Patricio Gutiérrez, Chairman of the Board & CEO,

Grupo Idesa

"2021 is going to be a very good period for our petrochemicals business, such as we have not seen in many years, while we continue seeing a very good performance in distribution."

How is the strong post-pandemic recovery in the US helping the businesses of Grupo Idesa?

Since the beginning of 2019 we had been implementing strong initiatives to improve savings and efficiencies. That yielded good results when the pandemic started, since we did not have to cut our workforce. Luckily, all the group’s divisions were considered essential by the government. 2020 was a good year for the group, and our distribution business had an outstanding performance, rapidly capturing opportunities in the sanitation market. This year, the American economy has boosted demand, while in Europe we are seeing some good developments as well. With oil prices around US$70, our raw materials are more expensive, but we have better margins overall. So, 2021 is going to be a very good period for our petrochemicals business, like we have not seen in many years, while we continue seeing a very good performance in distribution.

To which industries is your petrochemicals business mostly tied?

In petrochemicals we have four companies: Petramin produces alkyl amines that feed mainly the automotive industry. The segment is still lagging behind in Mexico, partly because of the shortage of microchips, while in Europe we are seeing a much stronger demand. Síntesis Orgánicas is our phthalic anhydride producer, used for alkyd resins, a market that is picking up in Mexico and also in the US, while we also have some exports to South America. Novidesa produces expanded polystyrene (EPS), which is the product line that has suffered the most from demand contraction in Mexico as it goes to the construction industry; it is slowly picking up now. Finally, Idesa produces ethanolamines. Demand for these has remained stable, but our market position has improved because imports of ethanolamines from the US have been falling.

How is the distribution business of Alveg evolving?

Alveg has four divisions: industrial and automotive remain the largest ones, but we also have the oil and gas and specialties divisions. Alveg is recognized as a leading distribution player in Mexico and has played a role in the professionalization of this segment. There are a lot of small local players that do not have the capacity to implement the best practices, so there is space for consolidation. Beyond Mexico, Alveg has an ambitious growth plan to increase its presence in the US, Central America and South America. For this, we are implementing a solid plan to improve physical infrastructure and technology.

Could you comment on your joint ventures Cyplus Idesa and Tonalli Energía?

2020 was a good year for Cyplus Idesa, but it should have been better, because the mining industry was not an ‘essential’ industry during the pandemic, which created a negative demand trend for sodium cyanide. In 2021 we have faced some operational issues due to shortages of feedstock from Pemex (namely ammonia and natural gas), which provoked unscheduled plant stops.

Meanwhile, Tonalli Energia is focused on a well awarded in round 1.3. We are evaluating drilling two additional wells, but we are very cautious about doing more investments in Tonalli.

How do you think Mexico’s chemicals industry could overcome its chronic feedstock shortages?

Our position has always been clear: Pemex needs to exist as an industry leader, but needs to be focused on the areas where it has good competence, for example E&P. If we have other players in the refining business, that will help the chemicals industry have access to more options to source feedstock. If Pemex decides to stay in the refining business, then the private industry should help Pemex strengthen its business, be it in refining, gas separation or petrochemicals. It would be a win-win-win relationship, for Pemex, for the private sector, and for the country.

As a company celebrating 65 years in 2021, what would be your final message for the members of APLA?

The chemical industry is essential for the growth of any country and has always been focused on sustainable development, yet the public perception is different. This is partly because we have traditionally kept a low profile. We should stick our head out and show everything we are doing to improve sustainability and be part of the circular economy.