New market study, "Brazil Petrochemicals Report Q1 2011", has been published

Jan. 5, 2011 - PRLog -- The planned three- to four-year delay at the Comperj refinery and petrochemicals project in Rio de Janeiro is a major setback to the expansion of the Brazilian petrochemicals industry and its hopes of gaining global market share, according to BMI's latest Brazil Petrochemicals Report.

Comperj has now been put back to 2016-2017 from the scheduled 2012-13 completion. The reasons for the delays are the expectation of sluggish resins demand and the prolonged economic downturn, which means that demand for polymers is not going to be as high as Petrobras had envisaged when the project was conceived in 2005. Comperj is to be Petrobras' largest petrochemicals investment; other partners include Grupo Ultra and BNDES. Comperj will process 150,000b/d of heavy crude, feeding downstream units. The cost of Comperj has risen from US$6.5bn to US$9.8bn due to increased oil, construction and labour costs as well as the addition of extra speciality petrochemicals manufacturing projects. Comperj will begin manufacturing 1.4mn tonnes per annum (tpa) of ethylene and propylene from 2016, with second generation petrochemicals plants, designed to produce thermoplastic resins and other downstream products, beginning operations at Comperj in 2017 when Petrobras believes the market will have recovered sufficiently.

Petrobras is also reconsidering the capacities of the downstream units, to reflect the change in market conditions. The cracker will have a capacity of 1.07mn tpa. A second phase of derivative plants includes 600,000tpa of ethylene glycol, 800,000tpa of PE, 850,000tpa of PP, 500,000tpa of PTA and 550,000tpa of PET. Petrobras intends to implement all the downstream projects with partners. Brazilian resins major Braskem, which is part-owned by Petrobras, will join the company in the polyolefins project. Oxiteno, owned by Brazil's Ultrapar, will join Petrobras in the MEG project. The delay in Comperj will significantly reduce Brazil's exportable surplus of thermoplastics resins from around 3.5mn tonnes in 2015 to around 1mn tonnes.

Over the medium term, Brazil will need to diversify feedstock sources away from naphtha, which could undermine its competitiveness. A survey by Abiquim suggests that Brazil should accelerate its raw material diversification to meet national demand for basic products such as ethylene and propylene. The association forecasts that ethylene and propylene consumption is likely to reach 6.5mn tpa and 4.3mn tpa respectively by 2015, increasing 116% and 150% compared with 2005. However, the delay in Comperj will reduce feedstock requirements as well as domestic rates of consumption, although there is a possibility of olefins imports. In spite of growing naphtha demand, which touched around 14.6mn tpa in 2010, naphtha production in Brazil dropped to around 10mn tpa in 2010. BMI envisages that investment programmes will continue over the next five years, notwithstanding delays.

In 2010, Brazil had olefins production capacities of 3.44mn tpa ethylene, 2.15mn tpa propylene and 415,000tpa butadiene. In intermediates and aromatics, Brazil had capacities 980,000tpa benzene, 1.3mn tpa ethylbenzene, 740,000tpa ethylene dichloride, 530,000tpa styrene, 740,000tpa vinyl chloride monomer and 355,000tpa xylenes. In the polymers sector, Brazil had capacities of 840,000tpa HDPE, 795,000tpa LDPE, 1.42mn tpa LLDPE, 740,000tpa PET, 2.05mn tpa PP, 880,000tpa PVC and 560,000tpa PS.

Brazil is third in BMI's Americas Petrochemicals Business Environment Ratings with a composite score of 64.8 points. While it has a relatively large petrochemicals industry, Brazil's score is weighed down by a higher level of risk than most other countries in the region, with its long-term financial market risk a notable cause of concern. Brazil's only chance to climb the ratings and overtake Canada is if the latter reduces its capacities, which is a distinct possibility as the Canadian petrochemicals industry struggles to compete in the global market and the US market remains in the doldrums. Brazil is 8.3 points ahead of Mexico and 12 points behind Canada.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.