Sameer Bharadwaj, Orbia’s CEO since Feb. 1.

PVC pricing reached historic highs in several markets due to strong global construction demand as well as constrained PVC and ethylene supplies triggered by adverse weather, the company reported.

South America led first-quarter revenue growth. Total first quarter South America’s revenue was $433 million, a 47% on-year increase.

The company’s North American revenue rose 8% to $580 million while the European revenue rose 19% to $668 million.

Orbia’s products include plastic pipes, which account for about a third of the company’s revenue. Its polymer division represents 35% of revenue and focuses on PVC. The company also has a specialty division.

Orbia’s modern history started in 1997 when an investor group headed by the Del Valle family acquired Grupo Industrial Camesa, later merging into Camesa. In 2003 Camesa raised its stake to full ownership of chemical company Mexichem and took the name. Mexichem then became Orbia in 2019.

Alpek boasts record volume

As for Monterrey-based Alpek, it posted on April 20 its first quarter 2021 results saying the period saw “record high first quarter volume.” It reached 1.2 million tons or a 4% on-year rise.

Alpek is owned by Grupo Alfa, also based in Monterrey, which traces its roots to the end of the 19th century. Alfa owns businesses that operate in diversified activities such as meat packaging and marketing; aluminum components for the auto industry production; as well as other divisions in oil industry and communication technology.

Alpek also raised its full-year guidance 20% on higher-than-expected margins and record volumes.

“Results were supported by the continued recovery of the global economy, which increased demand for several products, including PETAlpek, a polyester, plastics and chemical producer,” said company’s CEO Jose de Jesus.

“As a result of strong worldwide demand for petrochemical products, driven largely by China, Asian integrated Polyester reference margins increased to an average of U.S. $330 dollars per ton in the first quarter of 2021,” de Jesus added. This was a 36% increase from the previous quarter.

Polyester volumes posted a new first quarter record of 996,000 tons, 3% higher year-over-year, due to “consistently strong post-Covid-19 demand,” the company said.

Pemex output fell

Pemex said on April 30 that the production of petrochemicals in the first quarter fell 15% from a year earlier to 347,000 tonnes.

Aromatics and derivatives production fell to 21,000 tonnes or 70% less than in the first quarter of last year. Pemex blamed output declines at La Cangrejera in Coatzacoalcos, Veracruz, on catalytic reforming unit’s trouble.

Ethane derivatives production fell 17,000 tonnes to 74,000 tonnes while propylene production fell 1,300 tonnes both compared with a year earlier and due to problems at the Morelos and Cangrejera plant.

Production of methane derivatives rose 18,000 tonnes due to greater ammonia output in the Cosoleacaque complex. It was “the best performance of the ammonia VI plant since April 2016."

Methanol production rose 8,000 tonnes as the plant managed “stability” the company said in a report filed along with its earnings.

Reversing declining output

Mexican hydrocarbon authorities on March 23 released a list of Strategic Institutional Planning for the next five years that includes increasing the “efficiency of the infrastructure of the ethane-ethylene chain and derivatives.”

According to Pemex data, the monthly ethylene production was 23.8 million tonnes compared with 27.9 million tonnes in March 2020.

The value of Pemex petrochemical imports rose 19% during the one-year period between February 2020 and February 2021, Sener figures showed.

The average ethane price as of April 2021 was $23.08 per gallon, nearly 79% above last year.

Mexico is seeing production declines in part as its total hydrocarbon production is declining. According to the U.S. Energy Information Administration, Mexico produced one Tcf (trillion cubic feet) of dry natural gas in 2019, its lowest level since the 1980s. In 2019 Mexico consumed three Tcf of dry natural gas.

In addition to the above companies, the Braskem Idesa Brazilian-Mexican venture is also one of the country’s biggest petrochemical infrastructure owners. 

By Renzo Pipoli