PE production remains stable despite payment delays: Mexico's Braskem Idesa

Braskem Idesa's polyethylene production in Mexico remained stable and at an "excellent level" as of Dec. 2, the company said, denying any impact from the non-payment of interest that was due on Nov. 18.

The non-payment pertains to a debt with an outstanding principal of $900 million, maturing in 2029. According to the original contract terms, a failure to make a payment for five days or more on the due interest of the notes constitutes "an Event of Default."

On Nov. 19, both Braskem Idesa and Brazilian Braskem, which owns a 75% stake in the Mexican company, issued separate statements indicating that the PE producer "remains engaged in discussions with representatives of a certain ad-hoc group of its senior noteholders to achieve a sustainable capital structure for the company while preserving its operations."

Platts, part of S&P Global Energy, asked Braskem about the state of negotiations with senior bondholders and the status of the missed interest payments. On Dec. 3, a Braskem spokesperson said the company had missed the payment and the cure period, adding that the BAKIDE29 bond has a default status.

A Mexican polymer distributor said that the news hasn't yet impacted the market, which is currently oversupplied. Regarding Braskem Idesa's financial situation, he added, "They haven't yet reached high production levels."

"I think low PE prices are affecting their finances severely," the same source added.

In the Mexican PE market, prices were heard to be stable to higher in recent days, with discussions suggesting that a price floor has been reached across grades. Market participants indicated that this uptick is not a result of increased consumer demand but rather a response to more balanced market conditions compared to before.

Expectations for December suggest that prices will remain stable or increase slightly, with unchanged market conditions and subdued demand. The last deals of the year are anticipated to be finalized in the next two weeks.

Platts last assessed spot high-density polyethylene (HDPE) film at $845/mt delivered in Mexico City on Nov. 26, stable week over week.

Uncertainties in Brazilian market

The polymer market is also facing turbulence in Brazil, where Braskem is seeking solutions for its financial difficulties while adjusting its operations with measures such as exiting the caustic soda market and importing dichloroethane to make its polyvinyl chloride production more competitive.

In the local PE market, concerns have arisen regarding the potential imposition of a definitive antidumping duty on imports from the US, aimed at protecting local production. According to market participants, this has negatively impacted demand.

"This year-end is worse compared to 2024 because of this PE issue. Year-end used to be a time to sell a lot of material from the US, but now it's difficult due to the antidumping situation," a trader said, adding that buyers are considerably apprehensive.

Platts assessed spot HDPE film pricing at $820/mt on Nov. 26, flat week over week. In the domestic market, spot HDPE film was assessed at Real 9,500/mt delivered in Sao Paulo.