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  4. > Brazil Petrochemicals Report Q3 2016

Brazil Petrochemicals Report Q3 2016

  • July 2016
  • -
  • Business Monitor International
  • -
  • 74 pages

BMI View:

Cheaper oil has lowered the cost of naphtha, Braskem's main raw material, thereby improving competitiveness. However, the 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 the trade deficit was 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.

Table Of Contents

Brazil Petrochemicals Report Q3 2016
BMI Industry View ... 7
Political . 10
Economic ... 11
Operational Risk . 12
Industry Forecast .. 14
Table: Brazil Petrochemicals Sector - Historical Data And Forecasts, 2012-2020 . 20
Macroeconomic Forecasts ... 21
Economic Analysis ... 21
Industry Risk/Reward Index . 25
Americas Petrochemicals Risk/Reward Index 25
Table: Americas Petrochemicals Risk/Rewards Ratings . 27
Market Overview ... 28
Industry Trends And Developments 30
Company Profile 39
Braskem . 39
Table: Braskem Financial Results - BRLmn 44
Petróleo Brasileiro (Petrobras) .. 45
Regional Overview 50
Americas Overview .. 50
Table: Planned Cracker Projects . 55
Global Industry Overview .. 57
Demographic Forecast . 64
Table: Population Headline Indicators (Brazil 1990-2025) 65
Table: Key Population Ratios (Brazil 1990-2025) . 65
Table: Urban/Rural Population and Life Expectancy (Brazil 1990-2025) . 66
Table: Population By Age Group (Brazil 1990-2025) 66
Table: Population By Age Group % (Brazil 1990-2025) . 67
Glossary . 69
Table: Glossary Of Petrochemicals Terms . 69
Methodology .. 70
Industry Forecast Methodology 70
Risk/Reward Index Methodology ... 72
Table: Petrochemicals Risk/Reward Index Indicators 73
Table: Weighting Of Indicators . 74

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