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January 8 - January 14 2010
Today's News Headlines
* Flexible plastic packaging revenues down in 2009, improved outlook for 2010 - Brazil
* Braskem, Quattor merger to strengthen plastics industry, says Abiplast - Brazil
* Chemical, petrochemical imports twice as expensive after devaluation - Venezuela
* Pequiven implements energy saving measures - Venezuela
* Morón fertilizer production up 10% in 2009 - Venezuela
* Alfa expects Q4 sales of US$2.4bn - Mexico
* Petroecuador, PDVSA have 45% of land needed for RPD refinery - Ecuador
* CF ends attempt to take over Terra - Peru
* Petroquisa transfers Braskem's shares to controlled company - Brazil
* Ultrapar to invest US$470mn in 2010 - Brazil
* Geyer still trying to stop Braskem, Quattor merger - Brazil
* Petrobras to double Comperj refining capacity - Brazil
* PetroquímicaSuape looks for partner - Brazil
* Brazil interested in developing Bolivian gas-chemical pole - Bolivia, Brazil
* CF's petrochemical plant will not affect Shougang operations - report - Peru
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* Flexible plastic packaging revenues down in 2009, improved outlook for 2010 - Brazil
Brazil's flexible plastic packaging industry revenues are expected to have declined 3-5% last year from 11bn reais (US$6.2bn) in 2008, national flexible plastic packaging industry association Abief's president, Alfredo Schmitt, told BNamericas.
The decrease is attributed to the global economic downturn. "The crisis resulted in falling prices and an unfavorable business environment," Schmitt said.
Volumes are also expected to have experienced a similar decline, according to the executive.
For 2010, Abief is projecting revenue growth of at least 6% in view of an upturn in the Brazilian economy.
"Historically, the flexible plastic packaging industry has grown at up to two times faster than the country's GDP," the executive added.
While the forecast for the domestic market is positive, exports could still face a difficult year.
"The current exchange rate is unfavorable for exports. In addition, producers are affected by unfavorable taxes and production costs, including energy, which are expected to continue increasing," Schmitt said.
The executive is optimistic about the effects of the potential merger between Brazilian petrochemical firms Braskem (NYSE: BAK) and Quattor on the domestic market.
"The merger of Braskem and Quattor is expected to provide the necessary conditions for local plastics producers to compete in the domestic and international markets," he added.
Merheg Cachum, president of national association of plastic industries Abiplast, also expects the merger to create a positive environment.
"When the plastics manufacturing industry has a reliable supplier, it is better placed to compete with products manufactured internationally," he told BNamericas previously.
The full interview with Alfredo Schmitt will be published on Monday, for subscribers only.
By Fernanda De Biagio
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
* 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
* Pequiven implements energy saving measures - Venezuela
Venezuelan state petrochemical company Pequiven plans to implement a number of measures in an effort to reduce power consumption by 20%, in accordance with the government's energy saving plans, state news agency ABN reported.
Starting January 14, Pequiven will reduce the opening hours of its corporate headquarters, located in Valencia in Carabobo state, to between 7:00am and 1:00pm, company president Clark Inciarte said, adding that the company plans to purchase a power plant in order to guarantee the opening hours during the rationing program in Carabobo.
Pequiven is also considering modifying operations at a number of its plants subject to raw material supply, domestic demand and international commitments, according to Inciarte.
The company is currently evaluating which production lines could be suspended at the Ana María Campos petrochemical complex in Zulia state, which, while generating much of the electricity it consumes, receives power from state power company Corpoelec through state energy company Enelven.
The José complex in Anzoátegui state, which receives power from the national grid, could connect to the system designed by the energy and oil ministry for the east of the country, the president added.
The measures would not apply to the Morón complex in Carabobo state, according to Inciarte, which generates 100% of the electricity it consumes.
Venezuela's current power crisis has been triggered both by low hydro levels due to the El Niño weather phenomenon and investment shortfalls.
By Business News Americas staff reporters
* Morón fertilizer production up 10% in 2009 - Venezuela
Venezuela's Morón petrochemical complex, in Carabobo state, produced 1.26Mt of fertilizers in 2009, an increase of 10% from 1.13Mt the previous year, according to a report by state news agency ABN.
Nitrogen fertilizer output totaled 360,127t and phosphate fertilizer production 900,520t, ABN reported.
By Business News Americas staff reporters
* 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
* Petroecuador, PDVSA have 45% of land needed for RPD refinery - Ecuador
Ecuador's state oil company Petroecuador and its Venezuelan counterpart PDVSA have acquired 44.9% of the land needed for the prospective Pacífico refinery (RDP) to be built in Manabí province, according to a report by state news agency El Ciudadano.
The companies have 1,347ha of the total 3,000ha needed for the refinery and its buffer zone, the report cited the refinery's chief Carlos Proaño as saying.
The two firms have completed basic engineering of the refinery and petrochemical complex since announcing plans for the JV in 2008.
Originally, the companies said the refinery would have a 300,000b/d capacity and be 51% owned by Petroecuador.
