Mexico's Braskem Idesa Sees PE Output Fall in Q1 on Ethane Woes

Braskem Idesa saw its cracker utilization rate and polyethylene production decline in tandem in the first quarter as it dealt with a lack of feedstock in Mexico, majority-owner Braskem said Thursday.<br />Braskem Idesa produced 221,293 mt of PE in the first quarter, down 5,445 mt (2.4%) from Q4 2017, while the year-on-year drop was more pronounced at...

Braskem Idesa saw its cracker utilization rate and polyethylene production decline in tandem in the first quarter as it dealt with a lack of feedstock in Mexico, majority-owner Braskem said Thursday.

Braskem Idesa produced 221,293 mt of PE in the first quarter, down 5,445 mt (2.4%) from Q4 2017, while the year-on-year drop was more pronounced at 28,632 mt (11.5%), Braskem said during an earnings call.

A 75:25 joint venture between Brazilian petrochemical giant Braskem and Mexico's Grupo Idesa, Braskem-Idesa's Etileno XXI petrochemical complex in the southeastern state of Veracruz has nameplate capacity of 1.05 million mt/year of polyethylene, including two high-density PE lines with combined capacity of 750,000 mt/year and a low-density PE line capable of producing 300,000 mt/year, company records show.

Braskem Idesa has a 20-year contract with fellow Mexican petrochemical producer Pemex for the supply of ethane for cracking at Etileno XXI, although consistent supply has been an issue since the plant began operations in 2016, both companies have said. Braskem Idesa saw its cracker utilization rate fall to 85% in Q1 2018, down 1 percentage point from the final quarter of 2017 and 12 percentage points lower year on year, Braskem said.

Pemex recently sought to improve ethane supply, and in turn its own ethylene and polyethylene production, via a six-month trial of spot imports from the US, a company source said previously. After successfully importing spot cargoes over the first and second quarters, Pemex has since issued a tender for ethane imports to cover the next three-plus years, the company said.

In a related development, Braskem Idesa on Thursday gave an indication that Pemex's import strategy was resulting in improved supply and lending optimism for long-term improvement in volumes.

"In the last two weeks, [ethane supply] has been very strong, better than what we saw in the first quarter," Braskem CEO Fernando Musa said. "Mexico is facing challenges in ethane availability, but that explains the decision to start importing ethane. And this is happening at a good frequency now, which is helping the supply of ethane into the market. So our expectation is to run the plant this year anywhere between 85% and 90%."

Braskem Idesa will halt production in mid-May for a planned maintenance that will last "a couple of weeks only," a company source previously said, adding that the turnaround would not have any impact on its presence in the market due to a planned inventory build.

Source: www.platts.com