Crisis could delay petrochemical expansion plans

The global economic slowdown could delay the expansion plans of Brazilian petrochemical companies, despite the positive performance of the domestic market, Business Monitor International (BMI) said in a report. Last year companies performed well. Even with weaker demand and destocking throughout the chain in the fourth quarter of 2008, Brazilian petrochemical company Braskem (NYSE: BAK) grew resins sales by 2% in the full year. In addition, Braskem expects domestic demand for polymers to increase 5-6% in 2009, the report said. But according to BMI, petrochemical projects under construction are likely to be delayed by 12-18 months. For example, federal energy company Petrobras' (NYSE: PBR) Rio de Janeiro Comperj petrochemical complex is not expected to come online before 2013, with possible partners yet to decide about feedstock prices and demand, BMI said. Investments in Comperj are expected to total US$8.4bn and operations were planned to begin in 2012. Braskem's ventures in Venezuela and Peru could also suffer the impact of the global recession as the projects are still in the study phase. Ethylene production will increase 63% by 2013 in Brazil compared to 2008, according to the report. If Comperj's second phase is completed in 2012, polyolefin output will surpass 9Mt/y, making Brazil self-sufficient in thermoplastic resins and giving it a surplus of 3.5Mt/y, which could be exported. The project, however, could be postponed due to credit restrictions in the country, BMI said.