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Wednesday, January 13, 2010
Today's News Headlines
* Chemical, petrochemical imports twice as expensive after devaluation - Venezuela
* Braskem, Quattor merger to strengthen plastics industry, says Abiplast - Brazil
* Alfa expects Q4 sales of US$2.4bn - Mexico
* Petroquisa transfers Braskem's shares to controlled company - Brazil
* Ultrapar to invest US$470mn in 2010 - Brazil
* CF's petrochemical plant will not affect Shougang operations - report - Peru
* Geyer still trying to stop Braskem, Quattor merger - Brazil
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* Chemical, petrochemical imports twice as expensive after devaluation - Venezuela
Chemical and petrochemical imports into Venezuela will be twice as expensive after President Hugo Chávez's recent devaluation of the currency from 2.15 bolívares per US dollar though demand could better reflect real market conditions rather than speculation, according to an industry expert.
The president created a dual exchange rate whereby priority imports would be subject to a rate of 2.60 bolívares to the dollar and non-essential items 4.30 bolívares, with chemicals and petrochemicals subject to the latter. There is also a parallel or black market rate of 5-6 bolívares to the greenback.
"It will be more expensive to import petrochemicals during 2010. On the other hand, some correction in demand may begin to appear in early 2010," Rina Quijada, CEO at Intellichem, a Latin American petrochemical consultancy firm told BNamericas.
"With the enormous gap between parallel and official exchange rates during the past years, demand in many trade related products reflected financial gains rather than real market demand. During 2009, if you calculated the price of any resin at official rates, it would present a market with the highest priced products in the region. On the other hand, if you did the same calculations with the parallel market rates, Venezuela would appear as a country with the cheapest resins in the Americas," Quijada explained.
"However, we will have to wait and see if the gap between the exchange rates remains at current levels or if the gap will widen with time. It is too early to say. It seems that in Venezuela, the currency has now three values and it will take some time to adjust to these changes."
"Venezuela's imports are expected to increase in 2010 as local production of many petrochemicals may be limited due to ethane/propane limitations. If demand reflects real market conditions rather than financial transactions, the supply/demand relationship might be more balanced this year," the CEO said.
In the short term, the devaluation will translate into more expensive products and higher inflation but many countries in the region, like Mexico and Brazil, have managed to control currency-related inflation, Quijada said.
By Linus Hoggett
Business News Americas
* Braskem, Quattor merger to strengthen plastics industry, says Abiplast - Brazil
The potential merger between Brazilian petrochemical companies Braskem (NYSE: BAK) and Quattor is expected to improve Brazil's ability to compete internationally as well as strengthen the local plastics industry, national association of plastic industries Abiplast president Merheg Cachum told BNamericas.
"When the plastics manufacturing industry has a reliable supplier, it is better placed to compete with products manufactured internationally," the executive said.
Brazil currently has approximately 11,300 companies operating in the plastics manufacturing sector, according to Abiplast.
Cachum also believes the industry would be better positioned to negotiate prices with only one petrochemical firm operating in the country.
Braskem, Quattor and Brazil's federal energy firm Petrobras (NYSE: PBR), a minor shareholder in both companies, are thought to be close to finalizing a deal to combine their petrochemical assets. Recently, the companies confirmed negotiations had advanced in response to local press reports.
"If the pricing policies are not in line with international pricing trends, there is a risk that manufacturing companies will start looking to foreign markets and import larger volumes of resins," Cachum added.
"The goal of a merger like this wouldn't be to harm local industry," he said.
According to the executive, the plastics industry's trade deficit could improve under more competitive conditions. In 2008, the deficit totaled US$1bn and in the first eight months of 2009 US$539mn, down 12% year-on-year.
Brazilian plastics production improved significantly in the final quarter of 2009, mainly due to an upturn in domestic demand.
"The outlook for 2010 is for continued improvement in several sectors, including the automotive and electronics industries," Cachum said.
Abiplast currently forecasts plastics production to increase 6% in 2010. "We have grown above the country's GDP and, in my opinion, the local elections this year will be a positive factor as well," he added.
By Fernanda De Biagio
Business News Americas
* Alfa expects Q4 sales of US$2.4bn - Mexico
Mexican industrial conglomerate Alfa (BMV: ALFA) expects fourth quarter sales of approximately US$2.37bn and Ebitda of US$290mn, the company said in a filing with the Mexico City bourse BMV.
Sales for the full year 2009 are expected to total US$8.54bn while Ebitda is estimated at US$1.06bn, the latter of which represents an increase of 9% over 2008.
The Ebitda margin in 2009 is forecast at 12.4% compared to 9.1% in 2008, making last year's Ebitda the best in the company's history.
"The success of last year is the result of the strategic development of our companies as well as measures adopted to confront the economic crisis in terms of increased productivity and operational efficiency," Mario Páez, director of planning and finance, said in the filing.
The company also extended the average term of its debt to 4.6 years from 2.3 years during 2009 and at year-end the net debt to Ebitda ratio was 2.1 times.
Alfa is comprised of four business groups: Alpek (petrochemicals), Nemak (auto components), Sigma (refrigerated food) and Alestra (telecommunications).
