Logistics, water access key for Braskem hub restart

Market: Petrochemicals
09/05/24

Brazilian petrochemical giant Braskem's plants at the Triunfo petrochemical hub have come to a standstill because of logistical and water access issues and the uncertainty surrounding when water levels will subside.

Braskem had to shut down all of its operations in Rio Grande do Sul state after extreme flooding in recent days, but said its polymer inventories are safe and protected from the damage caused by heavy rainfall at its operations in southern Brazil during the past two weeks.

At least 428 cities and 1.5mn people have been hit by the floods. So far, there are 107 confirmed deaths and 136 people missing, according to the state's last emergency service report.

There has been no permanent damage to the industrial facilities, Braskem said today in an earnings call.

But critical water intake and effluent treatment systems are submerged, rendering them inoperable. Additionally, the Santa Clara River terminal, which was preemptively closed by the local port authority, has also been flooded.

"We can only assess the situation and evaluate losses once the water recedes," Braskem's chief financial officer Pedro Freitas said during the company's first quarter earnings call.

Freitas said that part of the production of basic resins, such as polyethylene (PE) and polypropylene (PP), will be offset by increased production in other Brazilian states or in Mexico.

Braskem has been operating under its nameplate capacity. The situation is different at Braskem's 260,000 t/yr bio-based PE plant. There is stock available abroad, as the majority of this product is earmarked for export, Freitas said.

1Q production and sales

Braskem's domestic resin sales fell by 5pc in the first quarter from a year prior, with volumes also falling in the US and Europe but growing in Mexico.

Domestic sales declined on the company's decision to prioritize sales with higher added value in the period, Braskem said in its preliminary first-quarter production and sales report.

Domestic resin sales fell to 839,000 metric tonnes (t) in the first quarter, from 884,000t a year earlier. On the other hand, the company's Brazil resin sales rose by 7pc from the prior quarter on higher demand for polyethylene (PE) and polypropylene (PP) because of inventories rebuilding in the supply chain.

In Mexico, polyethylene (PE) sales through the Braskem Idesa joint venture rose by 6pc to 209,000t in the period, primarily because of the higher availability of products for sale in the period. Sales rose by 17pc from the fourth quarter of 2023 mainly thanks to seasonality and replenishment of PE stocks in the fourth quarter of 2023.

First quarter polypropylene (PP) sales hit 508,000t, according to consolidated numbers for the US and Europe. That is a 2pc drop from a year earlier and down by 1pc from the previous quarter. The declines are mainly because of better handling of inventory, which partially offset the lower availability of products for sale in the US thanks to an unscheduled shutdown in the region.

Braskem reported a $270mn loss in the first quarter, swinging from a profit of $46.9mn in the same period last year, largely because of additional provisions related to the Alagoas state geological event.

By Frederico Fernandes

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