Released May 29, 2020 | Cordoba
en
Refining
Latin America's Petroleum Refining Industry continues to cope with the impact of the COVID-19 pandemic. Refiners keep adjusting their operational strategies to manage product storage and deal with refinery margins. Nationwide lockdowns and mandatory quarantines are expected to last through June and even longer, so offline refineries and run cuts remain in place.
Venezuela continues to run at lower capacity its 625,000-barrel-per-day (BBL/d) Amuay and 295,000-BBL/d Cardon refineries at lower capacities. Completion of repairs are being delayed.
Brazil's Petrobras is maintaining a 40% rate reduction at its refineries and expects to maintain the lower rates in June.
Mexico's Pemex TRI is struggling to complete repairs at its 325,000-BBL/d Salina Cruz and 285,000-BBL/d Refineria Lazaro Cardenas (Minatitlan) refineries due to a contractor shortage. Its 243,000-BBL/d Salamanca refinery continues to produce only 85,000-BBL/d.
Oil & Gas
During May, the Oil & Gas Industry partially resumed activities due to the following factors:
Peru's state-run company, PETROPERU, is looking to resume operations of its main pipeline (Norperuvian Crude Oil Pipeline) in the coming weeks in order to restart operations at its plants in the country's northern blocks.
Mexico recently reported an increase in crude oil and natural gas production due to the commissioning of the first phase of the Hokchi field project, located offshore in the state of Tabasco.
Metals and Minerals
The mining sector is starting to reactivate operations as governments remove lockdown measures. Projects under construction are being impacted by the pandemic. Most construction funding is still suspended, and future project investments will be pushed back. Projects under construction in Latin America amount to $38 billion.
Mexico's mining companies have begun to resume operations, as the government allowed mining activity starting May 15. Mines are expected to achieve full operational capacities in the third quarter this year.
Peru continues with the gradual resumption of mining activities. Mining companies have resumed operations with reduced numbers of workers on-site.
Chile's mines are operational; miners are trying to maintain production with reduced personnel and new health guidelines.
Power
During the last week of May, 158 Power projects worth $17 billion were tracked in Latin America, including 34 projects worth $2.6 billion that have been identified as being affected by COVID-19. No cancellations have been reported.
Grassroot and transmission & distribution (T&D) projects represent 82% of the project investments, while expansions and other in-plant capital projects represent 6%, and maintenance spending represents 12%. impact on grassroot and T&D projects is still larger because they require a larger mobilization of people and equipment, and larger and more complex investment decisions. The impact on maintenance spending is increasing because once the most critical maintenance activities have been done, plant operators are rescheduling the rest due to budgetary constraints and the reduction of running hours due to lower electricity demand.
Industrial Manufacturing
The Manufacturing Industry was forced to temporarily shut down operations in early April, and only allow essential activities remain open.
The automotive industry is one of the most affected manufacturing sectors. Industrial Info is tracking 997 operational automotive plants; 131 (13%) plants have suspended production since late March. Most of the shuttered plants are car assemblers. Some big player companies have begun to resume operations.
Alternative Fuels
Unica, the Brazilian sugarcane industry union, has announced that the volume of ethanol sales in the first 15 days of May 2020 for the Centro-Sul region of Brazil was 1.05 billion liters, a 22% decrease when compared with the same period in 2019 (1.35 billion liters). Of this total, 33.94 million liters were destined for the foreign market and 1.02 billion liters domestically. In the domestic market, sales of hydrous ethanol reached 729.23 million liters in the first half of May, with a reduction of 24% over the amount recorded in the same period of the last harvest (959.43 million liters). Anhydrous ethanol, in turn, fell by 23.82%: 292.57 million liters sold in 2020, against 384.04 million liters in 2019. These figures underline the impact which the COVID-19 global pandemic is having on the biofuels industry in Brazil.
As a means to meet greater demand for alcohol for disinfection and asepsis, there has been accumulative growth in fuel ethanol production for non-fuel purposes. Unica estimates that the volume for other purposes reached 174.49 million liters by May 16, registering an increase of 87.17% in comparison with the quantity sold in the same period of the last harvest (93.22 million liters). Nevertheless, these figures only represent around 6% of plants' total sales.
Overall, the situation has become most worrying for fuel ethanol plants solely comprised of distilleries, which do not have the necessary infrastructure to produce sugar for the duration of the harvest.
The high volatility in the prices of oil and its derivatives and the crisis caused by the pandemic of the new coronavirus brought many uncertainties for the biofuels sector. Despite this scenario, the president of Unem (National Corn Ethanol Union), Guilherme Nolasco, says that corn ethanol plants, with exclusive production, continue to produce within normal limits.
In Argentina, the biodiesel sector was dealt another blow upon confirmation that the U.S. Department of Commerce has decided to uphold its ruling to place prohibitive tariffs on the entry of Argentine biodiesel.
