Brazil PE turns to US amid new duties
Brazil PE turns to US amid new duties
Brazil’s polyethylene (PE) market is navigating one of its most turbulent periods in recent memory, as buyers again turn to US‑origin resin amid domestic shortages, restricted Middle Eastern liftings and the reimposition of definitive antidumping duties (ADDs) on North American imports. The 26 March 2026 ruling locks in duties for the next five years at $199.04/t for US material and $238.49/t for Canadian resin, mirroring the provisional rates that expired in February.
Approved during the 235th ordinary meeting of the foreign trade chamber’s executive management committee (Gecex), the decision arrives as the local supply chain is stretched thin. Gecex and Brazil’s ministry of development, industry, commerce and services (Mdic) said the duty levels were maintained “in the public interest,” citing concerns about pressure on downstream industries amid the tight market seen during the six months of provisional enforcement.
Domestic supply crunch intensifies
The shift to definitive duties follows a sharp deterioration in domestic supply. A distributor for Braskem, Brazil’s dominant PE producer, told customers on 5 March that nearly all PE grades were unavailable, with no forecast for replenishment. Several lines had already hit zero inventory. The warning fueled speculation of more price increases—fears quickly confirmed.
Braskem’s March pricing policy initially signaled a rollover, but the company issued two mid‑month hikes: $50/t on 2 March, then another $318/t on 5 March. With inventories depleted and prices climbing, converters and distributors accelerated procurement abroad.
Middle Eastern disruption amplifies dependence on US supply
Market tightness has been compounded by severe disruptions in Middle Eastern shipping lanes after the escalation of the US–Israel conflict with Iran. Logistics provider Ceva reports more than 140 container ships, carrying over 470,000 TEU, stranded or delayed in the Arabian Gulf. War‑risk insurance premiums have increased fivefold, and China–UAE spot freight rates have jumped nearly 25pc since mid‑February.
With Middle Eastern liftings curtailed, the US has regained importance as a strategic fallback. Despite several March price‑increase attempts by US producers, US‑origin PE remains competitive thanks to shorter transit times and steadier logistics. Houston–Santos freight rose only $12/t—minimal compared with global spikes.
After Brazil’s provisional ADD expired in February, many buyers took advantage of the duty‑free window. As domestic inventories collapsed and Middle Eastern options thinned, the US became an essential stopgap to maintain production.
Regulatory certainty returns—but sourcing patterns hold
Although the broader ADD investigation remains open until May 2026, the government formalized the duties ahead of schedule, providing five years of clarity. Yet this is unlikely to shift procurement trends. Converters continue revisiting CFR US offers, diversifying carriers and recalibrating their domestic‑import balance. With Braskem unable to supply key grades and no immediate relief expected from the Middle East, US‑origin resin remains one of the few viable options.
A market shaped by scarcity
The prospect of higher duties of as much as $734/t had largely closed off Brazil to US product, but now that the lower duties have been finalized, US producers see the door opening for US material to move to the region once more. In 2025, volumes of US PE to Brazil had declined by 8.1pc to 1.36mn t, reducing the country’s share of US PE exports to 8.9pc from 10.5pc a year earlier.
Now, particularly given global supply disruptions caused by the US-Israel war in Iran, US product is in demand in most corners of the globe. US export prices have risen sharply, with HDPE blow molding prices up by 33¢/lb or 87pc since the beginning of the war through the first week of April. Prices are expected to move even higher by the end of the month, but even with the higher prices, the security of supply the US can offer makes its PE attractive in most regions, including Brazil.
With domestic inventories in Brazil drained, geopolitical tensions inflating logistics risks and freight markets strained, Brazil’s PE chain will rely heavily on US supply despite the tariffs. Unless domestic output stabilizes or Middle Eastern routings normalize, US resin is set to remain a critical lifeline into Q2.
Braskem to appeal the AD decision
Braskem will appeal to raise the definitive duties imposed on 26 March—set at $199/t for US PE and $238/t for Canadian—to the previous Camex‑recommended level of $734/t, CEO Roberto Ramos said during the company’s earnings call. He argued that the government failed to properly assess the investigation’s technical studies, which conclude on 14 May.
Ramos said the study clearly showed US producers engaged in predatory pricing. He also noted that Middle East–related disruptions have sharply increased feedstock costs, including petrochemical naphtha, which Braskem buys mainly from Petrobras but also imports from the US, Algeria and the Middle East.
“The government should have been more sensitive to our situation. We are effectively in a state of war,” Ramos said. Braskem will analyze the decision further and confirmed it will file an appeal.
Author: Fred Fernandes & Michelle Klump
