What is Grupo Idesa’s structure and what role does it play in the Mexican petrochemical space?

Within our petrochemical division, we have four companies with a diversified product basket. Grupo Idesa is the only producer of ethanolamines, which go into the surfactants market, oil and gas, construction and personal care industries. Another legacy product of Idesa is phthalic anhydride, with a broad range of uses, and, finally, an important part of our product portfolio is our alkylamines. We also produce EPS (expansible polystyrene), which is the only product line where we are integrated downstream into a finished product for the construction industry producing floor and wall structural and insulating panels.

To what extent is Grupo Idesa exporting?

We have become an indirect exporter; our customer are the ones exporting finished products. Beyond that, we export excess capacity of certain products mostly to Europe and the US, and sometimes to Latin America and the Caribbean. How has competition with Asian products impacted the Mexican chemical market?

While there is a clear slowdown in demand both in Mexico and internationally, demand in some market segments remains steady or is growing. The reason why the global slowdown is so difficult for the Mexican chemicals is the aggressive competition we are facing from Asian producers. This is affecting the industry in many ways. It is not just the lower prices that our customers can find choosing Asian products, but also that the price of the finished product sold by Asian suppliers could be the same as the raw material that our customers purchase – this means customers can skip a step in the production process, buying the finished product or part of that finished product instead of buying raw materials. Therefore, demand for raw materials in the region is not at is best, even as demand for finished products is not necessarily slowing down. On top of that, the strong currency (Mexican Peso) is helping importers. All considered, I believe this is one of the most challenging years in the chemical industry. We are at the bottom of the cycle, and everyone expects things to pick up in 2024. How can Mexico stand out as a manufacturing base for the chemical industry?

There are four elements that the chemical industry requires to excel and add value. One is technology, whether in-house or licensed. The second is human capital; Mexico has a well-prepared base of engineers, but we must continue to promote the industry as a career path for young people given the global trend of fewer STEM graduates. Third is the market itself; I always say that the potential of our industry stands in its deficit – we are talking about a commercial trade deficit for the chemical sector of close to U$21 billion. And finally, the fourth and crucial constituent is the competitive and reliable sourcing of raw materials. Currently, this last pillar is Mexico’s weakest link. No company will build a new plant if they cannot secure feedstocks at reliable and competitive prices. There have been many views on the government participation in the downstream, but the concession we have arrived at is to find a middle ground: We continue to reaffirm that we want Pemex, the state-owned oil and gas company, but we want a stronger Pemex that can provide the industry with the required raw materials so we can invest in bigger and new plants. Do you think Mexico is at a disadvantage without a clear framework for renewable energy?

The industry is indeed concerned that the current government does not provide the tools and incentives to invest in renewables, which makes Mexico’s carbon mitigation objectives very difficult to achieve. Our customers may soon be demanding that part of our electricity be generated from renewables before purchasing our products. When that happens, the country will have a lot of catching up to do. Meanwhile, at Grupo Idesa, we continue to look at ways to reduce our energy consumption to cut both costs and emissions. Could you share a final message for our audience and APLA members?

We need to continue fighting for a powerful Mexican chemical industry. If we can capture even a fraction of the existing potential, we are already on a very good path.