Chemicals
Chemical producers are struggling to maintain operations with only necessary personnel on site, implementing maintenance work to preserve the status of their plants. One of the impacts of the present crisis is evident on the investment values approved during the first five months of the year. From January through May 2019, 71 projects received capital approval, which represented a total of $4.54 billion, about $3.6 billion of which was destined to the construction of new plants or units. In the same period of 2020, however, a significantly lower amount has been approved due to the impact of COVID-19. Although the number of projects, 67, is quite similar, only $1.05 billion worth was approved, 80% of which was invested in the plastic/rubber and petrochemical sectors.
Pharmaceutical & Biotech
Companies in the Pharmaceutical & Biotech Industry continue to produce at maximum capacities, especially in the final formulation and medical devices sectors.
Regarding projects in engineering and construction phases, though the majority of them continue to be delayed to be evaluated by the second part of the year or even next year, there is a very small portion of projects that already kicked-off and/or were completed during the month of March and April 2020, mainly in Brazil and Mexico and in the final formulation and medical devices sectors.
Cosmetic companies continue converting production lines to produce various alcohol-based products, since the market demand for this essential product continues to increase.
Food & Beverages
The most important companies of the Food & Beverage Industry, such as Coca-Cola Femsa and Grupo Modelo in Mexico and Ambev and Cargill in Brazil, have temporally suspended their capital investments related to expansions and new facilities.
COVID-19 cases continue to rise in Brazil. Meat processor BRF announced that 340 employees tested positive for the coronavirus in one of its facilities in the city of Concordia, in Santa Catarina state. The company JBS, also declared that at its plant in Ipumirim, Santa Catarina, 22 employees have been infected with COVID-19. The facilities remain operational, and both companies have ensured that all the sanitary protocols are being correctly implemented in all their industrial plants. However, the companies said that due to staff reductions, it will be impossible to fulfill all commercial commitments, adding one more complication to problems facing the global meat trade.
Pulp & Paper
In Brazil, where the heaviest investments in the Pulp & Paper Industry are concentrated, projects spearheaded by Klabin, LD Celulose (Duratex + Lenzing), Bracell and Lwarcel, together worth more than 20 billion reais (US$3.75 billion), continue to be suspended. Paper projects expected to be approved in the first quarter of 2020 have been postponed to the end of this year.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Latin America's Petroleum Refining Industry continues to cope with the impact of the COVID-19 pandemic. Refiners keep adjusting their operational strategies to manage product storage and deal with refinery margins. Nationwide lockdowns and mandatory quarantines are expected to last through June and even longer, so offline refineries and run cuts remain in place.
Venezuela continues to run at lower capacity its 625,000-barrel-per-day (BBL/d) Amuay and 295,000-BBL/d Cardon refineries at lower capacities. Completion of repairs are being delayed.
Brazil's Petrobras is maintaining a 40% rate reduction at its refineries and expects to maintain the lower rates in June.
Mexico's Pemex TRI is struggling to complete repairs at its 325,000-BBL/d Salina Cruz and 285,000-BBL/d Refineria Lazaro Cardenas (Minatitlan) refineries due to a contractor shortage. Its 243,000-BBL/d Salamanca refinery continues to produce only 85,000-BBL/d.
Oil & Gas
During May, the Oil & Gas Industry partially resumed activities due to the following factors:
- The return of commercial sectors in several countries following shutdowns to prevent the spread of the coronavirus
- The reactivation of numerous refineries, which allowed an increase in storage at crude oil terminals
- Resumption of oil takeaway infrastructure
- New government measures in Argentina, Mexico, Peru and Ecuador to strengthen the oil industry
Peru's state-run company, PETROPERU, is looking to resume operations of its main pipeline (Norperuvian Crude Oil Pipeline) in the coming weeks in order to restart operations at its plants in the country's northern blocks.
Mexico recently reported an increase in crude oil and natural gas production due to the commissioning of the first phase of the Hokchi field project, located offshore in the state of Tabasco.
Metals and Minerals
The mining sector is starting to reactivate operations as governments remove lockdown measures. Projects under construction are being impacted by the pandemic. Most construction funding is still suspended, and future project investments will be pushed back. Projects under construction in Latin America amount to $38 billion.
Mexico's mining companies have begun to resume operations, as the government allowed mining activity starting May 15. Mines are expected to achieve full operational capacities in the third quarter this year.
Peru continues with the gradual resumption of mining activities. Mining companies have resumed operations with reduced numbers of workers on-site.
Chile's mines are operational; miners are trying to maintain production with reduced personnel and new health guidelines.
Power
During the last week of May, 158 Power projects worth $17 billion were tracked in Latin America, including 34 projects worth $2.6 billion that have been identified as being affected by COVID-19. No cancellations have been reported.
