Mexico seeks private sector support to breathe new life into chemicals industry

Mexico wants to double private sector investments in its chemicals and petrochemicals industry by 2030 and replace US$14bn-worth of imports with local produced goods, government officials disclosed on Monday.

Within three years, the government's aim is for the sector to be growing by 10% a year, according to the Plan México roadmap launched by President Claudia Sheinbaum in Mexico City.

"It is essential to recover the capacity that the State used to have to produce petrochemicals," energy minister Luz Elena González said on Monday.

"We used to be a power in petrochemicals, [but] now the privatized fertilizer plants and the petrochemical plants have been abandoned." 

González was speaking at a presentation of Mexico's national development plan in the state of Tamaulipas, which is one of the centers of Mexico's petrochemical industry. Domestic companies such as Orbia and Alpek and multinational giants including BASF, Ineos and Sabic all have manufacturing facilities in the city of Altamira.

Plan México

Chemicals and petrochemicals form one of the strategic industrial sectors identified by the Plan México roadmap that was unveiled by Sheinbaum on Monday.

The document includes the target of doubling private sector investments in the industry and achieving growth of 10% a year within three years.

As part of the strategy for petrochemicals, national oil company Pemex will modernize its Cangrejera petrochemical complex in Veracruz state on the Gulf of Mexico.

The site's capacity to produce ethane, a key feedstock for the petrochemical industry, will be increased to 520,000t/y by 2030 from the current 250,000t/y.

Energy minister González said on Monday that investments by Pemex in the downstream sector would enable Mexico to increase its output of higher-valued refined products.

In recent years, the domestic petrochemical industry has been hit by low availability of feedstock from Pemex and an influx of cheap products from China.

As well as providing more ethane for domestic producers, Plan México commits Pemex to increasing its own petrochemical output after years of decline.

Pemex's production of petrochemicals slumped from 11.3Mt in 2014 to 3.5Mt in 2023, according to the company's database. At Cangrejera, petrochemicals output fell from 3.1Mt in 2014 to under 900,000t in 2023.

Source: BNamericas using Pemex database

Import substitution

Alongside increased production from Pemex, Mexico will also act to limit foreign competition.

The government will impose tariffs on imports of chemical products which have increased by more than 100% in the last two years. 

Plan México aims to substitute US$14bn of chemical imports by 2030, in segments such as advanced polymers, carbon fibers and packaging materials. 

Mexico will also relax customs controls on some key precursors used to make chemicals and fertilizers.

Subscribers can access the petrochemicals part of the Plan México strategy in the documents box in the upper-right corner.