APLA 2025: Investments called crucial for Mexico's petchems recovery

Mexican polyethylene prices reached new year-to-date lows in the week ended Oct. 22, with some polymer participants at the Latin American Petrochemical Association's APLA 2025 conference saying they saw no end in sight for demand weakness in the region.

As these challenges persist, accentuated by an increased reliance on imports, industry participants at the gathering, held Oct. 20-23 in Cancun, painted the need for further investments in Mexico's domestic capacity as essential for the sector's recovery.

"To increase [domestic] production by 10%, in practice, is still unfeasible," Miguel Benedetto, general director of Mexico's National Association of the Chemical Industry, or ANIQ, said during a panel discussion at the conference. "But we need to give the first steps. And if we accomplish that, we can reduce imports by $14 million."

Platts, part of S&P Global Commodity Insights, last assessed Mexican blowmolding high-density PE at $890/metric ton domestic Mexico City, $5/mt below the levels of Oct. 15. All other PE grades, apart from HDPE film that remained stable, also fell $5/mt week over week. All assessed prices are currently at the lowest levels of 2025 and at a bottom not seen since mid-2023.

As in Mexico, persistently decreasing demand across Latin American polymer markets has created a sluggish environment, which market participants expect to continue through the end of the year.

"We don't expect demand to improve for the remainder of the year," said a source who supplies feedstocks for polymer production in Mexico.

As domestic PE prices keep dropping, Mexico's dependence on foreign material is rising. During the first six months of 2025, Mexico's trade deficit for the product increased by 9% compared to the previous year, driven by a 13% rise in imports, which grew from 715,000 metric tons to 810,000 mt. Approximately 95% of these imports originated from Canada and the US, according to Banxico, Mexico's central bank.

The negative trade balance has decreased year after year since 2010, dropping by 44% from 2010 to 2024. Notably, 65% of total imports come from Mexico's largest trading partner, the US.

Investment to tackle Mexico's challenges

Benedetto also pointed out the lack of feedstocks from domestic petchems producer Pemex as another significant challenge for the Mexican industry. The state company's production utilization has plummeted by 72% from 2010 to 2024.

The ANIQ's leader added the industry is struggling as well with competitiveness in the energy sector, as domestic natural gas production has decreased by 32% during the same period.

To tackle these challenges, Benedetto proposed modernizing outdated infrastructure and promoting investment from both public and private sectors. He emphasized the importance of aligning with the government's Plan Mexico, which aims to modernize Pemex's production, particularly in the Morelos and Cangrejera petrochemical complexes.

Under this plan, Pemex aims to restart HDPE production by 2027, a grade it ceased producing in 2022, and to achieve its projected maximum output by 2030. This would increase total polyethylene production from 15,000 metric tons in 2024 to 692,000 mt by 2030, representing a 45-fold increase.

However, a critical factor that still needs to be addressed in Mexico's energy strategic plans is the coherence of its goals, Benedetto said. In addition to increasing production capacities, other objectives include reducing emissions, which could limit investment incentives in the sector.