Brazil's Braskem invests in feedstock transition while aiming to improve domestic sales

This content is part of the WPC 2025 series, where we explore key themes from the 40th annual World Petrochemical Conference.

Brazil's resin producer Braskem is investing in a transition from naphtha-based production to ethane-based production amid efforts to improve domestic sales, which remained unchanged in 2024 from the previous year.

"Switch-to-gas is a stopover in our flight to progressively transform Braskem in a green industry," said the company's CEO Roberto Ramos at the company's fourth-quarter earnings call on Feb. 27.

The company announced on Feb. 26 that it will rely on Brazil's petrochemical giant Petrobras for ethane supply, backed by government incentives for the petrochemical industry. Petrobras already is Braskem's naphtha supplier, with a contract that requires a minimum utilization rate of 70% in Braskem's plants for supply maintenance.

The ethene utilization rate in Brazil increased by 1 percentage point in 2024 to 72%, remaining close to the minimum 70% rate agreed with Petrobras.

The transition is motivated mainly by the investment of around $40 million (Real 233 million) at Braskem's petrochemical complex in Rio de Janeiro, also announced on Feb. 26. The company aims to expand its annual ethene capacity to 220,000 mt and equivalent volumes for polyethylene production.

Braskem reported a $1 billion net loss in Q4 2024 and a $2.2 billion net loss throughout 2024, mostly due to the devaluation of the Real against the US dollar throughout the year.

"We are at an extended downcycle in the fossil resins market, with no progression expected until the end of this decade," added Ramos. "And the opposite is seen at the green market, which has demand and need for supply."

Even so, according to Ramos, the company expects the proportion in ethane used to be expanded from the actual 10% to 20% in the following years, while the remaining production will rely on naphtha.

Green PE sales advance; regular sales remain unchanged

The company's investments in green ethene production led to a 7 percentage-point increase in the utilization rate in 2024 compared to 2023, reaching a 76% rate at the Rio Grande do Sul petrochemical complex, the only one in Brazil that produces green ethene.

The higher amount of green ethene production led to a 23% increase in green PE sales in 2024 from 2023, at 191,000 mt. During Q4 sales reached 57,000 mt, up 24% from the previous quarter and 17% higher in the year-on-year comparison.

Braskem's resin sales in Brazil remained unchanged in 2024 at 3.3 million mt, the same volume registered in 2023.

In the quarterly comparison, sales in Q4 dropped 7% against the previous quarter, totaling 810,000 mt, mostly due to seasonality in the period. The volume is 3% higher when compared to the same year-ago period, due to higher volumes available.

When questioned about the impact of the import duty increase for chemicals and polymers to 20%, implemented in October and initially requested by Braskem, the director of investor relations, Rosana Avolio, said effects will only be seen throughout 2025.

"We consider this benefit will only be seen substantially in 2025," said Avolio. "Demand in Q4 not only in Brazil, but globally, saw an important seasonality."

Braskem is also involved in the request to investigate the US and Canada for dumping in Brazil's polyethylene market. Brazilian traders see the ongoing investigation as a challenge, as they believe an antidumping duty against the US will lead to an inflationary effect in prices.

Brazil's polyethylene imports spiked 40% year on year in 2024, with the US being the main supplier accounting for 72% of the volumes, according to data from the Ministry of Development and Foreign Trade.

"There is a competitive advantage for producers who process ethane in feedstock costs," said Ramos. "The producer who uses naphtha is not able to compensate that through the other co-products released in the cracker."

Platts, part of S&P Global Commodity Insights, last assessed Feb. 26 the high-density PE film grade at $1,080/mt CFR Brazil, while the domestic price was assessed at $1,965.50/mt.