Abraham Klip
Director General
Unigel Mexico
View from the Top

PEMEX Partnership Bears Fruit, Challenges

Mon, 01/18/2016 - 11:23

Q: How has Plastiglas’ relationship with PEMEX developed since it entered the Mexican market?

A: Unigel is a Brazilian chemical group that commercializes products such as acrylics, sodium cyanide and polystyrene as well as products for the fertilizing industry with ammonium sulfate. We are the largest producer in Latin America. Unigel Brazil decided to buy Plastiglas from Grupo Desc in 2006 with the idea of making the same acrylic sheets as we do in Brazil for sales in the North American market.

To ensure raw material availability for the production of these acrylic sheets Unigel entered an agreement with PEMEX to use the acrylonitrile produced at its plants. At the time, those plants were idle so we were supporting the whole industry using acrylonitrile production byproducts. Before that agreement, PEMEX had to incinerate the byproducts resulting from the acrylonitrile production chain, incurring extra costs.

In the agreement, PEMEX and Unigel committed to improving acrylonitrile production technology as well as to allowing Unigel to build a plant inside PEMEX’s facilities that would take advantage of all the byproducts being incinerated. This included hydrocyanic acid, which is dangerous to handle and transport. By building the plant, Unigel was expecting to have a constant supply of methyl methacrylate, a vital raw material for the production of acrylic sheets. The plant had to be operated by PEMEX’s union so Unigel took the operators to Brazil and trained them. Unigel is extremely proud of that because it was the first company to invest in PEMEX's petrochemical facilities long before the Energy Reform took place.

The problem that arose from that relationship is that the plant needed propylene as a raw material, also made by PEMEX as a byproduct of refining, and since refineries in Mexico operate at very low capacities the whole value chain of producing acrylic sheets was affected. This led to one of Unigel’s methyl methacrylate plants not operating due to lack of propylene.

Q: How is Plastiglas solving its raw material supply issue, while ensuring the best quality for its customers?

A: To face the lack of methyl methacrylate, Plastiglas had to start importing raw material from Unigel Brazil. Importing the product from Brazil means that costs to produce acrylic sheets are higher, which means that the whole industry based on the byproduct is also at risk. Because of the lack of propylene from PEMEX the whole chemical value chain in Mexico using that product is affected. To avoid imports and help the Mexican industry, Unigel is trying to reach an agreement with PEMEX in which Unigel can rent or buy PEMEX’s acrylonitrile plant, take care of the propylene raw material through other sources besides PEMEX refineries and bring the whole industry back to life.

Q: What are Unigel’s options if it does not reach an agreement with PEMEX?

A: President Peña Nieto stated the importance of protecting the chemical products industrial chain in Mexico but his message missed the fact that PEMEX operates at extremely low production efficiencies, therefore destabilizing the value chain. We are therefore looking for alternatives. One option is synthetically producing the raw materials needed for the production of acrylic sheets instead of receiving them as byproducts from Mexican industries. This would of course involve a different set of costs but we are willing to take them on because of the high stakes related to Plastiglas’ cell-cast acrylic sheets in the North America market, which represent 65 percent of the Mexican and 25 percent of the US market.

Sixty percent of the acrylic sheets produced by Plastiglas in Mexico is sold in the US and Canada, making it unviable to supply them from Brazil. This range of acrylic sheets can be used for many final products such as bulletproofing, heat resistant and shock resistant applications, among others. A range of our acrylic sheets just got approved by the National Sanitation Foundation (NSF) as a safe product to be in contact with food.