Brazilian trade regulators' decision to impose provisional antidumping duties on polyethylene (PE) resin imports from the US and Canada is expected to disrupt trade flows throughout the Americas.
The new duties issued by foreign trade council Gecex/Camex, set at $199.04/t for US-origin resin and $238.49/t for Canadian-origin resin, will be effective immediately and valid for up to six months.
The duties are part of a broader shift in Brazil's trade policy, which raised overall polymer import taxes from 12.6pc to 20pc in October 2024. Decom will conclude the full antidumping investigation by 2 February 2026.
A global trader active in the Brazilian market said on Thursday that they are already reassessing all delayed orders, pending shipments, and goods in transit to determine how to proceed with clients. Many of those clients have expressed concerns the measure is a strategy to improve Braskem's short-term financials, especially as creditor banks holding the company's shares as collateral are expected to take over the task of selling the company. This follows unsuccessful negotiations with Brazilian investor Nelson Tanure who had sought to acquire Braskem.
In contrast, an executive at a Brazilian plastic resin converting company said the decision is good news, as it helps level the playing field with competitors in the Manaus Free Trade Zone, who largely import from the US under tax-free conditions, unlike buyers in the rest of Brazil.
But there could be a side effect, the executive said, of manufacturers in Manaus turning to Asian suppliers, which may drive up prices for those imports as well. The executive said he is watching to see what Braskem's new pricing levels for September will be.
With the antidumping duties in place, analysts expect a short-term drop in prices as exporters seek alternative destinations for resin traditionally sent to Brazil. Analysts expect Braskem to be the primary beneficiary for the measures, having faced ongoing losses, reduced operating rates, and workforce cuts.
US-Brazil trade death blow?
US traders are concerned with the new duties, with one trader saying it "will probably kill the economics" of trade between the US and Brazil.
"It's just one more thing gone wrong," the trader said. "It will be a huge pain, short term."
Another US trader said it expects some orders to be cancelled.
Ultimately, traders said it is likely that more material will be sent from the US to surrounding countries, such as Uruguay, Argentina and Paraguay. But it is unlikely that those countries will be able to absorb all of the resin that had been moving to Brazil.
"It's not good," said one North American producer of the new duties. "Brazil will not be the way to go [with exports]. We will need to move to other regions."
Another producer agreed, saying the news "is not helpful," but that the full impact will not be known until Braskem announces its new price position.
"This was initiated by Braskem, and they want to get their prices up," the producer said. "Where is the balance between Braskem getting their prices up and producers in North America absorbing some amount of [the anti-dumping duty]? That's obviously unknown at this point."
The impact will likely be different from product-to-product and producer-to-producer. Brazilian buyers who are purchasing resin that is highly specialized and not easily replaced by another supplier, are likely to see their prices rise significantly. But buyers purchasing more commodity-type resin will have other supply alternatives and may not see as much of an impact.
Trade flow changes likely
The move is likely to result in some trade flow shifts. In some cases, US producers who have assets in other regions can shift volume from one region to another. For instance, a company like ExxonMobil, which has assets in Saudi Arabia and the US, could shift volume from Saudi Arabia to Brazil and move US material that would normally have gone to Brazil to other regions to fill in gaps traditionally sourced out of Saudi Arabia.
Dow, which has assets in Argentina, is likely to supply more into Brazil from those assets, sources said.
"Trade patterns will adjust," said a US trader.
The antidumping measures could boost Braskem's pre-tax earnings by $150mn-$250mn, representing a 10-15pc increase, according to a July report by Brazilian bank BTG Pactual. If combined with the approval of legislation that restores tax incentives to the petrochemical sector, the company's earnings could rise by up to 45pc in 2026.
Despite the potential upside, BTG maintains a neutral recommendation for Braskem shares, citing pressured spreads, high leverage, and unresolved environmental liabilities.
