Released May 22, 2020 | Cordoba
en
Chemicals
The Chemical Processing Industry's (CPI) reaction to the COVID-19 pandemic has been similar across all Latin American countries. Producers are struggling to maintain operations with only necessary personnel on site and administrative personnel working remotely as the health crisis grows. CPI companies mainly are implementing maintenance work, and are delaying many capital investments to the second semester of 2020 or even 2021. Industrial Info has identified $6 billion worth of capital spending that is being pushed forward by one or two years, while $750 million in project activity is being delayed until the second semester of 2020 as the industry awaits market improvement. Maintenance investments, however, generally are continuing as scheduled.
Pharmaceutical & Biotech
As new positive COVID-19 cases significantly increase in Latin America, the Pharmaceutical & Biotech Industry has become even more essential. Many pharma companies are running their plants at full capacity. The final formulation, biological therapeutics and medical devices sectors are producing at maximum levels and even increase productivity. These sectors are facing challenges as national governments call for them to accelerate production of medicines, medical supplies and import more materials, not only to treat COVID-19, but also other chronic diseases to treat vulnerable sections of the population. The industry is not only doubling, but sometimes tripling operation shifts, to meet demand.
Industrial Info is tracking $ 5.27 billion in final formulation and medical device investments that not being impacted by COVID-19. Industrial Info also has identified $10.23 billion worth of capital and maintenance projects that are being affected by COVID-19.
Food & Beverages
Brazil: The meat-processing sector has experienced volatile costs and prices due to the pandemic. The most significant companies in the region, such as Brazil's BRF, are seeing a drop in internal demand. BRF owns 50% of the Brazilian market share in multiple market segments, and has already announced a $38 million reais (US$6.8 million) loss during the first quarter of 2020. BRF has requested additional credit lines totaling $409 million for the short term to increase company's liquidity levels. In the processed food sector, companies also are experiencing decreased consumption due to the drop of personal incomes.
Industrial Manufacturing
Thousands of Industrial Manufacturing plants in Latin America have halted production, stalled construction activity for ongoing capital projects and significantly delayed planned maintenance or expansion activities.
Automotive manufacturing is one of the most affected sectors. With temporary plant closings, layoffs and employee suspensions, some companies have decided to extend their reopening, while others have begun to produce, but with reduced shifts.
Industrial Info is tracking 137 automotive plants that have suspended production since March 20. Most of the companies expect to resume operations within May through June, but other companies have extended their shutdowns.
Oil & Gas
The oil sector has gradually begun to resume activities. Peru: The government issued new security regulations to reactivate the upstream activities that were halted to prevent the spread COVID-19. Production is expected to be resumed in the coming weeks in the fields that are not affected by the closure of the North-Peruvian Pipeline.
Argentina: The government recently established a national crude oil reference price of $45 per barrel. Major energy companies are reassessing their investment plans to define capital expenditures this quarter. From the beginning of May, some refineries in the country began to increase production levels, allowing hydrocarbon producers to dispatch the overstocked oil at production facilities.
Brazil: State oil company Petrobras has reached a production plateau in the offshore Parque das Baleias cluster, which contains the Jubarte, Baleia Ana, Cachalote, Caxaréu, and Pirambú fields. Four floating production storage and offtake facilities (FPSOs) are operating in the fields, connected to 44 producer and 21 injectors wells. The fifth planned unit for this area, the Parque das Baleias FPSO, is delayed due to the oil price crisis.
Refining
Argentina: Refining run rates continue to improve. YPF SA has increased production at its 113,200-barrel-per-day (BBL/d) Lujan de Cuyo refinery. Its processing units, which had been running at 40% capacity, are now running at 55% capacity. Axion Energy's 85,000-BBL/d Campana refinery continues to process at lower rates, running at 80% of total capacity.
Mexico: Production at the 270,000-BBL/d Cadereyta Refinery was reduced due to COVID-19. Planned repairs continue at the 325,000-BBL/d Salina Cruz refinery, with the possibility of extending their duration.
Brazil: Refineries continue to process at 60% of total capacity. The lower rates will continue until late June.
Chile: ENAP Refinerias has delayed a 40-day maintenance turnaround on the 50,300-BBL/d Crude Topping 1 unit at its 115,700-BBL/d Bio, Chile. A new date has not been announced.
Venezuela: PDVSA is operating its 140,000-BBL/d El Palito refinery at minimum rates of 40-45% of total capacity.
Peru: Repsol Peru continues to run its 110,000 b/d La Pampilla refinery at lower rates. Petroperu SA has suspended all activities related to the PMRT (Proyecto de Modernizacion de Refineria Talara - PMRT) at its 65,000-BBL/d Talara refinery.
