That's the assessment of Fitch Ratings, which has just published its 2016 outlook for the region's chemicals industry.
"Low oil prices should benefit Braskem's cost structure, which is reliant upon derivative oil product, naphtha," according to Gilberto Gonzalez, associate director at Fitch. Producers in Mexico, such as Alpek, S.A.B. de C.V.; Mexichem, S.A.B. de C.V.; and Grupo IDESA, S.A. de C.V. should benefit from solid North American demand. "Growth in key automotive, building and construction, and packaging end markets remains robust," said Gonzalez.
Latin American chemical companies will likely maintain high capex relative to cash flow generation through 2016. Aggregate investments for rated chemical companies in the region should remain high and total about $1.7bn in 2016, slightly above the $1.6bn projected for 2015. Companies projected cash flow generation remains solid, in part boosted by depreciating currencies and company liquidity remains sound. This combination should result in stable to lower net leverage in most cases.
The full report, Outlook 2016: Latin American Chemicals. is available at the Fitch Ratings web site.
Source: Fitch Ratings
Enjoy curated articles directly to your inbox.