How has Petroquim’s production capacity and focus evolved in recent years?

Almost 10 years ago, Petroquim reached a production of 115,000 t/y, due to the raw material availability that ENAP, the Chilean State refiner, could provide. Unfortunately, the availability of this feedstock went down due to the closure of the Naphta Cracker in 2014. This made our average production range between 80,000 to 90,000 t/y since then.

Petroquim’s main focus is to develop products like polymers that comply with the requirements of heterophasic copolymers and random copolymers. Although we would still like to have more raw materials available, which is a variable that is not likely to change in the short term, we are very happy with our results.

Can you expand on your polypropylene products and the end markets Petroquim supplies?

About one third of the 80,000 t/y of polypropylene products which Petroquim manufactures is sold in Chile, with rest mainly sold along the Andean coast, meaning Ecuador, Peru, Colombia, and in very small amounts in Argentina and Brazil. Its main uses are those common to a homopolymer, raffias, thermoform, and films.

Can you tell us about Petroquim’s innovations and the use of LyondellBasell’s Spheripol technology?

What we are seeing is that many of the plants entering the market are fed by propane dehydrogenation plants. A big part of that new capacity entering the market will come from plants that can only produce PP homopolymers. That is why the effort we have made with some of our chemical suppliers to replace the effect of ethylene as a copolymer to achieve it with the blend of ethylene and propylene has been very important. We are the pilot that will allow many plants coming into the market to supply a wider range of PPs than was traditionally done with homopolymers only.

To what extent have logistics challenges impacted your business?

The availability of freights to Peru, Ecuador and Colombia has been deeply affected in the last two years. We had to manage our own distributors and hire third-party distributors to support the production of our clients during this period. Fortunately, the situation has improved considerably; although there are still issues like expensive freights, they are no longer at the historic levels of H2 2021.

We expect to see a gradual improvement, in both ships, containers and route availability. In 2023 I believe there will still be periods with peaks and standstills, particularly in Asia and the ports of the Pacific in the US that will affect the times of the ships coming from Chile. However, clients now understand this, which forces the whole chain to work with higher inventories than usual. A strong deceleration happening in China and a market almost in recession such as the in the US will help accelerate all adjustments, which is already apparent.

What are your expectations for the following years regarding the chemical market and Petroquim?

We believe the industry in Chile and South America in general is under stress due to the low level of investment, partly because the region is characterized by political instability. In Petroquim’s case, as well as most petrochemical companies, we grow when the refiners that supply us grow. In Chile, our monomer supplier shows no sign of growth, meaning we expect to maintain current production levels for several years.

I have been in this industry for more than 20 years, and I am not pessimistic. I have learned these are cycles and we happen to be in the lower side of one, but at some point, we will recover, and things will get back to normal. In the meantime, we can use this time to reconsider how we are doing things: costs, people, training; do we have the human capital?, do they have the training required? We have made adjustments to redefine and optimize the distribution of tasks to create a more sustainable business.