By Business News Americas staff reporters
* Petroquisa transfers Braskem's shares to controlled company - Brazil
Petroquisa, the petrochemical subsidiary of Brazil's federal energy firm Petrobras (NYSE: PBR), has transferred 59,014,254 ordinary shares of Brazilian petrochemical company Braskem (NYSE: BAK) to its controlled company WBW, Petrobras said in a filing with securities regulator CVM.
The shares account for 31% of the Braskem's total ordinary shares, the statement said.
After the transfer, Petroquisa will no longer hold any ordinary shares in Braskem but will retain 72,966,174 preferred shares in the company.
WBW is the only Petroquisa subsidiary to hold shares in Braskem.
According to recent press reports, the share transfer represents a move to advance the merger between Braskem and fellow petrochemical company Quattor, in which Petrobras has a 40% stake.
By Business News Americas staff reporters
* Ultrapar to invest US$470mn in 2010 - Brazil
Brazilian chemical, fuel distribution and cargo group Ultrapar (NYSE: UGP) plans to invest 820mn reais (US$470mn) in its local subsidiaries in 2010 excluding acquisitions, the company said in a statement.
The 2010 investment plan will focus on capacity expansions, technology, productivity gains and modernizations of current operations, Ultrapar said.
Investments in Ultrapar's chemical subsidiary Oxiteno are planned to total 185mn reais. The amount will be earmarked for the conclusion of expansion works in Camaçari, Bahia state, which will increase output of ethylene oxide and ethoxylates by 90,000t/y and 70,000t/y, respectively.
The group added that the economic environment for 2010 is more favorable than last year and offers more attractive business opportunities for its controlled companies.
By Business News Americas staff reporters
* CF's petrochemical plant will not affect Shougang operations - report - Peru
Illinois-based fertilizer manufacturer and distributor CF Industries' (NYSE: CF) planned nitrogen complex in San Juan de Marcona in Peru's southern Ica region will not affect the operations of Chinese-owned iron ore producer Shougang Hierro Perú, CF's representative in Peru, Ismael Benavides, was reported as saying by local business daily Gestión.
"Shougang's operations are 5km to 10km from the planned petrochemicals pole," Benavides added.
On January 22, 2009, Peru's mines and energy ministry (MEM) declared San Juan de Marcona the site for the installation of a petrochemical pole and in October zoning for future plants was defined.
However, Shougang argues the land forms part of its concession area over which it holds the rights.
According to Benavides, the area where CF proposes to construct its ammonia and urea plants totals 1,970ha, which represents 3.3% of Shougang's 60,000ha total concession area.
The representative added that it was a mistake to say that petrochemical companies would have to pay a fair price to Shougang for land declared suitable for the development of the petrochemical pole as the land is state-owned and under the administration of the respective regulator.
"Any problem Shougang has, or any discussion, must be resolved with the state," Benavides said.
CF is coordinating the development of its project with MEM for which it plans to submit its EIS at the end of this month.
By Business News Americas staff reporters
* Geyer still trying to stop Braskem, Quattor merger - Brazil
A court in Rio de Janeiro will review a new request by businessman Alberto Soares de Sampaio Geyer, a shareholder in the Vila Velha holding, to prevent the merger between Brazilian petrochemical companies Braskem (NYSE: BAK) and Quattor, newspaper O Estado de S Paulo reported.
Vila Velha controls Brazilian petrochemical group Unipar (Bovespa: UNIP6), which has a 60% stake in Quattor.
Geyer also claims he has been excluded from negotiations over a potential merger.
The deal is also being delayed due to disagreements between Brazilian conglomerate Odebrecht and Brazil's federal energy firm Petrobras (NYSE: PBR), a shareholder in both Quattor and Braskem, regarding the appointment of the chief executives of the new company.
Odebrecht, which hold a majority interest in Braskem, does not intend to replace Braskem CEO Bernardo Gradin, the report read.
By Business News Americas staff reporters
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In-deph interview
* "The Central and South American market will grow by an average of 4% a year, reaching around US$4.8bn in 2013"
Paul Gaster
Divisional manager - flexible packaging
PCI Films Consulting
http://www.bnamericas.com/interviews/petrochemicals/Paul_Gaster_,PCI_Films_Consulting,/169679612
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Main companies covered in today's news
* PEMEX Petroquímica
http://www.bnamericas.com/company-profile/en/PEMEX_Petroquimica-Pemex_Petroquimica/169679612
* Quattor Petroquímica S.A.
http://www.bnamericas.com/company-profile/en/Quattor_Petroquimica_S,A,-Quattor/169679612
* Cosan S.A. Indústria e Comércio
http://www.bnamericas.com/company-profile/en/Cosan_S,A,_Industria_e_Comercio-Cosan/169679612
* 3Com Corporation
http://www.bnamericas.com/company-profile/en/3Com_Corporation-3Com/169679612
* Unipar Comercial e Distribuidora S.A.
http://www.bnamericas.com/company-profile/en/Unipar_Comercial_e_Distribuidora_S,A,-Unipar_Comercial/169679612
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