Metals and Minerals
Chile: Miners have continued operations with a reduced number of workers on site and reduced operational capacity. Nonetheless, the sector has faced setbacks due to lockdowns. Projects under construction have been suspended and are still struggling to restart.
Peru: Mining companies are awaiting approval to restart operations, which will be in three phases: Large-scale mining, medium-sized operations and small-scale mining.
Hochschild Mining has resumed operations at its Pallancata and Inmaculada Mine.
New-build and expansion projects have been the most impacted by COVID-19 precautions in Chile and Peru. The same trend is expected for the entire Latin American region, as companies review their capital spending and create new guidelines to mitigate the economic impact.
Argentina: Mining activity is restarting, but miners are facing supply chain issues.
Power
Industrial Info recently identified 32 projects impacted by COVID-19 in Latin America's Power Industry, resulting in scheduling delays, but not cancellations.
Half of the affected projects involved the construction of new-build capacity: three in-plant capital projects worth $66.5 million, 10 transmission and distribution projects worth $99.8 million, and three maintenance projects worth $4.1 million.
Chile: 300 MW of diesel-fired, peaking new-build capacity that had been planned to begin operations this month has been pushed to the third and fourth quarters of the year.
Mexico: Electricity market regulator CENACE was forced to allow 23 renewable projects, representing 1.04 GW of wind and 1.9 GW of solar photovoltaic new-build capacity, to resume commissioning activities that had been halted due to resolution by CENACE in April 29.
Alternative Fuels
Brazil: Alternative fuel producers remain concerned about uncertainties surrounding the impact of COVID-19 on the consumption of biofuels and the price of oil on the international market. According to surveys, the volume of hydrated ethanol traded last week dropped 37.6% when compared with the previous week, and 76% in comparison with the same week in 2019.
The sharp drop in demand for biofuels in Brazil and the weakening of the oil market have led to a sharp reduction in the price of ethanol at gas stations and plants. The loss of competitiveness of hydrated ethanol relative to gasoline has resulted in the destruction of profit margins for some producers. Mills have been recommended to store up as much ethanol stock as possible to sell at a more favorable price later in the season; however, the strategy comes up against the current tanking capacity and the financial situation of the companies, which could run out of working capital to finance the harvest.
Argentina: Signs are appearing of an improving scenario for ethanol and biodiesel producers. The provincial government of Córdoba has set out an agenda to support agro businesses, including ethanol producers, through the promotion of a new national law to increase the cut of alcohol in naphtha to 15%; it currently stands at 12%.
The Chemical Processing Industry's (CPI) reaction to the COVID-19 pandemic has been similar across all Latin American countries. Producers are struggling to maintain operations with only necessary personnel on site and administrative personnel working remotely as the health crisis grows. CPI companies mainly are implementing maintenance work, and are delaying many capital investments to the second semester of 2020 or even 2021. Industrial Info has identified $6 billion worth of capital spending that is being pushed forward by one or two years, while $750 million in project activity is being delayed until the second semester of 2020 as the industry awaits market improvement. Maintenance investments, however, generally are continuing as scheduled.
Pharmaceutical & Biotech
As new positive COVID-19 cases significantly increase in Latin America, the Pharmaceutical & Biotech Industry has become even more essential. Many pharma companies are running their plants at full capacity. The final formulation, biological therapeutics and medical devices sectors are producing at maximum levels and even increase productivity. These sectors are facing challenges as national governments call for them to accelerate production of medicines, medical supplies and import more materials, not only to treat COVID-19, but also other chronic diseases to treat vulnerable sections of the population. The industry is not only doubling, but sometimes tripling operation shifts, to meet demand.
Industrial Info is tracking $ 5.27 billion in final formulation and medical device investments that not being impacted by COVID-19. Industrial Info also has identified $10.23 billion worth of capital and maintenance projects that are being affected by COVID-19.
Food & Beverages
Brazil: The meat-processing sector has experienced volatile costs and prices due to the pandemic. The most significant companies in the region, such as Brazil's BRF, are seeing a drop in internal demand. BRF owns 50% of the Brazilian market share in multiple market segments, and has already announced a $38 million reais (US$6.8 million) loss during the first quarter of 2020. BRF has requested additional credit lines totaling $409 million for the short term to increase company's liquidity levels. In the processed food sector, companies also are experiencing decreased consumption due to the drop of personal incomes.
Industrial Manufacturing
Thousands of Industrial Manufacturing plants in Latin America have halted production, stalled construction activity for ongoing capital projects and significantly delayed planned maintenance or expansion activities.
Automotive manufacturing is one of the most affected sectors. With temporary plant closings, layoffs and employee suspensions, some companies have decided to extend their reopening, while others have begun to produce, but with reduced shifts.
Industrial Info is tracking 137 automotive plants that have suspended production since March 20. Most of the companies expect to resume operations within May through June, but other companies have extended their shutdowns.
