Released May 01, 2020 | SUGAR LAND
en
Alternative Fuels
As a result of the COVID-19 global pandemic, consultancy firm Canaplan has evaluated the current situation of the sugarcane-based ethanol industry in Brazil and presented a study with three possible outcomes for the 2020/21 harvest season. It was concluded that in a scenario in which public policies are enforced late and the effects of the coronavirus pandemic are at their maximum, crushing will be more concentrated at the end of the year, reaching 594.4 million tons, with productivity of 77 tons per hectare and 81 kg of ATR (Total Recoverable Sugars) per ton. The mix should be alcoholic, with 56% of the raw material aimed at the production of biofuel (approximately 26.67 billion liters) and 44% for sugar with a production of 33.94 million tons. Canaplan clarified that there is very small variation between the three scenarios analyzed; however, each company's strategy is going to be different. According to the president of Canaplan, it is necessary to find a quick solution to the problems, emphasizing that each week lost represents a fall by 2% of what is produced.
Following the start of the 2020/21 harvest season, the first economic results of the year are coming into focus. During the first fortnight in April, producers in Brazil's Center-South region sold 799.03 million liters of fuel ethanol. Of this total, sales of hydrated ethanol to the domestic market totaled 560.48 million liters, a 35.77% drop compared with the same period in 2019. In relation to anhydrous ethanol, 201.20 million liters were sold domestically, against 302.91 million liters in the previous year. The drastic drop in demand for fuels, the retractions in oil prices and the drop in sugar prices already have affected sector revenues. In the first half of April, revenue from the sale of ethanol fell by almost 50% compared to the values recorded in the same period of 2019. It is important to note, however, that while sales have fallen, crushing capacities and productivity up until now have reached record levels, in order to make use of the sugarcane before the economic impacts of the crisis worsen. Crushing reached 22.38 million tons of sugarcane in the first 15 days of the month; this is the second-highest historical index for the period, lower only when compared to the 32.94 million tons obtained in the same fortnight of the 2016/2017 season. In a biweekly comparison to results observed in 2019 (13.90 million tons), there was an increase of almost 8.5 million tons. In fact, by April 16, 178 production units were already operating in the Center-South (of these, six were producing corn ethanol). On the same date last year, there were 157. Nevertheless, 20 producers have decided to postpone their crushing season as a result of the pandemic.
Several companies are turning to sugar production in light of the declining demand for ethanol. According to JOB Economia e Planejamento, sugar ultimately will return to its role as "savior of the country," with prices and demand stronger than ethanol. Brazil is expected to see two records: one in production, of 41 million tons; the other for sugar exports of around 30 million tons, equal to 10 million more than in the previous harvest. As such, India likely will lose its role as the world's largest producer of the commodity. In the Center-South, production is forecast at 37.5 million tons versus 26.73 million in the previous season.
Yet, despite the positive outlook, the effects of the COVID-19 pandemic are starting to come to light. Evandro Gussi, the President of Unica (Union of the Sugarcane Industry), has highlighted that plants in the Center-South region of Brazil may begin to suspend activities in a period of ten days to two weeks, unless the sector receives government assistance to overcome the crisis. He clarified that without measures being taken at a federal level, in the very short term the sector will begin to cease operations at its plants, which would spark a chain reaction in the entire industry. The emphasis was placed on the fact that the sector had done its part in reducing costs, redirecting operations and promoting and implementing social distancing, with the government now having to step in to play its part.
Unsurprisingly, several planned investments in the alternative fuels industry for the year have been delayed or cancelled entirely; however, certain projects are still advancing or have been completed on time. One example is the biogas plant constructed at Raizen's sugar plant in Guariba, which commenced experimental activities this month. Furthermore, Brazil Bio Fuels' planned R$220MM (US$41.23MM) corn ethanol investment in Sao Joao da Baliza remains on schedule, with a new contract recently signed with U.S. technology firm ICM to collaborate on their 130 million-liter-per-year project.