Testing of the refinery is expected to begin in December 2013, according to Proaño.
Foreign investors from the UK, South Korea and Japan had made a "firm commitment" to finance 70% of the project, Proaño said, without providing further details of the financiers or precise investment amounts.
In 2008, the companies estimated the project's cost at US$5bn.
By Business News Americas staff reporters
* CF ends attempt to take over Terra - Peru
Illinois-based fertilizer manufacturer and distributor CF Industries (NYSE: CF) has withdrawn its offer to acquire Iowa-based nitrogen producer Terra Industries (NYSE: TRA), the former said in a statement Thursday evening.
"It is clear that an acquisition of Terra now would require a significant increase in our offer, given the substantial uplift in equity values in the fertilizer sector," said CF's CEO Stephen Wilson. The stock and cash offer was worth around US$4.5bn.
CF Industries has a nitrogen complex under development in Peru for which it announced in October that it had signed a natural gas supply agreement with the Camisea consortium, led by Argentine oil company Pluspetrol.
The company also said it has sold all its Terra shares.
CF is itself the subject of a hostile takeover bid from Canadian fertilizer maker Agrium (TSX, NYSE: AGU).
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
* 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
* Petrobras to double Comperj refining capacity - Brazil
Brazilian federal energy company Petrobras (NYSE: PBR) could increase refining capacity of its Rio de Janeiro Comperj petrochemical complex from 150,000b/d to 300,000b/d, newspaper Valor Econômico reported.
"We are evaluating the situation in order to make the project more competitive," Petrobras downstream director Paulo Roberto Costa was quoted as saying.
The Comperj refinery is expected to be constructed before the basic petrochemicals unit and the second generation petrochemical plants for the production of resins, the report read.
Difficulties in negotiating partnerships for the project lead Petrobras to focus on the refinery and, consequently, postpone talks on the petrochemicals unit until the situation regarding the merger of Brazilian petrochemical companies Braskem (NYSE: BAK) and Quattor is resolved.
Petrobras is a shareholder in both petrochemical companies and the only national supplier of raw material for petrochemicals production.
Some 60% of the earth moving works for Comperj's refinery have been concluded, Valor said.
Estimated investments in Comperj are expected to total US$8.4bn and operations begin in 2012.
By Business News Americas staff reporters
* PetroquímicaSuape looks for partner - Brazil
Brazil's federal energy company Petrobras (NYSE: PBR) is seeking a partner for its PetroquímicaSuape project to produce PTA, PET resin and polyester fibers, local newspaper Jornal do Commercio reported.
Indian conglomerate Reliance Industries, which has signed a technical cooperation agreement for PetroquímicaSuape, is seen as a preferred partner for the venture.
Negotiations with Reliance were at an advanced stage, but slowed down after the global economic crisis hit, the report read.
In addition to Reliance, Petrobras is also in talks with another Indian group and with Spanish industrial group La Seda.
PetroquímicaSuape's first production units are expected to begin operations in the second half of 2010 and investments are expected to total 4bn reais (US$2.27bn).
By Business News Americas staff reporters
* Brazil interested in developing Bolivian gas-chemical pole - Bolivia, Brazil
Brazil is interested in investing in the industrialization of Bolivia's natural gas reserves and will submit to President Evo Morales' government projects to install a gas-chemical pole in Bolivia, according to Brazil's ambassador in La Paz, Frederico Cézar de Araújo, Spanish news portal EFE reported.
The government is working with Brazilian petrochemical company Braskem (NYSE: BAK) and federal energy group Petrobras (NYSE: PBR) on related projects, according to De Araújo.
The gas-chemical pole is expected to require investments of between US$1.5bn and US$2bn and would contribute to Bolivia's plan to industrialize its natural gas reserves.
De Araújo said that Brazil would wait until Bolivia's new hydrocarbons regulation is ready before advancing with any project.
Brazilian demand for Bolivian gas is currently 16M-18Mm3/d, but the Brazil purchases 24Mm3/d under a contract it has with its neighbor.
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
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In-deph interview
* "We forecast revenue growth of at least 6% for the sector in 2010"
Alfredo Schmitt
President
Abief
Brazil
http://www.bnamericas.com/interviews/petrochemicals/Alfredo_Schmitt_,Abief,1/170477330
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Main companies covered in today's news
* Quattor Petroquímica S.A.
http://www.bnamericas.com/company-profile/en/Quattor_Petroquimica_S,A,-Quattor/170477330
* PEMEX Petroquímica
http://www.bnamericas.com/company-profile/en/PEMEX_Petroquimica-Pemex_Petroquimica/170477330
* Fertilizantes Fosfatados S.A.
http://www.bnamericas.com/company-profile/en/Fertilizantes_Fosfatados_S,A,-Fosfertil/170477330
* 3Com Corporation
http://www.bnamericas.com/company-profile/en/3Com_Corporation-3Com/170477330
* Unipar Comercial e Distribuidora S.A.
http://www.bnamericas.com/company-profile/en/Unipar_Comercial_e_Distribuidora_S,A,-Unipar_Comercial/170477330
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