Oil & Gas
The oil sector has gradually begun to resume activities. Peru: The government issued new security regulations to reactivate the upstream activities that were halted to prevent the spread COVID-19. Production is expected to be resumed in the coming weeks in the fields that are not affected by the closure of the North-Peruvian Pipeline.
Argentina: The government recently established a national crude oil reference price of $45 per barrel. Major energy companies are reassessing their investment plans to define capital expenditures this quarter. From the beginning of May, some refineries in the country began to increase production levels, allowing hydrocarbon producers to dispatch the overstocked oil at production facilities.
Brazil: State oil company Petrobras has reached a production plateau in the offshore Parque das Baleias cluster, which contains the Jubarte, Baleia Ana, Cachalote, Caxaréu, and Pirambú fields. Four floating production storage and offtake facilities (FPSOs) are operating in the fields, connected to 44 producer and 21 injectors wells. The fifth planned unit for this area, the Parque das Baleias FPSO, is delayed due to the oil price crisis.
Refining
Argentina: Refining run rates continue to improve. YPF SA has increased production at its 113,200-barrel-per-day (BBL/d) Lujan de Cuyo refinery. Its processing units, which had been running at 40% capacity, are now running at 55% capacity. Axion Energy's 85,000-BBL/d Campana refinery continues to process at lower rates, running at 80% of total capacity.
Mexico: Production at the 270,000-BBL/d Cadereyta Refinery was reduced due to COVID-19. Planned repairs continue at the 325,000-BBL/d Salina Cruz refinery, with the possibility of extending their duration.
Brazil: Refineries continue to process at 60% of total capacity. The lower rates will continue until late June.
Chile: ENAP Refinerias has delayed a 40-day maintenance turnaround on the 50,300-BBL/d Crude Topping 1 unit at its 115,700-BBL/d Bio, Chile. A new date has not been announced.
Venezuela: PDVSA is operating its 140,000-BBL/d El Palito refinery at minimum rates of 40-45% of total capacity.
Peru: Repsol Peru continues to run its 110,000 b/d La Pampilla refinery at lower rates. Petroperu SA has suspended all activities related to the PMRT (Proyecto de Modernizacion de Refineria Talara - PMRT) at its 65,000-BBL/d Talara refinery.
Metals and Minerals
Chile: Miners have continued operations with a reduced number of workers on site and reduced operational capacity. Nonetheless, the sector has faced setbacks due to lockdowns. Projects under construction have been suspended and are still struggling to restart.
Peru: Mining companies are awaiting approval to restart operations, which will be in three phases: Large-scale mining, medium-sized operations and small-scale mining.
Hochschild Mining has resumed operations at its Pallancata and Inmaculada Mine.
New-build and expansion projects have been the most impacted by COVID-19 precautions in Chile and Peru. The same trend is expected for the entire Latin American region, as companies review their capital spending and create new guidelines to mitigate the economic impact.
Argentina: Mining activity is restarting, but miners are facing supply chain issues.
Power
Industrial Info recently identified 32 projects impacted by COVID-19 in Latin America's Power Industry, resulting in scheduling delays, but not cancellations.
Half of the affected projects involved the construction of new-build capacity: three in-plant capital projects worth $66.5 million, 10 transmission and distribution projects worth $99.8 million, and three maintenance projects worth $4.1 million.
Chile: 300 MW of diesel-fired, peaking new-build capacity that had been planned to begin operations this month has been pushed to the third and fourth quarters of the year.
Mexico: Electricity market regulator CENACE was forced to allow 23 renewable projects, representing 1.04 GW of wind and 1.9 GW of solar photovoltaic new-build capacity, to resume commissioning activities that had been halted due to resolution by CENACE in April 29.
Alternative Fuels
Brazil: Alternative fuel producers remain concerned about uncertainties surrounding the impact of COVID-19 on the consumption of biofuels and the price of oil on the international market. According to surveys, the volume of hydrated ethanol traded last week dropped 37.6% when compared with the previous week, and 76% in comparison with the same week in 2019.
The sharp drop in demand for biofuels in Brazil and the weakening of the oil market have led to a sharp reduction in the price of ethanol at gas stations and plants. The loss of competitiveness of hydrated ethanol relative to gasoline has resulted in the destruction of profit margins for some producers. Mills have been recommended to store up as much ethanol stock as possible to sell at a more favorable price later in the season; however, the strategy comes up against the current tanking capacity and the financial situation of the companies, which could run out of working capital to finance the harvest.
Argentina: Signs are appearing of an improving scenario for ethanol and biodiesel producers. The provincial government of Córdoba has set out an agenda to support agro businesses, including ethanol producers, through the promotion of a new national law to increase the cut of alcohol in naphtha to 15%; it currently stands at 12%.