Meanwhile, in Argentina, the effects of the lockdown--in place until May 10--continue to affect the corn ethanol sector. After two years of uninterrupted operations, Bio 4, one of the pioneering producers of ethanol in the country and located in the city of Rio Cuarto, halted operations last on April 29. Circulation restrictions caused a crash in gasoline consumption and consequentially brought down bioethanol. Bioethanol has been used by oil companies in Argentina to reduce naphtha consumption by 12%. Due to a fall in demand and their storage capacity having been occupied, the company has been given no choice but to temporarily cease operations. This invariably causes a knock-on effect for other industries heavily tied to the corn-ethanol sector in Argentina, such as feedlots and animal feed production. As the distillery does not operate, there is no production of burlanda or generation of vinasse (ethanol production byproducts), which forces ranchers and dairy farmers to reformulate the diets of their cattle with more expensive sources, which are probably not available locally. This is a complication due to the higher cost of freight and the difficulties of moving. Similarly, the company's powerhouse works in conjunction with a bio digester, which breaks down the animal waste and so any change in diet leads to a period of adaptation for the bio digester as well. As a result, energy generation at the plant is also affected. The company has stated, however, that plans are to resume production as soon as conditions are given and that they will take advantage of the downtime to perform maintenance on the plant and adjust the distillery to produce alcohol for new markets.
Metals & Minerals
Following a COVID-19 economic impact review, Brazilian company Vale reduced its 2020 capital spending (capex) from US$5 billion to US$4.6 billion, and potential updates over the year may be necessary. The company has decided to suspend or postpone its non-essential projects. Investments in dam safety and health are considered essential and are not subject to suspension at the moment.
Projects under construction, such as Solobo III and S11D Expansion Sistema Norte 240, are continuing as planned. Start-up dates have not changed, but they could change as related construction is affected by the pandemic.
Mines in Mexico are shuttered all over the country. Field work and explorations activities have been halted.
Anglo American decided to demobilize almost 15,000 workers from its Quellaveco Project in Perú, following the strict measures that the Peruvian government has taken to fight COVID-19.
Teck Resources has suspended construction at Quebrada Blanca II in Chile, after it was initially planned to be a two-week suspension. Assuming full construction activities are restarted in the second quarter, Teck expects to achieve the first production by mid-2022. Teck Resources announced that based on an assumption of a four-week suspension period, the impact is estimated to be approximately US$75 million to $125 million and a schedule delay of up to eight weeks, including demobilization, suspension and restart impacts.
Power
April was the first complete month during which the entire Latin American region has been affected by the pandemic, with different levels of restrictions impacting social and economic activities in the region. During the month, 105 capital projects worth $6.38 billion were identified as impacted or delayed due to COVID-19, although none of them have been cancelled or put on hold. Nevertheless, in terms of new capacity, it has delayed the startup of commercial operations at a 30MW solar facility in Mexico and the kick-off of the preliminary works of a small-scale, 3MW solar facility in Chile. In terms of maintenance activity, only two were identified as delayed; but, once again, no cancelations so far.
Refining
Refiners across Latin America continue to cut output and try to push their refinery utilizations to near minimum to keep their operations active. However, the continuity and extension of the current lockdown and restrictions in countries such as Argentina, Peru and Uruguay are forcing companies to start shutting down facilities to face low demand and storage unavailability.
Pemex TRI remains on plan to go ahead with its 2020 Turnaround Program at its Mexico sites; however, start dates are being revised due to the limitation of contractors allowed into plants.
Argentina
YPF SA has decided to keep offline, until the third week of May 2020, its 28,000 BBL/d Plaza Huincul, Argentina refinery. The state-owned oil company previously had reduced production 50% before being forced to shut down processing units in the second week of April. The 205,000 BBL/d La Plata Refinery remains processing at 50-55% capacity, and the 21-day planned turnaround on the 90,000 BBL/d Crude Topping D, 18,000 BBL/d Vacuum, 5,400 BBL/d Paraffin (HTP) Hydrotreater and associated units remains set to begin the second week of May; however, its duration may be extended due to planning and the restricted number of contractors allowed on site. Finally, YPF SA has reduced production an additional 10% to the already depressed level at its 113,200 BBL/d Lujan de Cuyo refinery, which is processing at 40% capacity and may be forced to shut it down if demand for petroleum products continues to drop, since storage capacity has reached its limit.
