Chemicals in Mexico Follow the Money Report¶
Opportunities for Change¶
The Mexican chemical industry is currently navigating a period of significant transformation, with investment flowing into key areas of its value chain. These investments are not primarily driven by new market entrants or disruptive technologies in the 2024-2025 timeframe, but rather by strategic maneuvers of established players aimed at consolidation, efficiency, strategic realignment, and adaptation to evolving supply dynamics. The analysis of M&A movements, investment trends, and market disruptors reveals several opportunities for change that are actively receiving financial and strategic backing.
1. Consolidation and Capability Enhancement in Chemical Distribution & Commercialisation¶
A prominent trend receiving substantial investment is the consolidation within the chemical distribution and commercialisation segment. This is primarily occurring through mergers and acquisitions (M&A) by major global players seeking to expand their footprint and capabilities in the Mexican market.
- Brenntag SE's Acquisition of Química Delta, S.A. De C.V.: Agreed in May 2024 and expected to close in Q3 2024, this acquisition sees Brenntag, a global market leader, integrating Química Delta, a leading Mexican distributor with annual sales of $368 million USD in 2023. This strategic investment aims to significantly expand Brenntag's presence in Latin America, particularly Mexico. The opportunity here lies in creating a more powerful distribution entity with an expanded service portfolio (including base oils from Química Delta's expertise), enhanced geographic reach, and potentially greater operational efficiencies. This consolidation is an investment in market share and improved service delivery to diverse end-use industries.
- Univar Solutions' Merger with Apollo Global Management, Inc.: Finalized in 2023, this merger involving a leading global distributor with significant operations in Mexico represents a substantial corporate investment. While involving a financial sponsor, the move is aimed at strengthening Univar Solutions' position as a principal distributor. The opportunity stemming from this investment includes the potential for increased financial and operational resources for Univar's Mexican operations, leading to investments in infrastructure, technology adoption, and an expanded suite of value-added services (logistics, technical support). This change is geared towards reinforcing competitive positioning and service capacity.
These investments in the distribution sector are creating opportunities for the involved companies to achieve economies of scale and scope, broaden their product and service offerings, and strengthen their market positions. For the broader market, this could lead to more robust, efficient, and comprehensive distribution partners, although it also points towards increased market concentration.
2. Strategic Repositioning and Strengthening of Basic Chemical Production¶
The basic chemical production segment is also witnessing significant investment, albeit through different mechanisms, focusing on strategic realignment for future growth and ensuring the stability of existing critical assets.
- Alpek's Spin-off from ALFA: Approved by ALFA's shareholders in October 2024 and expected to complete in 2025, the spin-off of Alpek into "Controladora Alpek" is a major corporate restructuring. This strategic move represents an investment in Alpek's future autonomy, allowing it to focus more intently on its core petrochemical business (PTA, PET, etc.). The opportunity created is enhanced strategic flexibility for Alpek to pursue targeted investments in production efficiency, capacity expansion, potential diversification into specialty chemicals, and to directly access capital markets or form strategic partnerships. This change is an investment in unlocking value and fostering focused growth for a key national producer.
- Braskem Idesa's Project Financing: The recent receipt of approximately US$1.5 billion by Braskem Idesa for its Ethylene XXI complex, a major petrochemical facility, represents a crucial financial investment. While related to the ongoing operations and funding structure of an existing asset, this infusion ensures the operational stability and continuity of a critical source of ethylene and polyethylene. The opportunity here is the sustained and reliable supply of basic chemicals to downstream industries in Mexico, mitigating supply chain risks associated with this large-scale facility. This investment underpins the operational integrity of a vital part of the value chain.
These investments indicate a strategic focus on strengthening the core productive capacities of the Mexican chemical industry, enabling key players to enhance their strategic direction and ensure the stability of essential production.
