Alpek Turns Geopolitical Chaos into a Margin Upswing
Middle East disruptions and operational readiness drive record EBITDA, guidance raise, and faster deleveraging.
ALPEKA.MX · Earnings Call · 2026-07-23
When the Middle East conflict disrupted global supply chains in Q2 2026, most petrochemical producers braced for pain. Alpek, Mexico's largest specialty chemicals player, saw opportunity. The company leveraged its operational readiness, expanded spot sales, and reinforced its position as a domestic supplier of choice, turning chaos into a windfall. Comparable EBITDA surged 169% year-over-year to $336 million, reported EBITDA hit $407 million (including a $66 million inventory gain), and net debt fell by $103 million, driving leverage down to 2.2x — ahead of schedule. The result was a rare moment of strength in a cyclical industry, prompting management to raise full-year guidance and accelerate its deleveraging path.
The Geopolitical Tailwind
The quarter's narrative was set from the opening line: “Throughout the quarter, the Middle East conflict continued to impact global supply leading to trade disruptions. This resulted in higher reference margins and Notion freight costs.” — Jorge Pedro Young Cerecedo, Chief Executive Officer (CEO) · 2026-07-23 For Alpek, these disruptions translated directly into higher PET margins — Chinese integrated PET margins peaked at $336 per ton in May — and ocean freight rates to South America climbed to $347 per ton in June. The company's ability to secure raw materials and keep plants running, while competitors faltered, allowed it to capture outsized value. As CEO Jorge Young explained, the volatile environment "supports the case of domestic suppliers," and Alpek's scale — the largest PET producer in the Americas, the only Mexican polypropylene producer, and the leading EPS producer regionally — gave it a distinct advantage.Operational Readiness Pays Off
The company didn't just wait for tailwinds; it actively capitalized on them. "In the second quarter, we significantly increase our sales in the spot market ," Young noted. “Our percentage of spot of non spot sales definitely increased in the second quarter, and that was a huge contributor.” — Jorge Pedro Young Cerecedo, Chief Executive Officer (CEO) · 2026-07-23 Spot sales, which typically represent about 80% of volume, rose by roughly 10 percentage points as the company serviced customers whose supply was disrupted. This customer diversification is expected to persist, with many spot clients converting into long-term relationships. The company also repriced contract volumes to offset feedstock cost increases, citing strong customer support.Outlook and Capital Allocation
With momentum behind it, Alpek raised its 2026 comparable EBITDA guidance to $750–800 million and operating free cash flow to $300–350 million. Capital expenditures are set at $150 million, focusing on a polypropylene project and PET sheet expansion. The company reiterated its commitment to keeping leverage within its 2x–2.5x target, aiming for the lower end, and confirmed it does not expect to resume dividends in 2026. This marks a shift from prior quarters, where deleveraging was a priority but the timeline was less defined. As CFO Rodrigo Prieto stated, "we are maintaining a discipline to generate the cash flow. It is very important for us to convert this EBITDA to cash flow, and, absolutely, the idea is to use this cash flow to reduce and repay some debt."The company is also advancing asset monetization, targeting $30–50 million from Phase 1 sales this year, with additional phases later. While the geopolitical situation remains fluid — Brent crude recently surpassed $100 per barrel — management's cautious optimism is supported by resilient demand and a diversified customer base. Prior calls had emphasized austerity: "we would like to devote the free cash flow that we will have this year to deleveraging the company. That will be our top priority," said José Pons in February. Now, with leverage already below target, Alpek is positioned to consider shareholder returns sooner, though management remains disciplined. Alpek's ability to navigate this volatile environment is a testament to its operational excellence and strategic positioning. The company has not only survived the storm but emerged stronger, with a clearer path to long-term value creation. As global trade dynamics continue to evolve, Alpek's focus on being the preferred supply disruption beneficiary is a compelling narrative for investors.We are the largest domestic supplier in The Americas of PET resin, We are the largest domestic supplier the only domestic supplier of polypropylene in Mexico, the largest domestic supplier of EPS throughout The Americas.