Mexico
Pemex has confirmed it will maintain the budget for the facility's 2020 planned turnaround program at its 270,000 BBL/d Cadereyta refinery originally expected to commence in May; however, due to delays in the contractor line-up as a result of the COVID-19 pandemic and fewer contractors being allowed in the refinery, it has been indefinitely delayed. Same scenario for the 285,000 BBL/d Refineria Lazaro Cardenas (Minatitlan) refinery, where turnaround was scheduled to begin on May 22 and now has been delayed. The turnaround schedule team is reviewing the scope and schedule to commence work in July or later. Only part of the labor force continues assisting with the facility, but this has had no impact on operations.
Peru
Repsol Peru continues to run at lower rates its 110,000 BBL/d La Pampilla, Peru refinery. The 30,000 BBL/d Distillation 1 continues to be offline, while the 80,000 BBL/d Distillation 2 is running at 70,000 BBL/d. The remaining operational units are running at approximately 60% normal capacity, and the company expects to maintain those rates until mid-May 2020.
Petroperu S.A. continues to suspend all activities related to the PMRT (Proyecto de Modernizacion de Refineria Talara - PMRT) at its 65,000 BBL/d Talara, Peru refinery. The project was underway, with a completion date in August-September 2021. The facility has been already offline since December 2019 to perform tie-ins related to facility expansions and upgrades. Petroperu SA has not yet determined a date to resume work, which will depend on market demand.
Petroperu S.A. was forced, this past weekend, to shut down its 10,500 BBL/d Iquitos, Peru refinery as a result of reduced product demand. The restart date is unknown at this time, and will depend on market demand.
Venezuela
A restart date remains unknown at this time for the 120,000 BBL/d Crude 4 and 180,000 BBL/d Crude 5 units at PDVSA's 625,000 BBL/d Amuay refinery, which remains offline due to the pandemic and export restrictions. PDVSA accelerated the previously set 45-day planned turnaround and revamp on the 80,000 BBL/d FCCU, set to be performed later this year; however, due to COVID-19 the FCCU will remain under major maintenance and repairs until June.
Uruguay
ANCAP was forced to de-rate to minimum rates, approximately 50%, at its 50,000 BBL/d La Teja refinery operations. Only essential staff is allowed to assist and work alternating shifts were implemented as measures to prevent the spread of COVID-19. Also, ANCAP is on schedule to perform, in October 2020, a three-week minor plant wide turnaround for safety and inspections; however, the company may consider accelerating work as an opportunity to shut down the plant and face low demand.
Chile
ENAP Refinerias has kept the lone Crude unit at its 28,600 BBL/d Gregorio refinery offline since March 21, due to COVID-19 cases among workers. At this time, any possible restart date remains unknown.
Brazil
Petrobras is continuing with the shutdown of its 207,500 BBL/d Crude U200A, 53,000 BBL/d FCCU 2 (U-220A) and 31,500 BBL/d HDT 2 (U-283A) at its 415,000 BBL/d REPLAN refinery. The Crude unit went offline on February 1 for maintenance, while the FCCU 2 and HDT 2 went offline on March 1 as an opportunity outage. The remaining units at the refinery continue processing at 60% capacity.
Netherland Antilles
Klesch Group will not begin operating the 225,000 BBL/d Willemstad Isla refinery in May 2020, as previously agreed, due to the inability to move personnel from Europe to the island. All processing units, still operated by PDVSA, remain offline due to unplanned events, followed by lack of crude and financial issues, and will be kept as such until June 2020. Klesch Group expects to begin operating the Isla Refinery in June/July 2020 if the current situation improves.
Oil & Gas
Oil and natural gas production in Latin America continues to decline. Due to the drop in local demand caused by the quarantine imposed in several countries, the fall in international oil prices and the lack of storage capacity, large national producers have developed contingency plans to decrease production levels. Petroleos Mexicanos (Pemex) will focus its production only on its most profitable fields and is analyzing the suspension of crude oil purchases from private producers. Petrobras, which aimed to halt production by 2 million BBL/ d by the end of this month, was not able to do so due to an unexpected increase in production in the Presalt basin. At the moment, the Brazilian state-owned company is considering stopping production in some of its mature fields in the Reconcavo Bahiano, to reach an agreement signed with the Organization of the Petroleum Exporting Countries (OPEC). Natural gas production in Peru is limited to the country's internal demand and exports through the Melchorita LNG export terminal.
