How has demand for Grupo Idesa’s different business units evolved in 2022?

The business unit which has performed best is our petrochemical division. We have seen good result in all our different products, especially in ethanolamines business. Grupo Idesa’s logistics division, including our terminal in the Port of Veracruz, has been underperforming. We expanded this terminal to provide service for gasoline and diesel handling capabilities. Our distribution arm, Alveg, is having a more difficult year as we have seen a lot of competition from local and international competitors.

Demand for ethanolamines remains strong, but other products in our distribution business have slowed.

To what extent could private investment in Mexico’s petrochemical sector improve the supply of feedstock?

There are significant opportunities for investment as Mexico still has a huge demand for chemicals, petrochemicals, and every type of raw material. It is critical to make investments upstream or the first steps of the value chain in terms of petrochemicals, as this will add value to Mexico’s abundant natural resources such as oil and gas. Upstream development is a long-term goal, but in the meantime a mix of private and public investment is necessary. This can have a significant impact and decrease the deficit in the trade balance. In the near term, the focus is on infrastructure development for raw material imports.

Braskem Idesa is making a huge investment, which allows for the flexibility to source raw materials independently if Pemex cannot supply the requirements. Once this new terminal is up and running, it will allow the industry to start making proposals to Pemex to try to optimize their existing assets and operate at a higher capacity. There might be options for companies to invest in certain assets together with Pemex and increase the production of different products that Mexico needs, such as ethylene oxide.

Which sectors are stimulating growth for Idesa’s Novidesa EPS (Expanded Polystyrene Foam) business?

The end market where we are seeing high demand is construction. This industry suffered throughout the pandemic, but demand is increasing due to a backlog of projects now starting up again. Approximately two years ago when the construction industry faced supply chain tightness for products such as polyurethane, the US housing industry started using EPS as a substitute. I believe that we will continue to see high demand for EPS in the construction industry moving forward, especially in the US and Mexican markets so long as we don’t see a significant slowdown in the economy in the north America region. Idesa used to do spot exports to the US in the past, but we now have supply contracts with clients for at least a three year term.

Which areas of digital transformation could make the most tangible difference for petrochemical producers?

The pandemic has provided different challenges and opportunities to become more efficient, and businesses are now going through digital transformation. Grupo Idesa is focusing on establishing a platform and system which will allow the company to implement any digital requirement that we have in the near future. We are especially focusing on our logistics division and trucking company where there are many opportunities to optimize operations, such as the paperwork process which can be digitalized. The Mexican government is also requiring more transparency and information about truck loads, and here digitization plays an important role.