LatAm Petrochemicals: Increasing POs on stronger petrochemical spreads; Alpek is our top-pick

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LatAm Petrochemicals: Increasing POs on stronger petrochemical spreads; Alpek is our top-pick

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LatAm Petrochemicals

Increasing POs on stronger petrochemical

spreads; Alpek is our top-pick

Price Objective Change

Stronger spreads led us to increase EBITDAs by 20-45% 25 May 2026

We are updating our models for the Mexican petrochemical names, incorporating 1Q26 Equity

results and stronger spreads following the escalation of the Middle East conflict. We are Latin America

also reducing our WACC assumptions for both companies as we incorporate lower cost Oil & Gas

of debt. In this context, we raise our Alpek’s PO to MXN15.5/sh (from MXN13/sh) and Leonardo Marcondes >>

Orbia to MXN14/sh (from MXN13/sh). Research Analyst

Merrill Lynch (Brazil)

Alpek is our top pick within the LatAm Petrochemicals leonardo.marcondes@bofa.com

Alpek is our top-pick across the LatAm Petrochemicals universe. Given its stronger CaioResearchRibeiroAnalyst>>

balance sheet – enabling the company to effectively manage WK, secure feedstock Merrill Lynch (Brazil)

caio.ribeiro@bofa.com

supply, and sustain healthy operating rates – and higher exposure to spreads. Regarding

Nicolas Barros >>

Orbia, although it should benefit from higher PVC spreads, we believe that the Research Analyst

downstream businesses could face margin pressure from cost pass-through dynamics. Merrill Lynch (Brazil)

nicolas.barros@bofa.com

Spreads meaningfully revised upward

For 2026, we revise our assumptions for Chinese integrated PET margins to US$209/ton

from US$152/ton. For 2027 and 2028, we assume US$153/ton (+3% before) and

US$169/ton (+4%), respectively. For the US PVC-ethane spread, the key driver of Orbia’s

PS segment (35% of Orbia’s total EBITDA in 2026), we raise our 2026 assumption to