3. Adaptation to Shifting Raw Material Sourcing Dynamics¶
A significant change in the Mexican chemical value chain is the increased reliance on imported raw materials, particularly feedstocks like ethane and LPG, due to insufficient domestic supply from Pemex (less than 60% of cracker demand). This has led to chemical producers investing substantial financial resources in procuring these materials from international markets.
- Investment in Imported Feedstocks: Mexican chemical producers are spending over US $2 billion annually on ethane and LPG imports to cover over 40% of their feedstock needs. While this is an operational expenditure rather than a capital investment in new Mexican production capacity, it represents a significant financial flow directed at adapting to a critical change in the raw material supply landscape. International traders like Vitol and Trafigura play a larger role in this new dynamic.
The "opportunity for change" here is multi-faceted. The current investment in imports addresses the immediate need to maintain production continuity. However, this increased reliance on global markets and associated price/FX volatility highlights a structural vulnerability. This situation implicitly signals opportunities for future, more structural investments aimed at:
- Enhancing domestic feedstock production capabilities.
- Developing more robust import infrastructure and logistics.
- Exploring alternative feedstocks or technologies to reduce import dependency.
The current investment in sourcing foreign raw materials is a direct response to ensure the viability of the basic chemical production segment and, consequently, the downstream value chain. It's an adaptation that is receiving significant ongoing financial commitment.
Key Findings¶
The following table summarizes the key opportunities for change within the Mexican chemical value chain that are currently receiving investment:
| Opportunity for Change | Value Chain Step(s) Impacted | Nature of Investment / Change Driver | Key Actors Involved (Examples) |
|---|---|---|---|
| Consolidation and Capability Enhancement in Distribution | Distribution & Commercialisation | Mergers & Acquisitions (strategic expansion, market share growth, service portfolio integration); Capital Infusion (strengthening financial/operational capacity) | Brenntag SE, Química Delta, Univar Solutions, Apollo Global Management |
| Strategic Repositioning and Strengthening of Basic Chemical Production | Basic Chemical Production | Corporate Restructuring (spin-off for strategic focus and investment agility); Project Financing (ensuring operational stability and supply continuity) | Alpek (ALFA), Braskem Idesa |
| Adaptation to Shifting Raw Material Sourcing | Raw Material Supply, Basic Chemical Production | Increased operational expenditure on imported feedstocks (response to domestic supply shortfalls, ensuring production continuity) | Chemical producers (e.g., those reliant on ethane/LPG), International feedstock traders |
References¶
- Alpek. ANNUAL REPORT.
https://alpek.com/storage/cms/annual-report-2023.pdf - ANIQ. ANIU destacado la importancia del comercio de la industria química en América del norte. 09 Dec 2024.
https://www.aniq.org.mx/Home/Noticia/143 - Braskem Idesa. BRASKEM IDESA RECEIVES AROUND US$1.5 BILLION.
https://www.braskemidesa.com.mx/en/press_releases/braskem-idesa-receives-around-us15-billion-from-the-project-finance-structure-for-the-petrochemical-complex-in-mexico/ - Brenntag. Distribución de productos químicos en Mexico.
https://www.brenntag.com/en-mx/ - Idesa Petroquímica - Inicio.
https://www.idesa.com.mx/petroquimica - MarketScreener. Brenntag SE agreed to acquire Quimica Delta, S.A. De C.V. (2024-05-06).
https://www.marketscreener.com/quote/stock/BRENNTAG-SE-12401448/news/Brenntag-SE-agreed-to-acquire-Quimica-Delta-S-A-De-C-V--46647410/ - Publications IADB. La cadena de valor de productos químicos en México.
https://publications.iadb.org/publications/english/сию/La-cadena-de-valor-de-productos-quimicos-en-Mexico.pdf - Química Delta: Distribuidora de Productos Químicos en México.
https://quimicadelta.com/ - Univar Solutions. Distribuidor de productos químicos e ingredientes de México.
https://www.univarsolutions.com/es/locations/latin-america/mexico/