The market is expected to reactivate its investments in approximately six to 12 months. Many companies have postponed their investment decisions pending an improvement in the price of crude oil, while others have reduced their investment planned for 2020. However, so far Industrial Info has not identified any projects as canceled due to current market conditions. The investment curve shows a displacement to 2021. A slight improvement in the market is expected for 3Q20 due to the increase in the internal demand for fuels, brought on by the end of quarantine periods in countries such as Argentina, Chile, Peru, Ecuador, Mexico and Bolivia.
Chemical Processing
Most of Latin America's chemical producers are trying to maintain normal production rates with only necessary personnel on site--especially chlorine and PVC producers, as these are two vital elements for cleaning materials and product used in hospitals to treat patients and protect medical staff. Unipar, for example, has not only continued with normal operations, but has decided to increase production capacity by 15% by using idled assets.
In Mexico, Braskem-Idesa owns and operates one of the biggest petrochemical complexes in the region. The company has been able to continue operating at normal rates to comply with their contracts. They have been dealing with a shortage of natural gas feed on the part of state-owned Pemex by importing natural gas from the Houston, Texas area.
Pharmaceuticals
Plants continue at full capacity; however, Industrial Info has identified 126 projects as delayed by the health emergency crisis.
Laboratories continue researching for a COVID-19 vaccine; short-term expectations are focused on the pandemic treatment. Cuban company Centro de Ingenieria Genetica y Biotecnologia plans to add a production line of anti-inflammatory cytokines injectable vaccines (CIGB-258) to treat COVID-19 patients in critical conditions, expected to be completed by the last quarter of the year.
Food & Beverage
Due to the uncertain economic scenario for 2020, the most important companies in the Food & Beverage Industry--such as Coca-Cola Femsa and Grupo Modelo in Mexico and Ambev and Cargill in Brazil--have decided to temporally suspend all capital investments related to expansions and new facilities. The soft drinks and alcoholic beverages sector has been affected more than any other by the pandemic's restrictive measures.
Industrial Manufacturing
Industrial Info shows 126 automotive plants that have suspended production since March 20 to 25, due to the COVID-19 pandemic. Most of the companies expect to resume operations within May.
Mexico
Lower demand for heavy vehicles in the U.S. caused their production and export in Mexico to drop significantly in February, when compared with the same period last year, according to the National Association of Bus Producers, Trucks and Tractor Trucks (ANPACT).The production of motor transport vehicles reached a total of 12,332 units in February, which represents a decrease of 24.3%, while the export of units added 10,500 units, 23% less than the previous year. During the first two months of 2020, the production of heavy vehicles totaled 25,637 units, representing a 21.4% decrease.
As a result of the COVID-19 global pandemic, consultancy firm Canaplan has evaluated the current situation of the sugarcane-based ethanol industry in Brazil and presented a study with three possible outcomes for the 2020/21 harvest season. It was concluded that in a scenario in which public policies are enforced late and the effects of the coronavirus pandemic are at their maximum, crushing will be more concentrated at the end of the year, reaching 594.4 million tons, with productivity of 77 tons per hectare and 81 kg of ATR (Total Recoverable Sugars) per ton. The mix should be alcoholic, with 56% of the raw material aimed at the production of biofuel (approximately 26.67 billion liters) and 44% for sugar with a production of 33.94 million tons. Canaplan clarified that there is very small variation between the three scenarios analyzed; however, each company's strategy is going to be different. According to the president of Canaplan, it is necessary to find a quick solution to the problems, emphasizing that each week lost represents a fall by 2% of what is produced.