Grassroot and transmission & distribution (T&D) projects represent 82% of the project investments, while expansions and other in-plant capital projects represent 6%, and maintenance spending represents 12%. impact on grassroot and T&D projects is still larger because they require a larger mobilization of people and equipment, and larger and more complex investment decisions. The impact on maintenance spending is increasing because once the most critical maintenance activities have been done, plant operators are rescheduling the rest due to budgetary constraints and the reduction of running hours due to lower electricity demand.
Industrial Manufacturing
The Manufacturing Industry was forced to temporarily shut down operations in early April, and only allow essential activities remain open.
The automotive industry is one of the most affected manufacturing sectors. Industrial Info is tracking 997 operational automotive plants; 131 (13%) plants have suspended production since late March. Most of the shuttered plants are car assemblers. Some big player companies have begun to resume operations.
Alternative Fuels
Unica, the Brazilian sugarcane industry union, has announced that the volume of ethanol sales in the first 15 days of May 2020 for the Centro-Sul region of Brazil was 1.05 billion liters, a 22% decrease when compared with the same period in 2019 (1.35 billion liters). Of this total, 33.94 million liters were destined for the foreign market and 1.02 billion liters domestically. In the domestic market, sales of hydrous ethanol reached 729.23 million liters in the first half of May, with a reduction of 24% over the amount recorded in the same period of the last harvest (959.43 million liters). Anhydrous ethanol, in turn, fell by 23.82%: 292.57 million liters sold in 2020, against 384.04 million liters in 2019. These figures underline the impact which the COVID-19 global pandemic is having on the biofuels industry in Brazil.
As a means to meet greater demand for alcohol for disinfection and asepsis, there has been accumulative growth in fuel ethanol production for non-fuel purposes. Unica estimates that the volume for other purposes reached 174.49 million liters by May 16, registering an increase of 87.17% in comparison with the quantity sold in the same period of the last harvest (93.22 million liters). Nevertheless, these figures only represent around 6% of plants' total sales.
Overall, the situation has become most worrying for fuel ethanol plants solely comprised of distilleries, which do not have the necessary infrastructure to produce sugar for the duration of the harvest.
The high volatility in the prices of oil and its derivatives and the crisis caused by the pandemic of the new coronavirus brought many uncertainties for the biofuels sector. Despite this scenario, the president of Unem (National Corn Ethanol Union), Guilherme Nolasco, says that corn ethanol plants, with exclusive production, continue to produce within normal limits.
In Argentina, the biodiesel sector was dealt another blow upon confirmation that the U.S. Department of Commerce has decided to uphold its ruling to place prohibitive tariffs on the entry of Argentine biodiesel.
Chemicals
Chemical producers are struggling to maintain operations with only necessary personnel on site, implementing maintenance work to preserve the status of their plants. One of the impacts of the present crisis is evident on the investment values approved during the first five months of the year. From January through May 2019, 71 projects received capital approval, which represented a total of $4.54 billion, about $3.6 billion of which was destined to the construction of new plants or units. In the same period of 2020, however, a significantly lower amount has been approved due to the impact of COVID-19. Although the number of projects, 67, is quite similar, only $1.05 billion worth was approved, 80% of which was invested in the plastic/rubber and petrochemical sectors.
Pharmaceutical & Biotech
Companies in the Pharmaceutical & Biotech Industry continue to produce at maximum capacities, especially in the final formulation and medical devices sectors.
Regarding projects in engineering and construction phases, though the majority of them continue to be delayed to be evaluated by the second part of the year or even next year, there is a very small portion of projects that already kicked-off and/or were completed during the month of March and April 2020, mainly in Brazil and Mexico and in the final formulation and medical devices sectors.
Cosmetic companies continue converting production lines to produce various alcohol-based products, since the market demand for this essential product continues to increase.
Food & Beverages
The most important companies of the Food & Beverage Industry, such as Coca-Cola Femsa and Grupo Modelo in Mexico and Ambev and Cargill in Brazil, have temporally suspended their capital investments related to expansions and new facilities.
COVID-19 cases continue to rise in Brazil. Meat processor BRF announced that 340 employees tested positive for the coronavirus in one of its facilities in the city of Concordia, in Santa Catarina state. The company JBS, also declared that at its plant in Ipumirim, Santa Catarina, 22 employees have been infected with COVID-19. The facilities remain operational, and both companies have ensured that all the sanitary protocols are being correctly implemented in all their industrial plants. However, the companies said that due to staff reductions, it will be impossible to fulfill all commercial commitments, adding one more complication to problems facing the global meat trade.
Pulp & Paper
In Brazil, where the heaviest investments in the Pulp & Paper Industry are concentrated, projects spearheaded by Klabin, LD Celulose (Duratex + Lenzing), Bracell and Lwarcel, together worth more than 20 billion reais (US$3.75 billion), continue to be suspended. Paper projects expected to be approved in the first quarter of 2020 have been postponed to the end of this year.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
