MEXICO CHEMICALS 2015 MEXICO CHEMICALS MEXICO CHEMICALS 2015 Economy - Chemicals - Energy Reforms - Petrochemicals - Agrochemicals Paints and Coatings - Specialty Chemicals - Distribution Dear Readers, Mexico’s chemicals industry presents an enormous opportunity. The country’s vast wealth of natural resources, which includes medicinal plants, oil, to minerals, timber, marine, and agricultural products, can serve as raw materials and create new openings for developing new businesses and integrating multiple supply chains. At the same time, top-down, government-led structural reforms have opened the economy to further investment and will spur domestic consumption and exports, particularly with its northern neighbor. Mexico’s demographic potential is also obvious. In 2015, 53 million of Mexico’s 120 million citizens will be active participants in the economy. According to the National Institute of Geography and Statistics (INEGI), the chemicals industry accounted for 2.6% of Mexico’s GDP and 14.5% of manufacturing GDP in 2012, while employment was 0.8% and 8%, respectively. The largest segments of the industry include petrochemicals, rubber and plastics, pharmaceuticals, soaps, detergents and cosmetics. For the time being, the chemicals industry is slowed by its dependence on imports for raw materials, but savvy and visionary leaders can seize this historical opportunity to increase local production. The petrochemicals sector will be the most closely watched, in light of the opening of the exploration and production segment of the hydrocarbons industry and the privatization of petrochemicals plants. Historically, petrochemicals production has been volatile, with the industry reaching an apex of 51 plants producing 16 million metric tons in 1996, but the subsequent lack of investment and upgrade caused these facilities to decay. Now, with imports rising to nearly 15 billion pesos in the year 2013, price and supply pressures are decreasing competitiveness. In addition to the reforms, new investment in the ports at Altamira and Coatzacoalcos by Alfa, BASF, Braskem, CYDSA, IDESA and Mexichem will elevate the industry’s global competitiveness. Meanwhile, companies are making real progress in addressing Mexico’s weaknesses, which include excessive paperwork, unwieldy bureaucracy, corruption, and a lack of security, workforce training, and financing. The National Chamber of Transformation Industry, which represents small- and medium-sized enterprises as well as larger companies, is also working with authorities such as PEMEX and CFE to coordinate supply chain dynamics and integrate purchases of services, machinery and equipment on a national level. The following report presents an in-depth account of the investment opportunities in the Mexico’s burgeoning chemicals sector. We welcome readers to listen to the voices of private companies, government agencies, and business associations in the following pages that speak not only to the trends and dynamics on the ground but the spirit of optimism that pervades all levels of the value chain. Ing. Juan Manuel Díaz Manjarrez, Presidente del Sector Químico Ing. Gerardo Bazan Navarrete, Presidente de la Rama Petroquímica Ing. Gilberto Ortiz Muñiz, Vicepresidente del Sector Químico CANACINTRA CONTENT Building a Better Future: Manufacturing-Fuelled Growth: The Mexican Chemicals Industry Specialty Chemicals 8. Introducing Mexico: A Political and 66. Cars, Compounds, and Space: Mexico's Economic Overview Specialty Chemicals Sector 10. Interview with Government of Mexico 69. Interview with Macropol 11. Interview with ANIQ 70. Interview with Clariant 12. Mexican Chemicals: An Industry Recovers as 71. Interview with Organo Síntesis Structural Reforms Spur Optimism 72. Interview with Nynas 18. Interview with CANACINTRA 74. Interview with Evonik 19. Expert Opinion by White & Case Mexico 75. Interview with Watson Phillips 20. Interview with Oxiteno Mexico 21. Interview with FMC Agricultural Solutions LAN Region Attracting Ample Attention: Distribution The Door is Now Open: 78. Consolidation Breeds Competition: Mexico’s Petrochemicals Chemicals Distribution Sector 81. Interview with Trichem 24. What Goes Upstream, Must Come Down: 82. Interview with Quimi Corp Mexico’s Petrochemicals Sector 84. Interview with Química Delta 28. Interview with Pemex Gas y Petroquímica 85. Interview with DVA Mexicana Básic (PGPB) 86. Interview with Nexeo 29. Interview with Braskem IDESA 87. Interview with Charlotte Chemical 30. Interview with Indelpro 31. Interview with Grupo Idesa 32. Expert Opinion by López Velarde Wilson Even Flow: Hernández & Barhem, S.C. (LVWHB) Services, Infrastructure, and Logistics 34. Interview with Grupo Petroquimico Beta (GPB) 90. Gas, Engineers, and Waves: Servicing 35. Interview with