Following the start of the 2020/21 harvest season, the first economic results of the year are coming into focus. During the first fortnight in April, producers in Brazil's Center-South region sold 799.03 million liters of fuel ethanol. Of this total, sales of hydrated ethanol to the domestic market totaled 560.48 million liters, a 35.77% drop compared with the same period in 2019. In relation to anhydrous ethanol, 201.20 million liters were sold domestically, against 302.91 million liters in the previous year. The drastic drop in demand for fuels, the retractions in oil prices and the drop in sugar prices already have affected sector revenues. In the first half of April, revenue from the sale of ethanol fell by almost 50% compared to the values recorded in the same period of 2019. It is important to note, however, that while sales have fallen, crushing capacities and productivity up until now have reached record levels, in order to make use of the sugarcane before the economic impacts of the crisis worsen. Crushing reached 22.38 million tons of sugarcane in the first 15 days of the month; this is the second-highest historical index for the period, lower only when compared to the 32.94 million tons obtained in the same fortnight of the 2016/2017 season. In a biweekly comparison to results observed in 2019 (13.90 million tons), there was an increase of almost 8.5 million tons. In fact, by April 16, 178 production units were already operating in the Center-South (of these, six were producing corn ethanol). On the same date last year, there were 157. Nevertheless, 20 producers have decided to postpone their crushing season as a result of the pandemic.
Several companies are turning to sugar production in light of the declining demand for ethanol. According to JOB Economia e Planejamento, sugar ultimately will return to its role as "savior of the country," with prices and demand stronger than ethanol. Brazil is expected to see two records: one in production, of 41 million tons; the other for sugar exports of around 30 million tons, equal to 10 million more than in the previous harvest. As such, India likely will lose its role as the world's largest producer of the commodity. In the Center-South, production is forecast at 37.5 million tons versus 26.73 million in the previous season.
Yet, despite the positive outlook, the effects of the COVID-19 pandemic are starting to come to light. Evandro Gussi, the President of Unica (Union of the Sugarcane Industry), has highlighted that plants in the Center-South region of Brazil may begin to suspend activities in a period of ten days to two weeks, unless the sector receives government assistance to overcome the crisis. He clarified that without measures being taken at a federal level, in the very short term the sector will begin to cease operations at its plants, which would spark a chain reaction in the entire industry. The emphasis was placed on the fact that the sector had done its part in reducing costs, redirecting operations and promoting and implementing social distancing, with the government now having to step in to play its part.
Unsurprisingly, several planned investments in the alternative fuels industry for the year have been delayed or cancelled entirely; however, certain projects are still advancing or have been completed on time. One example is the biogas plant constructed at Raizen's sugar plant in Guariba, which commenced experimental activities this month. Furthermore, Brazil Bio Fuels' planned R$220MM (US$41.23MM) corn ethanol investment in Sao Joao da Baliza remains on schedule, with a new contract recently signed with U.S. technology firm ICM to collaborate on their 130 million-liter-per-year project.
Meanwhile, in Argentina, the effects of the lockdown--in place until May 10--continue to affect the corn ethanol sector. After two years of uninterrupted operations, Bio 4, one of the pioneering producers of ethanol in the country and located in the city of Rio Cuarto, halted operations last on April 29. Circulation restrictions caused a crash in gasoline consumption and consequentially brought down bioethanol. Bioethanol has been used by oil companies in Argentina to reduce naphtha consumption by 12%. Due to a fall in demand and their storage capacity having been occupied, the company has been given no choice but to temporarily cease operations. This invariably causes a knock-on effect for other industries heavily tied to the corn-ethanol sector in Argentina, such as feedlots and animal feed production. As the distillery does not operate, there is no production of burlanda or generation of vinasse (ethanol production byproducts), which forces ranchers and dairy farmers to reformulate the diets of their cattle with more expensive sources, which are probably not available locally. This is a complication due to the higher cost of freight and the difficulties of moving. Similarly, the company's powerhouse works in conjunction with a bio digester, which breaks down the animal waste and so any change in diet leads to a period of adaptation for the bio digester as well. As a result, energy generation at the plant is also affected. The company has stated, however, that plans are to resume production as soon as conditions are given and that they will take advantage of the downtime to perform maintenance on the plant and adjust the distillery to produce alcohol for new markets.
Metals & Minerals
Following a COVID-19 economic impact review, Brazilian company Vale reduced its 2020 capital spending (capex) from US$5 billion to US$4.6 billion, and potential updates over the year may be necessary. The company has decided to suspend or postpone its non-essential projects. Investments in dam safety and health are considered essential and are not subject to suspension at the moment.
Projects under construction, such as Solobo III and S11D Expansion Sistema Norte 240, are continuing as planned. Start-up dates have not changed, but they could change as related construction is affected by the pandemic.
