Drought threatens power supply-Brazil's petrochem industry could face production interruptions

28-Jan-15

Brazil's petrochemical industry is on alert for the risk of production interruptions because a severe drought is threatening power supplies, according to market sources in Platts. Last week, Brazil endured a major blackout that affected 11 states plus the country's federal district. The blackout, which lasted about one hour, resulted from high energy consumption due at least in part to the extreme heat, said Brazil's national energy operator, the ONS. "In case of a new major energy shortage, this can hurt large plastic converter factories," a Brazil-based polymer importer said. Another Brazilian polymer buyer said he believed if more major outages happen "some players will need to invest, as an option, into another type of power source, which will be more expensive, in order to keep their operations in a emergency situation." No operational disruptions was reported during last week's power outage by Brazil's largest petrochemical producer Braskem, with major operations in Alagoas, Bahia, Rio Grande do Sul, Rio de Janeiro and Sao Paulo states. In August 2013, a major power outage affected Braskem's production. Water shortages have been reported in Sao Paulo state as the Cantareira and Alto Tiete hydroelectric reservoirs have reached critically low levels due to the lack of rain. Brazil last week was forced to import electricity from Argentina for the first time since 2010 to deal with the outage.