Plans for two new ethanol-based plastics plants in Brazil and a naphtha-based polypropylene plant that were set to break ground this year will be delayed by Braskem SA until 2013, as the company hunkers down to weather a global slowdown for the petrochemical industry.

Braskem had planned to start building three new plants in Brazil within the next few months that would have totaled 1 billion Brazilian reais ($495.17 million) in investment.

Those sites included an ethanol-based PP plant, a second ethanol-based PE plant, and a conventional naphtha-based PP plant in the Camaçari industrial zone of Bahia state.

But the company's priorities have shifted to focus on increasing production capacity in existing plants and modernizing its current petrochemical park, Braskem President Carlos Fadigas told Brazil's Valor Economico newspaper in mid-July.

These efforts were already part of a 1.8 billion reais corporate budget for 2012, which includes the completion of a new butadiene plant in Rio Grande do Sul state, and a new PVC facility in Alagoas state.

Of the plans for three greenfield plants that are being delayed, Fadigas said the ethanol-based PP project is the furthest along, and should be ahead of the other two in a 2013 pipeline.

An industry pioneer in ethanol-based thermoplastic resins, Braskem in late 2010 opened its first "green" PE plant, in Triunfo. Now delayed, the second plant is scheduled to be built next to a sugarcane ethanol mill and distillery.

With 35 resin factories and four petrochemical plants worldwide, São Paulo-based Braskem has felt the impact of the global financial crisis on its bottom line, Fadigas said.

Industry analysts polled by Valor Economico said the fact that Braskem bases much of its resin production on naphtha in Brazil, and not cheaper natural gas, has drug down the company's performance.

Braskem is making a large investment with state-controlled oil company Petróleo Brasileiro SA (Petrobras) in the new petrochemical complex in Rio de Janeiro, called Comperj, the largest petrochemical center under construction in Brazil. Budgeted at $13 billion, Comperj is being designed for a ratio of 70 percent natural gas to 30 percent naphtha, with two refineries run by Petrobras and a petrochemical complex where Braskem is majority partner with $4 billion invested.

The Comperj petrochemical center is expected to have a product line that includes ethylene, propylene and benzene, along with second-generation products and resins from Braskem's portfolio.

Copyright 2012 Crain Communications. All Rights Reserved.

(Originally published July 23, 2012, in Plastics News.)