Mines in Mexico are shuttered all over the country. Field work and explorations activities have been halted.
Anglo American decided to demobilize almost 15,000 workers from its Quellaveco Project in Perú, following the strict measures that the Peruvian government has taken to fight COVID-19.
Teck Resources has suspended construction at Quebrada Blanca II in Chile, after it was initially planned to be a two-week suspension. Assuming full construction activities are restarted in the second quarter, Teck expects to achieve the first production by mid-2022. Teck Resources announced that based on an assumption of a four-week suspension period, the impact is estimated to be approximately US$75 million to $125 million and a schedule delay of up to eight weeks, including demobilization, suspension and restart impacts.
Power
April was the first complete month during which the entire Latin American region has been affected by the pandemic, with different levels of restrictions impacting social and economic activities in the region. During the month, 105 capital projects worth $6.38 billion were identified as impacted or delayed due to COVID-19, although none of them have been cancelled or put on hold. Nevertheless, in terms of new capacity, it has delayed the startup of commercial operations at a 30MW solar facility in Mexico and the kick-off of the preliminary works of a small-scale, 3MW solar facility in Chile. In terms of maintenance activity, only two were identified as delayed; but, once again, no cancelations so far.
Refining
Refiners across Latin America continue to cut output and try to push their refinery utilizations to near minimum to keep their operations active. However, the continuity and extension of the current lockdown and restrictions in countries such as Argentina, Peru and Uruguay are forcing companies to start shutting down facilities to face low demand and storage unavailability.
Pemex TRI remains on plan to go ahead with its 2020 Turnaround Program at its Mexico sites; however, start dates are being revised due to the limitation of contractors allowed into plants.
Argentina
YPF SA has decided to keep offline, until the third week of May 2020, its 28,000 BBL/d Plaza Huincul, Argentina refinery. The state-owned oil company previously had reduced production 50% before being forced to shut down processing units in the second week of April. The 205,000 BBL/d La Plata Refinery remains processing at 50-55% capacity, and the 21-day planned turnaround on the 90,000 BBL/d Crude Topping D, 18,000 BBL/d Vacuum, 5,400 BBL/d Paraffin (HTP) Hydrotreater and associated units remains set to begin the second week of May; however, its duration may be extended due to planning and the restricted number of contractors allowed on site. Finally, YPF SA has reduced production an additional 10% to the already depressed level at its 113,200 BBL/d Lujan de Cuyo refinery, which is processing at 40% capacity and may be forced to shut it down if demand for petroleum products continues to drop, since storage capacity has reached its limit.
Mexico
Pemex has confirmed it will maintain the budget for the facility's 2020 planned turnaround program at its 270,000 BBL/d Cadereyta refinery originally expected to commence in May; however, due to delays in the contractor line-up as a result of the COVID-19 pandemic and fewer contractors being allowed in the refinery, it has been indefinitely delayed. Same scenario for the 285,000 BBL/d Refineria Lazaro Cardenas (Minatitlan) refinery, where turnaround was scheduled to begin on May 22 and now has been delayed. The turnaround schedule team is reviewing the scope and schedule to commence work in July or later. Only part of the labor force continues assisting with the facility, but this has had no impact on operations.
Peru
Repsol Peru continues to run at lower rates its 110,000 BBL/d La Pampilla, Peru refinery. The 30,000 BBL/d Distillation 1 continues to be offline, while the 80,000 BBL/d Distillation 2 is running at 70,000 BBL/d. The remaining operational units are running at approximately 60% normal capacity, and the company expects to maintain those rates until mid-May 2020.
Petroperu S.A. continues to suspend all activities related to the PMRT (Proyecto de Modernizacion de Refineria Talara - PMRT) at its 65,000 BBL/d Talara, Peru refinery. The project was underway, with a completion date in August-September 2021. The facility has been already offline since December 2019 to perform tie-ins related to facility expansions and upgrades. Petroperu SA has not yet determined a date to resume work, which will depend on market demand.
Petroperu S.A. was forced, this past weekend, to shut down its 10,500 BBL/d Iquitos, Peru refinery as a result of reduced product demand. The restart date is unknown at this time, and will depend on market demand.
