Charles Fryer Senior Advisor, TECNON ORBICHEM
"Brazil has a large availability of hydroelectric sources, which present a path in which blue hydrogen with zero carbon footprint can be produced."
Can you introduce Tecnon OrbiChem and describe the company’s areas of expertise?
Tecnon OrbiChem specializes in monitoring world markets for chemicals – mainly petrochemicals but also inorganic chemicals. The company started in 1976, which makes us one of the oldest consulting companies in the chemical business. We publish monthly reviews of specific sectors in the chemical industry – I can take chlor-alkali, engineering thermoplastics, plasticizers, PET resin and polyurethanes as random examples – with the aim of analyzing the trends within the global industry. We regard ourselves us much more than a reporting agency, but rather as an analytical and commentary company also doing consulting work and organizing conferences around the world.
What would you say are the current themes most relevant to Latin America’s chemical sector?
The effect of the pandemic and lockdowns has been felt in several ways. There was a great reduction of consumption in 2020, which bounced back in 2021 when people started shopping again. This bounce back created shortages that are still present today. Logistics and supply chains were disrupted as port operations were stymied by people having to stay at home, resulting in tailbacks of ships and containers stacking up at ports. These disruptions have caused a realization that globalization can have negative consequences, as it relies on efficient transport around the globe. Countries and companies now need to start investing and looking for sources of raw material closer to home. In Latin America, the problem is that there is a lack of domestically produced feedstock, and prices of petroleum-derived raw materials are generally high.
Although there are clear challenges, there are also opportunities. The availability of natural gas is a first step towards reducing carbon footprint, and Latam has various natural gas resources which still needs to be exploited, such as in Bolivia, Argentina and Brazil. There are also discussions about a pipeline between Bolivia and the coast of Peru. These resources could be very valuable to the chemical industry, both as feedstock, a source of energy, and as a means of reducing electricity costs.
Which chemicals do you see as having the strongest potential for growth in Latam in the coming years?
In terms of base petrochemicals, the obvious one is ethylene. Brazil is short of ethylene, and we are seeing large quantities of caustic soda being exported from Brazilian ports because chlorine cannot be utilized as there is not enough ethylene to absorb it and make PVC. There is also the possibility to extract ethane from the natural gas coming from the pre-salt off-shore oil fields in Brazil. Presently a lot of the ethane is just being burned and there needs to be a program to extract the ethane and direct it towards ethane crackers, which can rejuvenate the Brazilian chemical industry.
The other possibility, particularly in Brazil, is for bio-materials to be used to make chemicals not from fossil fuels, but from natural resources which are renewable. The only good news from high crude oil prices is that it makes bio-materials more competitive, which will stimulate the investment necessary for their development.
Can you explain how the chemical industry fits into a growing bioeconomy?
The key to the future of the chemical industry is going to be the availability of hydrogen. Many chemical processes rely on hydrogen and new ones can be generated. Ideally, hydrogen must not be made from fossil fuels, so the world is working towards a competitive way of producing clean hydrogen. For this, cheap electricity is required, which can be provided from solar panels or wind energy. Brazil has a large availability of hydroelectric sources, which present a path in which blue hydrogen with zero carbon footprint can be produced.
Where do you think investment must be directed to create the necessary infrastructure to support widespread chemical recycling?
To achieve a truly circular economy, plastic waste needs to be collected. Programs are needed to encourage municipalities to sort waste.