Mexico sets eyes on becoming self-sufficient in petrochemical supply

This content is part of the WPC 2025 series, where we explore key themes from the 40th annual World Petrochemical Conference.

Mexico is doubling down on petrochemical production, as President Claudia Sheinbaum announced plans to increase Pemex's importance in the sector and move closer to self-sufficiency.

The Mexican government revealed a 20 billion Mexican pesos (around $975 million) investment on Feb. 12 to increase its petrochemical output over the next six years, as detailed in Pemex's new 2025-2030 Work Plan.

The plan is centered around reactivating two petrochemical complexes, Cangrejera and Morelos, under the control of the state company. By 2030, Pemex aims to reach an annual production of 250,000 mt of ethylene oxide, 690,000 mt of polyethylenes, and 330,000 mt of aromatics. The numbers represent a sharp increase compared to the production levels recorded by Pemex.

The $975 million would come from Pemex's own investment budget and through public-private mixed projects. The plan also outlines the replacement of $14 billion of chemical and petrochemical imports in strategic products, supported by new tariffs on certain chemical commodities and new private investment projects in the industry.

If implemented correctly, Pemex could use key advantages that remain unexploited in the Mexican petrochemical sector.

Economic opportunities

Pemex could replace at least some of the significant share of all petrochemical commodities consumed by the Mexican market that come from abroad, mainly the US.

Data from the National Institute of Statistics and Geography, compiled by the National Association of the Chemical Industry, shows that apparent national consumption (production plus imports, minus exports) for all petrochemicals in Mexico during 2023 was 11.8 million mt. Of those, almost three quarters -- 8.8 million mt -- were imported material.

Furthermore, in 2023, national production went down compared to 2022, while both consumption and imports increased.

"In the last 20 years, the market of chemical products in Mexico has grown at a rate above 5% per year," said Miguel Benedetto, ANIQ's general director. "But as production has stayed relatively the same, we have seen a very important increase in imports, which have tripled in two decades."

Pemex could also benefit from the ethane advantage of the region. According to Platts, part of S&P Global Commodity Insights, over the past three years the margin of US ethane crackers has consistently outperformed the margin of European naphtha crackers by between $340 and $150/mt only in the past six months. Pemex, with the appropriate feedstock and investment, could try to replicate that advantage.

"Pemex has the critical mass to make it a business if they really invest in it, professionalize its management, reduce the number of employees", said Oscar Ocampo, Energy and Environment Coordinator of the public policy think-tank Mexican Institute for Competitiveness (IMCO).

Market participants also recognize that Pemex could reclaim a significant role in the regional petrochemical landscape.

"They're looking at different parts of the petrochemical industry to improve the availability, for example, of some feedstocks that are critical to ourselves. [...] We think that if this is done the right way, that could improve our competitiveness in Mexico", said producer Alpek's CFO José Carlos Ponce during the company's latest earnings call on Feb. 19.

"If Pemex buys new reactors, a remodeled plant, the situation changes," said a polyethylene distributor source in Mexico. "Only the announcement would make buyers worry since it is a big change."

"If they roll out the plant, we would be worried", said a PE producer source in the region.

"Mexico can innovate in the areas it did in the 90s and transform itself into one of the first 10 petrochemical industries in the world", Benedetto said.