López Velarde Wilson Mexico’s Chemicals Industry Hernández & Barhem, S.C. (LVWHB) 93. Interview with Cryoinfra 36. Interview with White & Case Mexico 94. Interview with Tecnimont (Maire Tecnimont Group) 96. Interview with SNF Floerger Feeding a Growing Economy: 97. Interview with CH2M HILL Agrochemicals 98. Upgrades in the Pipeline: Infrastructure and Logistics in Mexico 40. Hungry to Succeed but Starved for Inputs: 101. Interview with Euromex Logistica Mexico’s Agrochemicals Sector Internacional 43. Interview with PROCCYT 102. Interview with Leschaco Mexicana 44. Interview with Velsimex 103. Interviews with Cargo Group International 45. Interview with Ibarquim and Alveg 46. Interview with Grupo Polak 47. Interview with Internacional Química de Cobre (IQC) Into the Future: Conclusion, Final 48. Interview with Sygenta Mexico Thoughts, Company Index, and Credits 106. Despite Large Challenges, Mexico’s Going Global and Green: Chemical Future is Bright Paints and Coatings 108. Final Thoughts 110. Company Index 52. No Longer a Supplementary Market: 111. Credits Mexico’s Paints and Coatings Sector 55. Interview with Comex This research has been conducted by Josie Perez, 56. Interview with IMPAC Amelia Salutz, Alfonso Tejerina, and Lubo Novak 58. Interview with ANAFAPYT Edited by John V. Bowlus 60. Interview with Reacciones Químicas Graphic design by Gonzalo Da Cunha 61. Interview with WYN de México A Global Business Reports Publication 62. Interviews with Latinpin and Sherwin- For updated industry news from our on-the-ground teams around the world, please visit our website at gbreports.com, Williams subscribe to our newsletter by signing up to our VIP list 63. Interview with Kathion through our website, or follow us on Twitter: @GBReports. MEXICO CHEMICALS 2015 - 4 - Exclusive Interviews Leading industry and government figures from Mexico’s chemicals industry discuss market trends and opportunities, as well as strategies for the future. 10, 11, 19, 28, 29 Editorial Analysis Global Business Reports’ journalists provide unique insights into all aspects of the pharmaceuticals value chain by working on the ground for week and meeting face to face with industry leaders. 8, 12, 24, 40, 52, 66, 78, 90, 98 Mexicali 0.1% 0.3% Quantitative 1.1% SONORA 6.0% BAJA CALIFORNIA CHIHUAHUA 17.8% 1.1% G DataHermosillo and Maps 4.5% 36.1% 0.3% 6.2% 0.3% ulf of California Mexico City 1.6% 17.5% Chihuahua 39.5% 1.7% Maps and quantitative data highlight and clarifyCOAHUILA DE 0 100 200 300 Km the key trends across all levels of the value chainZARAGOZA 1. AGUASCALIENTES 2. DISTRITO FEDERAL in the Mexican chemicals industry. 3. GUANAJUATO 4. HIDALGO 5. MEXICO NUEVO 6. MORELOS BAJA LEON CALIFORNIA 7. QUERETARO DE ARTEAGA SUR 8, 9, 13, 14, 16, 24, 25, 26, 40, 79,Monterrey 98, 106 8. TLAXCALA DURANGO Saltillo Culiacan La Paz Durango ZACATECAS TAMAULIPAS SINALOA Ciudad SAN LUIS Victoria POTOSI G ulf Zacatecas San Luis of NAYARIT 1 Potosi Mexico Aguascalientes Merida Tepic VERACRUZ- Guanajuato LLAVE Mexico 7 4 YUCATAN 3 Queretaro Guadalajara Pachuca Campeche Mexico has a growing population andJALISCO dynamic 5 QUINTANA Mexico City Jalapa ROO Morelia 8 economy. GBR goes beyond the chemicalsColima Toluca 2 Tlaxcala Chetumal MICHOACAN Cuernavaca TABASCO DE OCAMPO 6 Puebla CAMPECHE industry to help readers understand Mexico’sCOLIMA PUEBLA Villahermosa place in the world. North Pacific Chilpancingo Tuxtla Gutierrez Ocean GUERRERO Oaxaca OAXACA CHIAPAS 8, 9, 12, 13, 14, 15, 16 0 100 200 300 Km Future Outlook The future is being built today, and numerous companies are transforming Mexico’s chemicals sector one innovation at a time. 106, 108, 109 Image: AP Resinas GBR • Industry Explorations • MEXICO CHEMICALS 2015 BUILDING A BETTER FUTURE THE MEXICAN CHEMICALS INDUSTRY “There is a strong appetite by foreign players, including those in the chemical industry, to come and invest in the opening energy market. In Nuevo León we have received more than 100 companies that have requested to come and set up operations and some of these organizations were key chemical players. It is a great opportunity to open new operations and pursue new opportunities.” - Rodrigo Medina de la Cruz, Governor of Nuevo León, Government of Mexico EDITORIAL Mexicali Global Business Reports SONORA BAJA CALIFORNIA CHIHUAHUA G Hermosillo ulf of California Chihuahua COAHUILA DE ZARAGOZA 1. AGUASCALIENTES 2. DISTRITO FEDERAL 3. GUANAJUATO 4. HIDALGO 5. MEXICO NUEVO 6. MORELOS BAJA LEON CALIFORNIA 7. QUERETARO DE ARTEAGA SUR Monterrey 8. TLAXCALA DURANGO Saltillo Culiacan La Paz Durango ZACATECAS TAMAULIPAS SINALOA Ciudad SAN LUIS Victoria POTOSI G ulf Zacatecas San Luis of NAYARIT 1 Potosi Mexico Aguascalientes Merida Tepic VERACRUZ- Guanajuato LLAVE 7 4 YUCATAN 3 Queretaro Guadalajara Pachuca