"Mexico’s chemical sector is experiencing a significant recovery, especially due to extreme growth in the US, which is our main export market."
How has Mexico’s chemical industry bounced back in 2021, and which have been the standout segments?
In 2020, despite the chemical sector being recognized as an essential industry by the federal government, production decreased by 18.9% compared to 2019. This was due to a great decrease in demand from certain industries that were not considered essential, resulting in an 8.9% decrease in GDP level. However, in 2021 Mexico’s chemical sector is experiencing a significant recovery, especially due to extreme growth in the US, which is our main export market. The chemical segment which has seen the most growth is adhesives and sealants due to the packaging industry experiencing high growth as people have ordered goods and food online rather than going to shops or restaurants. The fertilizer and construction industries have also performed well in 2021, and the auto industry has started to recover. In summary, the first half of 2021 has been positive and although we have not reached 2019 production levels yet, we expect to do so by Q1 2022.
What recent discussions has ANIQ had with Pemex and the Mexican government about establishing a more stable source of feedstock in the country?
ANIQ has highlighted that Pemex is not using all of its infrastructure and we have proposed that Pemex’s facilities could be used to import ethane, propylene and ammonia. This would benefit everyone as Pemex would receive payment for the use of its facilities; the availability of raw material within the country would increase which will contribute to the development of the chemical industry, and the government will receive more taxes. Currently (September 2021), there has been no final decision from Pemex, but discussions are ongoing. To clarify, this would be a medium-term solution before Pemex manages to ramp up their own production.
ANIQ held its second annual logistics conference in August. What were the main challenges discussed?
Logistics disruptions have had a significant impact on the global chemical industry. However, Mexico is fortunate that more than 65% of its imports come from the US, where products are delivered by train or trucks, and thus, we have not experienced the logistical bottlenecks as severely as countries which rely on European, Asian or South America imports.
Approximately 15-20% of Mexico’s total imports were affected by logistics disruptions, but a bigger impact has been the lack of raw materials available, which has resulted in a significant increase in prices for some. For example, the price of electricity in Mexico is approximately 60% higher than in Houston. Furthermore, the manufacturing of electrical products in Mexico has decreased due to a lack of materials coming from Asia.
What are the main dynamics currently impacting Mexico’s auto industry?
Globally, Mexico is the fifth largest producer of cars, and our auto industry has a number of advantages, such as the new US, Mexico and Canada Free Trade Agreement (USMCA). Mexico also exports a lot to South America, where we have more competitive conditions for production than some of the largest markets such as Brazil, Argentina and Colombia.
At the moment, the lack of microchips available is the main concern, as there has not been enough supply from Europe or Asia. Another challenge is that new labor standards developed under the USMCA have resulted in the liberty to choose unions. Production has increased from 2020 to 2021, but not yet to the levels of 2019.
What are some of the initiatives related to sustainability that ANIQ is currently working on?
ANIQ is collaborating with the Ministry of Natural Resources, which is the department that defines the commitments of the country to lower greenhouse emissions. Mexico has the goal to reduce greenhouse gas emissions by 22% in all sectors by 2030, and by 50% by 2050. Specifically, the chemical industry has the responsibility to reduce its emissions by 6%, regardless of growth and production. ANIQ is supporting its members to reduce their carbon footprint, and has established key performance indicators that demonstrate the sustainability efforts being made, including a responsible care program. Finally, in the path towards a circular economy, we are strongly promoting recycling within the chemical and plastic industries.