Venezuela
A restart date remains unknown at this time for the 120,000 BBL/d Crude 4 and 180,000 BBL/d Crude 5 units at PDVSA's 625,000 BBL/d Amuay refinery, which remains offline due to the pandemic and export restrictions. PDVSA accelerated the previously set 45-day planned turnaround and revamp on the 80,000 BBL/d FCCU, set to be performed later this year; however, due to COVID-19 the FCCU will remain under major maintenance and repairs until June.
Uruguay
ANCAP was forced to de-rate to minimum rates, approximately 50%, at its 50,000 BBL/d La Teja refinery operations. Only essential staff is allowed to assist and work alternating shifts were implemented as measures to prevent the spread of COVID-19. Also, ANCAP is on schedule to perform, in October 2020, a three-week minor plant wide turnaround for safety and inspections; however, the company may consider accelerating work as an opportunity to shut down the plant and face low demand.
Chile
ENAP Refinerias has kept the lone Crude unit at its 28,600 BBL/d Gregorio refinery offline since March 21, due to COVID-19 cases among workers. At this time, any possible restart date remains unknown.
Brazil
Petrobras is continuing with the shutdown of its 207,500 BBL/d Crude U200A, 53,000 BBL/d FCCU 2 (U-220A) and 31,500 BBL/d HDT 2 (U-283A) at its 415,000 BBL/d REPLAN refinery. The Crude unit went offline on February 1 for maintenance, while the FCCU 2 and HDT 2 went offline on March 1 as an opportunity outage. The remaining units at the refinery continue processing at 60% capacity.
Netherland Antilles
Klesch Group will not begin operating the 225,000 BBL/d Willemstad Isla refinery in May 2020, as previously agreed, due to the inability to move personnel from Europe to the island. All processing units, still operated by PDVSA, remain offline due to unplanned events, followed by lack of crude and financial issues, and will be kept as such until June 2020. Klesch Group expects to begin operating the Isla Refinery in June/July 2020 if the current situation improves.
Oil & Gas
Oil and natural gas production in Latin America continues to decline. Due to the drop in local demand caused by the quarantine imposed in several countries, the fall in international oil prices and the lack of storage capacity, large national producers have developed contingency plans to decrease production levels. Petroleos Mexicanos (Pemex) will focus its production only on its most profitable fields and is analyzing the suspension of crude oil purchases from private producers. Petrobras, which aimed to halt production by 2 million BBL/ d by the end of this month, was not able to do so due to an unexpected increase in production in the Presalt basin. At the moment, the Brazilian state-owned company is considering stopping production in some of its mature fields in the Reconcavo Bahiano, to reach an agreement signed with the Organization of the Petroleum Exporting Countries (OPEC). Natural gas production in Peru is limited to the country's internal demand and exports through the Melchorita LNG export terminal.
The market is expected to reactivate its investments in approximately six to 12 months. Many companies have postponed their investment decisions pending an improvement in the price of crude oil, while others have reduced their investment planned for 2020. However, so far Industrial Info has not identified any projects as canceled due to current market conditions. The investment curve shows a displacement to 2021. A slight improvement in the market is expected for 3Q20 due to the increase in the internal demand for fuels, brought on by the end of quarantine periods in countries such as Argentina, Chile, Peru, Ecuador, Mexico and Bolivia.
Chemical Processing
Most of Latin America's chemical producers are trying to maintain normal production rates with only necessary personnel on site--especially chlorine and PVC producers, as these are two vital elements for cleaning materials and product used in hospitals to treat patients and protect medical staff. Unipar, for example, has not only continued with normal operations, but has decided to increase production capacity by 15% by using idled assets.
In Mexico, Braskem-Idesa owns and operates one of the biggest petrochemical complexes in the region. The company has been able to continue operating at normal rates to comply with their contracts. They have been dealing with a shortage of natural gas feed on the part of state-owned Pemex by importing natural gas from the Houston, Texas area.
Pharmaceuticals
Plants continue at full capacity; however, Industrial Info has identified 126 projects as delayed by the health emergency crisis.
