Why is the high-profit trend in Latin American petrochemicals unlikely to be sustained, according to Bank of America's analysis?

According to Bank of America's analysis, the high-profit trend is unlikely to be sustained due to multiple converging constraints: (1) the temporary nature of the profit surge, driven primarily by short-term export demand from Europe and Latin America to fill supply gaps caused by Middle East conflict—not by structural demand growth; (2) tightening operational capacity, with April plant utilization at ~87% of design capacity and May expected to remain high but capped below 90% due to insufficient prior maintenance, limiting ability to meet further European demand; (3) volatile and rising feedstock prices—especially benzene and styrene—that hinder downstream cost pass-through, as some customers are locked into quarterly long-term contracts; (4) increasing competition from Asian cargoes entering European markets, eroding pricing power; and (5) weakening terminal demand under high-cost conditions, alongside the critical uncertainty of whether Middle East tensions will escalate again, which could abruptly reverse current market dynamics or render all existing forecasts obsolete.

What were the key drivers behind the strong April 2024 profitability for Latin American petrochemical producers, particularly for polyethylene?

The key drivers behind the strong April 2024 profitability were a sharp improvement in feedstock cost stability and robust resin price increases: while naphtha prices surged ~50% in March—severely compressing margins—April saw only an 11% rise in naphtha and a 13% drop in ethane prices, significantly easing cost pressure; simultaneously, finished resin prices rose across the board, lifting production profits for multiple products—including polyethylene, whose average profit reached $1,000/ton in April using naphtha, ethane, or propane feedstocks, nearing pandemic-era highs; similarly, U.S. propylene-based polypropylene profits jumped 35% month-on-month to $595/ton, ending a 39-month stagnation, and Alpek’s integrated polyester and polypropylene operations also posted sharply higher profitability indicators.

Latin American Petrochemical High-Profit Trend Unlikely to Sustain

May 22, 2026

Bank of America reports Latin American petrochemical firms saw record Q2 profits driven by Middle East supply disruptions and rising product prices. Analysts warn this trend is unsustainable due to weakening demand, volatile raw material costs, and limited production capacity expansion.

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Latin American Petrochemical High-Profit Trend Unlikely to Sustain

Latin American Petrochemical High-Profit Trend Unlikely to Sustain

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