Laboratories continue researching for a COVID-19 vaccine; short-term expectations are focused on the pandemic treatment. Cuban company Centro de Ingenieria Genetica y Biotecnologia plans to add a production line of anti-inflammatory cytokines injectable vaccines (CIGB-258) to treat COVID-19 patients in critical conditions, expected to be completed by the last quarter of the year.
Food & Beverage
Due to the uncertain economic scenario for 2020, the most important companies in the Food & Beverage Industry--such as Coca-Cola Femsa and Grupo Modelo in Mexico and Ambev and Cargill in Brazil--have decided to temporally suspend all capital investments related to expansions and new facilities. The soft drinks and alcoholic beverages sector has been affected more than any other by the pandemic's restrictive measures.
Industrial Manufacturing
Industrial Info shows 126 automotive plants that have suspended production since March 20 to 25, due to the COVID-19 pandemic. Most of the companies expect to resume operations within May.
Mexico
Lower demand for heavy vehicles in the U.S. caused their production and export in Mexico to drop significantly in February, when compared with the same period last year, according to the National Association of Bus Producers, Trucks and Tractor Trucks (ANPACT).The production of motor transport vehicles reached a total of 12,332 units in February, which represents a decrease of 24.3%, while the export of units added 10,500 units, 23% less than the previous year. During the first two months of 2020, the production of heavy vehicles totaled 25,637 units, representing a 21.4% decrease.
- Audi Mexico is extending the suspension of its activities for one more month
- Honda is extending shutdown of the two Mexican plants until May 8
- Toyota is postponing Mexico operations until May 11
- Volkswagen plans to restart operations at its Puebla plant on May 18, regarding its plant in Silao Guanajuato, although this date is still to be defined
- VWCO production lines in Mexico reopen on May 4
- BMW is extending shutdown of Brazilian plants thru May 4
- Caoa Chery Plant at Jacarei (SP) has been suspended since April 1 and has not defined when it will resume operations. Anapolis Plant suspended on March 23, does not yet have a provision
- General Motors is extending shutdown of Brazilian plants by 60 days until mid-June
- Honda Automotive announced that it will extend until the June 25 the suspension of automobile production in their plants in Brazil
- Honda Motorcycles Production in Manaus, halted since March 27, is to be resumed on May 18
- HPE Mitsibishi / Suzuki: the Catalão (GO) plant operations, halted since March 23, are to resume on May 23
- Hyundai is extending production suspension at plant in Piracicaba, Brazil, until May 27
- Jaguar Land Rover resumed operations on April 27 after 30 days of suspension
- Mercedes-Benz plans to resume production in Brazil, sometime in May
- Nissan is extending production suspension in Resende Plant until May 21
- Peugeot Citroen: Porto Real (RJ) Complex is to resume operations on May 31
- Renault resumes activities on May 4 in all of its Brazilian plants
- Toyota postpones return of production at Brazilian plants until June 22-24
- Volkswagen anticipates the return of some of its plant, between the end of April and the beginning of May, including the San Carlos Plant. For the other units, the reactivation should take place by mid-May
- Agco Brazilian Plants, located at Mogis Das Cruzes (SP) and south region (RS), resumed operation on April 14, after 10 days of shutdown. The distribution center located at Jundai (SP), has remained active
- Agrale Plants at Caxias Do Sul (RS) resumed operations on April 13, after halting operations on April 1
- CNH Industrial resumed operations at the Plants located at Piracicaba, Sorocaba and Contagem on April 13
- FCA Fiat Chrysler Automoveis Brasil LTDA: the company plans to gradually resume operations at its Betim (MG), Goiana (PE) factories. Production at these units has been halted since March 27
- Scania resumed operations on April 27 gradually and in two shifts
- Volkswagen Caminhões e Ônibus (VWCO - MAN Latin America) restarted production in Resende, Brazil on April 27 with a smaller workforce for 60 days
- Pirelli plans to resume production at its Tires Plant in Argentina by the end of May
- Toyota Motor Corp. is extending a halt of production at its Plant in Zarate until mid-May
- Scania Argentina reopened its plant in Tucuman on April 27
- Volkswagen Argentina resumed operations March 27 at its two plants in Argentina: the box factory in Cordoba, and the vehicle factory in Pacheco, Buenos Aires province. The new MQ281 box project is to be delayed
